You’re reading The Brazilian Report‘s weekly tech roundup, a digest of the main news concerning technology and innovation in Brazil. This week’s topics: cryptocurrency, telemedicine, the Internet of Things (IoT), and novelties with Google Maps, among other stories.
The first stablecoins reach Brazil
Stablecoins (cryptocurrencies designed to minimize the volatility of prices) have taken center stage in the cryptocurrency world after Facebook announced its plans to develop a digital coin in June. The currency, called Libra, will be backed by a mix of assets in four official currencies. Meanwhile, at least three stablecoins have already been launched in the Brazilian market: GMC, BRX, and RealT. The first is pegged to the U.S. Dollar and the latter two to the Brazilian Real.
Stablecoins differ from other digital currencies because they are proportionally tied to the value of other assets, such as bonds or fiat money. Similarly to how cash was once tethered to the value of precious metals, like gold, these digital tokens are tied to assets that have proven stability, including national currencies such as dollars or euros. These types of coins usually match the value of currency. In the case of GMC, for example, 1 coin equals 1 US Dollar.
As their name implies, stablecoins aim to limit volatility and foster stability in terms of conversion rates and coin value. Keeping this in mind, it may seem odd for a company to base their coin on the Brazilian Real. While it is certainly more stable than its predecessors, the national currency only recently celebrated its 25th birthday, and it has lost nearly four times its value against the dollar since 1994.
So why are digital currencies like BRX and RealT important?
The answer lies in the goal to facilitate Brazil’s participation in the global cryptocurrency market. More Brazilians are trading crypto coins than stock, and having a coin tied to the national currency offers more certainty and ease in trading. Until recently, Brazilians have had to buy extremely volatile cryptocurrency, such as Bitcoin, in order to participate in the market. This not only limits the predictability of trading on blockchains but also slows down...
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