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Smart contracts may integrate Drex functionalities soon. Let’s decipher it!
The Central Bank is progressively announcing the features of Drex, Brazil’s emerging digital currency. Additionally, following its launch, planned for 2024/2025, we can expect innovations. However, the idea of so-called “smart contracts” may raise some questions.
Smart contracts are software programs that automate a financial transaction, eliminating intermediaries. In simple terms, we can think of this as an agreement between entities, with the distinctive feature that execution takes place automatically.
According to the data provided by the BC so far, such contracts constitute an essential pillar of the Drex platform. Currently, dedicated professionals are working together to develop this innovative digital currency.
Drex expands the concept of the Real
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Although it may seem intricate, Drex is fundamentally an enhancement of the Real. That is, it retains the backing of our national currency, but is entirely digital. Thus, 10 Reais are equivalent to 10 Drex and vice versa.
From this perspective, Drex’s characteristics resemble conventional money. However, due to its digital nature, it aims to optimize financial operations and potentially reduce expenses.
In response, the BC indicates that transactions made with Drex may involve certain fees. This detail, however, will be up to the banking institution providing the service to decide.
Smart contracts operate on blockchains
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A blockchain represents a sequence of data that catalogs operations carried out by individuals. It is a fixed and decentralized technology. It forms the basis for creating certain cryptocurrencies. However, it is crucial to emphasize that Drex does not qualify as one.
With this in mind, for smart contracts to function, they operate on a blockchain. In this way, the agreed commitments are carried out automatically, based on what was previously established and stored on this technological platform. In conclusion, once recorded, the details contained in them are permanent, strengthening reliability.
