“A CBDC for Paraguay has been in development for 2 years”

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By TP

“A Central Bank digital currency (CBDC) has been underway in Paraguay for 2 years.” This was reported to BitcoinDynamic by Ricardo Prieto, official spokesperson for the Paraguayan Blockchain Chamber, who also explained, during an interview, the progress of the «first third-generation network with national sovereignty» being developed in the South American country. After several years of work, the Paradata company launched the first blockchain corporate from Paraguay, called Legaledger, which was designed to meet demands presented at the business, government and military levels, as described on its website. This distributed network, based on Hyperledger Fabric, is a seed that is beginning to flourish, suggests Prieto when narrating how it was that after being born in the laboratory of a private company, it is now under a change of administration that will put it at the service of all citizens Paraguayans for endless initiatives from all sectors. These include the tokenization of property documents, the digital identity of the country's inhabitants and even a CBDC. Prieto recounts the steps that have been taken since the birth of the network: “in November, we made the official presentation of this blockchain so that people can learn about it, both in the public and private sectors and in the education. And when that happened, a lot of opportunities began to arise,” explained the CIO of the company Paradata. He added that after discovering that the Paraguayan corporate network opened many opportunitiesthe Paradata team presented its project before Congress where senators recommended the creation of the Paraguayan Blockchain Chamber, which was consolidated on February 12.

“In such a way that the Paraguayan Blockchain Chamber is now in charge of managing the network and protecting it. But it also has the imperative mandate to speak with the Government and Parliament so that the network is declared a national strategic infrastructure, so that it is at the service of all the citizens of Paraguay.» Ricardo Prieto, official spokesperson for the Paraguayan Blockchain Chamber.

Paraguay's corporate network will now be under the administration of the Paraguayan Blockchain Chamber. Source: Legaledger.com.py. First of all, Paraguay will be able to use the network to the digitization of civil, commercial, and military government procedures and for the tokenization of real-world assets (RWA), which are fully permitted in the country by law 682221, adds Prieto. This means that Paraguayans will be able to tokenize the ownership titles of vehicles, horizontal or vertical properties, as well as any other asset that exists in the physical world. «And all at no cost,» adds Prieto. «The network will allow us to digitize everything in the country, in the sense that if there is a document that has to be moved digitally, can have its verification and validation hash on a sovereign network“explained the spokesperson for the Paraguayan Blockchain Chamber. For now, the issuance of cryptoassets would be limited in the blockchain. «Not from a technical point of view, because the network does offer the necessary structure to do so, it just does not currently have a securities law to launch them,» details the spokesperson. He adds that “as we move forward, Paraguay will have the cryptoasset markets law, the Securities Market law and tokenized assets. It was also dealt with in a law on national technological infrastructure, and another on crowdfunding to boost local and international investment a little more,” he noted. Prieto assures that this month, heThe Paraguayan Blockchain Chamber will enable an official sandbox which will extend for the rest of the year. Its objective is to invite all national and international companies that are fintech startups to begin developing their solutions and ideas within a safe zone based on the Paraguayan network. “Then in November we will have an event in which we will present all the approved blockchain solutions that have undergone an audit of their smart contracts to be able to go to market. After that we will be ready to move on to the Hyperledger Pro version, which is the variant designed in the production stage.

A truly sovereign network?

Ricardo Prieto explained to BitcoinDynamic that a network becomes sovereign for a country when it proposes technical and infrastructure solutions that can definitively achieve that sovereignty. «We know of global and public networks like Ethereum that have nodes in all parts of the world. The problem with these nodes is that they are unknown because no one knows who is behind them and that can allow them to attack the network at some point, although that sounds impossible because it costs a lot of money. It should be noted that the geographical distribution of the nodes is also usually considered as a guarantee of redundancy, so that, if there is a problem in a specific region, the nodes in other regions will be able to maintain network activity. The official spokesperson for the Paraguayan Blockchain Chamber adds that due to the design of Legaledger, contrary to that of public networks such as Bitcoin and Ethereum, Its nodes can only function within Paraguayan territory. “And so we already have sovereignty technologically speaking, because no node can be outside of Paraguay,” he explained.

Ricardo Prieto assures that the Legaledger blockchain is the basis of Paraguay's digital transformation. Source: Legaledger.com.py. In addition to this, Legaledger nodes are not unknown, but are run by several companies, such as the Brazilian Dynamo Network. Also from a Paraguayan company that provides fiber optics throughout the country. Therefore, the fiber goes directly to the node in a layer two, preventing it from being recognized if it is beyond what the network can recognize.

Today we have 30 nodes and this year we are going to have 100 more, so the 130 nodes will be enabled to validate. But the idea is that we can have a validator node within each of the Paraguayan government entities, which are 514. Then we will have all the startups and fintech companies that in order to operate with our network have to be validator nodes. And finally we have the third level of nodes, which are the commercial companies of Paraguay, which are about 37,000 that are recognized by the Ministry of Finance, but if we have 2,000 of these companies within the network, in total we will have more than 2,500 nodes validating . Ricardo Prieto, official spokesperson for the Paraguayan Blockchain Chamber.

The project contemplates that private companies that run nodes will receive a tax discount for the investment they will make to protect Paraguay's sovereign network. «So, that is the logic of what we have proposed, which is unique in the world, this model does not exist and it is the network that we are building,» Prieto noted.

And when will Paraguay's CBDC?

The Central Bank of Paraguay has a CBDC in mind, as demonstrated by its digital sessions, but it does not seem to be in a hurry to do so. The logic behind that would be in what was commented by Prieto, who remembers that the Guaraní recently turned 80 years old.

We have never changed our currency, nor have we removed zeros from it because it is one of the strongest currencies in Latin America. The Paraguayan Central Bank does not usually relate much to technology issues, which is our area of ​​​​specialization. Yes we know that They are working, researching on CBDC, and we also know that at some point they are going to need a network, so we are developing it.” Ricardo Prieto, official spokesperson for the Paraguayan Blockchain Chamber.

Ricardo Prieto, spokesperson for the Paraguayan Blockchain Chamber. Photo: BitcoinDynamic. He assures that the Paraguayan Central Bank is aware of the work being done by the Blockchain Chamber, which is made up of 27 people from different sectors of the country. “And we will have everything ready for when the call from the Central Bank comes,” Prieto said. Meanwhile, the network will be available for citizens and companies or government institutions to use it for whatever they need it and take advantage of it at no cost, added Prieto. Furthermore, with this blockchain Paraguay will become an international digital jurisdiction and offer services to anyone who wishes to develop on the Guarani sovereign network. “So everything will be done under Paraguayan laws and not those of Estonia, Tanzania or Lithuania. They will be Latin projects, based on a network developed in the region and with local laws,» Prieto pointed out.