With the increasing digitalization of the financial world, it is normal that data privacy in Real Digital has become a relevant concern. More than that, a mandatory requirement.
Indeed, the implementation of Real Digital, the digital currency of the Central Bank of Brazil, introduces new challenges and considerations in this data protection and privacy landscape.
As a technological innovation that seeks to modernize the economy, Real Digital promises to provide more efficient and accessible transactions. However, how we will deal with data privacy and anonymity of transactions is a crucial issue that is being addressed.
The need to balance privacy with security is fundamental to any financial system. Protecting users’ personal data should be a priority, but it is also necessary to ensure the integrity and security of transactions.
This is particularly challenging in the context of Real Digital, where Blockchain technology is used to keep a transparent and immutable record of all transactions.
This article explores data privacy issues in Real Digital, with a focus on the challenge of balancing anonymity with security.
Preserving Privacy in the Digital Real
For the virtual version of the Brazilian currency, it is crucial to ensure the protection of user data against unauthorized access, misuse and information leaks.
This implies the adoption of robust security measures such as encryption, multi-factor authentication and granular access control.
In addition, user privacy should be considered in system design, using approaches such as data minimization, which limits the amount of information collected and stored.
Anonymity versus Traceability
In cash transactions, anonymity is preserved – the Central Bank has no knowledge of who is using a R$10.00 note in a supermarket.
However, in the context of Real Digital, there is a need to balance anonymity and traceability, a critical aspect of the project.
It is necessary for the system to enable the tracing of illicit transactions and the identification of suspicious activities, to comply with anti-money laundering and counter-terrorist financing regulations.
Real Digital Privacy Requirements
Real Digital must comply with national and international data privacy laws and regulations, such as the General Data Protection Law (LGPD) in Brazil and the General Data Protection Regulation (GDPR) in the European Union.
This requires the implementation of policies and procedures to ensure that data is collected, processed, stored and shared in accordance with the principles and requirements set out by these regulations.
Public Private Partnerships in Data Protection
Ensuring data privacy requires collaboration between public institutions, such as the Central Bank of Brazil, and private companies involved in the development and implementation of the digital currency.
This collaboration is essential for the creation of efficient security standards, protocols and solutions that can protect users’ privacy and ensure compliance with applicable regulations.
The Impact of Real Digital on thethe Technology and Cybersecurity Sector
Beyond the financial sector, the implementation of Real Digital has the potential to make a significant impact on the technology and cybersecurity sector.
By introducing an official digital currency, the Central Bank of Brazil is increasingly steering the economy into a new era of digitalization. This advancement has brought with it a number of challenges and opportunities for the technology sector.
One of the main challenges has been the need to develop and implement robust and secure infrastructures to support the new digital currency. This involves both setting up efficient digital payment systems and implementing advanced security measures to protect users and their transactions.
Which reminds us of the successful Pix project, launched in November 2020, which revolutionized the country’s financial market and which Eval was part of.
Blockchain technology, which is at the heart of Real Digital, is being adapted to meet business needs and data protection and privacy requirements. This could drive innovations and advances in this technology as experts seek to overcome these challenges.
The impact on cybersecurity
In cybersecurity, Real Digital represents both an opportunity and a challenge.
On the one hand, the decentralized nature and transparency of blockchain can help increase the security of transactions and the protection of user data.
On the other hand, the implementation of a digital currency can also present new risks and vulnerabilities. If adequate security measures were not in place, cybercriminals could try to exploit system vulnerabilities to carry out fraud or steal information.
In addition, as we have seen in the course of the article, Real Digital also brings up the issue of data privacy.
As Blockchain records all transactions transparently, it is necessary to find a way to protect users’ privacy without compromising the security and transparency of the system.
Blockchain, by its nature, is a public and transparent ledger. Every transaction that takes place on the network is recorded and “viewable” by anyone who has access to the network.
This provides a high level of transparency, which is one of the main advantages of Blockchain.
However, this transparency could potentially lead to privacy issues. Although Blockchain users are represented by anonymous digital addresses, once an identity is associated with a specific address, all transactions carried out by that address become linked to that identity.
Which may reveal more information than desired, leading to potential privacy issues.
In practice, this is a complex challenge that will require innovative and careful solutions.
Overall, the implementation of Real Digital in Brazil represents a significant opportunity for the technology and cybersecurity sector. Despite the challenges, it also represents a chance for Brazil to lead in technological innovation and digital security.
Balancing the challenge between Anonymity and Cybersecurity
Real Digital, as the Central Bank’s digital currency, will have a significant impact on users’ data privacy and the way personal and financial information is protected.
It is essential that all stakeholders, including government institutions, private companies, digital rights organizations and even society at large, work together to ensure that users’ privacy is maintained and data security is ensured.
Balancing user privacy and transaction traceability, as well as respecting data privacy regulations, will be crucial for successful adoption and trust in the new digital currency.
The possibility of using homomorphic encryption in Real Digital has been discussed in some debates.
Homomorphic encryption
Homomorphic encryption is an area of cryptography study that, in short, allows operations to be performed on data while it remains encrypted.
This can indeed ensure the privacy of information and consequently, if applied to Real Digital, ensure the privacy of users, which is a great advantage.
However, there are still many challenges in this area, such as performance and implementation complexity, which can slow down transactions. There are also challenges related to security, as there are already cyber attacks specific to the use of this technology.
In addition, there are challenges related to implementation complexity, given that it is a new and complex technology with which developers are not yet familiar.
When using Homomorphic encryption, we will have a scenario similar to what occurs in the real world, as we gave as an example at the beginning of this article, in which a person can spend R $ 10.00 in a supermarket and only both will be aware, ensuring the privacy of the transaction.
While AWS, Microsoft Azure, and others provide libraries and environments for using Homomorphic Encryption, they all recognize the limitations of the technology today.
Ultimately, researchers are furthering studies in this area, both to improve performance and safety, and to decrease implementation complexity.
It will therefore be a great challenge to make use of this technology with Real Digital. In the future, as this technology advances, we should see more common use of homomorphic encryption.
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Written by Arnaldo Miranda, Evaldo. Ai, reviewed by Marcelo Tiziano and designed by Caio.
