It's actually bits of dried blood. I, too, was afraid to clean my baby's umbilical cord properly as I was worried it would hurt her.
At the polyclinic, the nurse told me that it was okay to wipe her belly button with a cotton bud soaked in cool boiled water to wipe it all off.
As long as there's no pus or foul smelling discharge, it is okay to leave it alone.
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