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3rd October 2023 > > Latin America.


Two very contrasting approaches to blockchain usage in Latin America, clearly defining the good guys from the bad guys.

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Market Wrap

After briefly touching $28.5k cryptos couldn’t shake off the weakness seen in bond and stock markets, the correlation of which has been far too positive for far too long. Long bond portfolios are down over 10 points in a matter of months, racking up those off-balance sheet unrealised losses for all financial institutions, along with central banks. Taxpayers are on the hook for every cent and dollar lost during quantitative tightening, a needless exercise in supposed housekeeping. Turn those central banks’ bond portfolios into zero-coupon perps, with daily puts, mark them at par, and walk away. After all, the mere concept of owing money to yourself is nonsense.

Occasional Series – HS2

Phase one is 140 miles. It will cost upwards of £100bn (£700k plus per mile of track) and will take at least 17 years to plan and implement, probably much longer.

Indonesia’s first bullet train covers 88 miles, at a cost of just $7.8bn (£73k per mile of track) and took just 8 years to plan and implement.

Legally endorsed corruption is embedded in the UK system.

Curious Cryptos’ Commentary – Blockchain based ID

One obvious use case for blockchain technology is certifiable, and immutable, ID. Combine this with the power of ZKP (zero-knowledge proof) and the prospect of being able to prove who you are without revealing your actual identity is tantalisingly close.

This obviously scares the pants off the bureaucrats and technocrats. So, much like CBDCs are a bastard child of cryptos, governments are working on a bastard child of the utopia outlined in the previous paragraph.

Brazil is pressing on with a plan to issue identification documents “on-chain”:

Starting with Goiás, Paraná, and Rio de Janeiro, all other states must adopt this new process by November 6th, 2023, a remarkably short timespan for a government-controlled project.

CEO of the developer Serpro, Alexandre Amorim, explains the motivation behind this initiative:

“Blockchain technology plays a key role in protecting personal data and preventing fraud, providing a safer digital experience for Brazilian citizens. The use of the blockchain b-Cadastros platform is a great differential for the safety and reliability of the National Identity Card project. Applications that use blockchain can count on advantages such as data immutability, since it is practically impossible to change or falsify data recorded on a blockchain network.”

Which all sounds hunky-dory until you realise it is a pile of hogwash – the network will be private, not public. There are no benefits of decentralisation, as it will be centralised. Security is no better than any current database, and the data is most definitely mutable.

There is little doubt that this launch is an improvement on what went on before, but it could have been so much better.

Brazil is working on its own CBDC, now known as Drex:

“‘D’ and ‘r’ allude to Real Digital; the ‘e’ stands for electronic and the ‘x’ conveys the idea of ​​modernity and connection, the use of distributed ledger technology (DLT).”

How many millions of taxpayers’ dollars went to a consulting agency to come up with that dreadful concept? Government waste of taxpayers’ dollars is a real thing, boys and girls. Don’t ever forget it.

And the least surprising news?

The code for Drex allows the government to freeze accounts, decrease balances (or increase them depending on the level of local corruption), move coins at will between wallets, and mint/burn freely in any wallet.

Buenos Aires is leading the fightback against this dystopia propagated by Brazil:

Using wallets from QuarkID, a Web3 ID protocol, powered by zkSync Era, the utopia of proving your ID without revealing your identity will be launched this month starting with birth and marriage certificates. Income and academic qualifications will be available by November. Again, I note with some curiosity that the wheels of governance appear to move far more quickly in Latin America than here in the UK.

The network is a public one, and wallets are self-custody. Deigo Fernandez, Buenos Aires’ secretary of innovation lays down the gauntlet of freedom in a challenge to local authoritarians:

“With this development, Buenos Aires becomes the first city in Latin America, and one of the first in the world, to integrate and promote this new technology and set the standard for how other countries in the region should use blockchain technology for the benefit of their people.”

Do you hear that? “For the benefit of the people”, and not for the government, nor for civil servants.

Diego is one of the good guys. The politicians of Buenos Aires are truly enlightened.

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