Bitcoin and its underlying technology has earned the trust and praise of some of the most notable figures in banking and finance.

For instance, the director of Brazil’s central bank only has good things to say about the technical features of the crypto.

According to Central Bank of Brazil chief Fabio Araujo, Bitcoin is a major “financial innovation” that has given rise to new vital technologies and products.

Araujo highlighted the cryptocurrency’s role in paving the way for the development of the Web3 concept and in stimulating research and other studies on central bank digital currencies (CBDCs).

Bitcoin’s Smart Functionalities

During a recent event, the head of the central bank also discussed the shifting landscape of digital currency, adding that one of his organization’s primary goals is to add intelligent features to Bitcoin.

Araujo revealed that the country’s central bank began investigating the features of cryptocurrencies more than a decade ago.

“In 2009, with the introduction of Bitcoin and distributed database technology that promotes the development of Web3, we began to accelerate this process,” he said.

“The Bitcoin program provides the Proof-of-Work (PoW) solution, which is essential for Web3’s population-based services,” Araujo pointed out.

Image: Stratfor

Web3 In Layman’s Terms

Web3 (sometimes referred to as Web 3.0) is the third generation of web technologies. The web, often referred to as the World Wide Web, is the internet’s basic layer, supporting a variety of website and application services.

In 2014, Polkadot creator and Ethereum co-founder Gavin Wood used the term “Web3” to refer to a “blockchain-based decentralized online ecosystem.”

The concept of Web3 gained momentum in 2021. Particular attention surged at the end of 2021, primarily as a result of bitcoin advocates’ and prominent technologists’ and companies’ investments.

Image: CryptoSlate

Meanwhile, Araujo ruled out the use of Bitcoin as a currency, noting the asset’s volatility as a significant disadvantage. In this instance, the governor of the central bank indicated that CBDC is necessary since it eliminates the volatility scenario and functions as a payment solution.

Despite the fact that CBDC leverages the technology that underpins cryptocurrencies, CBDC is not a crypto asset, he said.

In the same manner that the Real does not compete with listed assets, the CBDC is an expression of the Real inside the ecosystem in which cryptocurrencies function, Araujo noted.

Brazilian Crypto Market Flourishes

The Brazilian market for Bitcoin and the broader cryptocurrency sector is expanding rapidly. It is expected that 10 million Brazilians own cryptocurrency at present.

The second-largest city in Brazil, Rio de Janeiro, is actively participating in the global municipal race to attract Bitcoin.

In January of this year, the city declared that 1 percent of its treasury would be held in cryptocurrency and that it was examining the potential of granting tax rebates to individuals who paid in Bitcoin.