written by Gustavo Henrique
5 minutes reading
Still on the subject of money, civilizations used clay tablets to document commercial transactions and agricultural inventories, laying the groundwork for accounting. Over time, these records evolved into paper ledgers as commerce and finance developed. In the 21st century, the introduction of blockchain with bitcoin has revolutionized the concept of accounting records, allowing for the creation of distributed and immutable ledgers that eliminate the need for intermediaries and increase the transparency of transactions.
Bitcoin has played and continues to play a central role in decentralized technology, but another blockchain has brought even greater possibilities: Ethereum and smart contracts. The creation of smart contracts has ushered in the era of programmable money, where the rules of execution, transfers, and control of operations are all written in code. These codes are the pillar of the programmability sought with CBDCs
- Programmable payments: These refer to the automatic execution of payments when a predefined set of conditions is met. For example, payments can automatically release funds when a service is completed, a product is delivered, or a pre-defined condition is met.
- Programmable money: involves embedding rules directly into the unit of value itself, defining or restricting its use. This means that money has built-in instructions that determine how and where it can be used, regardless of the payment system.
- Purpose-bound money: This is a protocol that specifies the conditions under which digital money can be used and is directly transferable between users. It combines elements of the first two types, allowing money to be programmed for specific uses and transferred directly between parties without intermediaries.
With this variety of applications, it is possible to create a whole new world of possibilities, as in the most emblematic case of buying and selling vehicles, where the smart contract sets the terms and in a single transaction the seller receives the money at the same time as the buyer receives ownership of the vehicle. Another very interesting option is the transparency that can be achieved in advance payments. Fraud in this modality is related to trade bills, where the same receivable is offered to several financial institutions. In a scenario where there is a distributed and transparent ledger, all the receivables can be consulted immediately by the institutions, if not zeroed out, reducing to a minimum the losses caused by trade bills.
With the DREX initiative, the Brazilian Central Bank aims to make the real programmable, providing banks and the population with new tools to guarantee financial stability, transparency, reducing fraud and losses due to systematic errors, as well as increasing efficiency and allowing the creation of new products. Currently, DREX is in its second phase, in which the main focus is precisely on new financial applications, new horizons for automation and improvement of the financial system, but there is still a lot of room for adaptation, with privacy being one of the topics still undefined, due to the high degree of difficulty in creating a solution with a high degree of decentralization, scalability and total privacy.
The financial sector is undergoing one of the most revolutionary transformations in its history, marked by the growing adoption of technologies such as blockchain, smart contracts, and programmable money. These innovations are redefining the way we transact, eliminating intermediaries, increasing transparency, and enabling unprecedented levels of automation and efficiency.
The future is bright. The convergence of technology and finance is paving the way for a more reliable and accessible system, where creativity and innovation will enable the emergence of new products and services that will benefit both institutions and individuals. In a world where trust and automation go hand in hand, programmable money stands out as a milestone of infinite possibilities for the global economy.
Fonts: History of Money - Spectrum