BitopiaLand on Nostr: BRICS is Going to Adopt Bitcoin for Trade The BRICS nations are evaluating ways to ...
BRICS is Going to Adopt Bitcoin for Trade
The BRICS nations are evaluating ways to reduce their dependence on Western financial systems.
The main proposal discussed is the creation of a BRICS currency, either a basket of member countries' currencies or a gold-backed currency.
The intention is to challenge the dominance of the dollar and establish greater financial independence in a multipolar world.
What BRICS is not realising yet is that sooner or later they will—due to its decentralised and global nature—adopt Bitcoin as their currency for trade.
Problems with the BRICS Currency – Basket Version
Currency Devaluation:
In a basket with multiple currencies, one country's currency can devalue faster than the others. This would cause the entire BRICS currency to lose value, reducing the purchasing power for all members.
If one country prints more money than the others, the devaluation would impact the collective currency, decreasing its purchasing power and making it less reliable as a store of value.
Dependency on Larger Nations:
China's economy towers over the other BRICS economies, and if the BRICS currency is based on a basket of member currencies, the Yuan’s share of the basket will always give China outsized influence over the currency.
Smaller BRICS countries would shift their dependency on the US (via the dollar) to dependency on China, and maybe, other large BRICS nations.
Costly Political Coordination:
Maintaining a basket currency requires continuous political coordination between member nations, involving currency adjustments and policy agreements.
Like all bureaucratic processes, this would be time-consuming, expensive, and fraught with “one-size-fits-none” political agreements.
Problems with the BRICS Currency – Gold-Backed Version
Gold Reserve Imbalances:
Countries within BRICS hold different levels of gold reserves. A gold-backed currency would disproportionately benefit nations with larger reserves, while leaving smaller economies at a disadvantage.
This will create an internal imbalance of power within BRICS, where smaller countries may struggle to keep pace with their larger counterparts.
Trust Issues:
Historically, gold-backed systems have failed due to the over-issuance of currency relative to gold reserves.
This was the problem during the era of the gold standard and later during the Bretton Woods system, where the US printed more dollars than it had gold reserves.
The question of how to trust each other’s gold holdings would present a significant challenge, as transparency around reserves will be difficult to guarantee.
High Costs:
Gold is expensive to store, secure, and transport.
For a currency system that is expected to support international trade, the logistics of maintaining and transferring gold reserves is crazy inefficient and impractical.
In a modern, fast-paced global economy, such a gold-backed system feels like a relic from days long gone.
Why Bitcoin is the Superior Alternative
Decentralisation:
Bitcoin is decentralised, meaning it isn’t controlled by any one nation.
This is crucial for BRICS, as it allows member countries to trade on equal footing without one nation holding an unfair advantage.
Unlike a BRICS currency, no member country has dominant influence over Bitcoin’s value or operation.
Global Reach:
Bitcoin can be used for trade not just within BRICS, but with non-BRICS countries as well. This global acceptance makes it a flexible option, extending its utility beyond the borders of BRICS nations.
It ensures that BRICS nations are not limited to their own trading bloc but can freely participate in international trade.
No Exchange Rate Fluctuations:
As a single, universal currency, Bitcoin eliminates the need for managing exchange rates between different national currencies.
This reduces the complexities and costs associated with currency fluctuations, making Bitcoin a stable medium for international trade.
No Political Coordination:
Bitcoin operates on a decentralised protocol, meaning it doesn’t require inter-governmental agreements or political coordination to function.
This allows for smooth and cost-efficient operations without the bureaucracy associated with managing a BRICS currency.
Existing Infrastructure:
Bitcoin’s global infrastructure is already in place, with a growing number of participants, nodes, and miners around the world.
Its network is secure, scalable, and continually being improved upon, making it a ready-to-use solution for international trade.
Cost-Effective:
Bitcoin is significantly cheaper to store, secure, and transfer than gold. There are no physical reserves to guard, no transportation costs, and no need for costly security infrastructure.
This makes Bitcoin an efficient, low-cost option for settling international trade transactions.
Conclusion
Bitcoin’s neutrality, cost-efficiency, flexibility, and established global infrastructure make it the superior option for BRICS trade.
It bypasses the complexities and challenges posed by both the basket-based and gold-backed BRICS currency models.
While the idea of a BRICS currency might seem appealing in theory, in practice it is very unlikely to succeed.
It is only a matter of time before BRICS nations realise that Bitcoin offers the only viable solution for their goal of achieving financial independence and international trade efficiency.
The BRICS nations are evaluating ways to reduce their dependence on Western financial systems.
The main proposal discussed is the creation of a BRICS currency, either a basket of member countries' currencies or a gold-backed currency.
The intention is to challenge the dominance of the dollar and establish greater financial independence in a multipolar world.
What BRICS is not realising yet is that sooner or later they will—due to its decentralised and global nature—adopt Bitcoin as their currency for trade.
Problems with the BRICS Currency – Basket Version
Currency Devaluation:
In a basket with multiple currencies, one country's currency can devalue faster than the others. This would cause the entire BRICS currency to lose value, reducing the purchasing power for all members.
If one country prints more money than the others, the devaluation would impact the collective currency, decreasing its purchasing power and making it less reliable as a store of value.
Dependency on Larger Nations:
China's economy towers over the other BRICS economies, and if the BRICS currency is based on a basket of member currencies, the Yuan’s share of the basket will always give China outsized influence over the currency.
Smaller BRICS countries would shift their dependency on the US (via the dollar) to dependency on China, and maybe, other large BRICS nations.
Costly Political Coordination:
Maintaining a basket currency requires continuous political coordination between member nations, involving currency adjustments and policy agreements.
Like all bureaucratic processes, this would be time-consuming, expensive, and fraught with “one-size-fits-none” political agreements.
Problems with the BRICS Currency – Gold-Backed Version
Gold Reserve Imbalances:
Countries within BRICS hold different levels of gold reserves. A gold-backed currency would disproportionately benefit nations with larger reserves, while leaving smaller economies at a disadvantage.
This will create an internal imbalance of power within BRICS, where smaller countries may struggle to keep pace with their larger counterparts.
Trust Issues:
Historically, gold-backed systems have failed due to the over-issuance of currency relative to gold reserves.
This was the problem during the era of the gold standard and later during the Bretton Woods system, where the US printed more dollars than it had gold reserves.
The question of how to trust each other’s gold holdings would present a significant challenge, as transparency around reserves will be difficult to guarantee.
High Costs:
Gold is expensive to store, secure, and transport.
For a currency system that is expected to support international trade, the logistics of maintaining and transferring gold reserves is crazy inefficient and impractical.
In a modern, fast-paced global economy, such a gold-backed system feels like a relic from days long gone.
Why Bitcoin is the Superior Alternative
Decentralisation:
Bitcoin is decentralised, meaning it isn’t controlled by any one nation.
This is crucial for BRICS, as it allows member countries to trade on equal footing without one nation holding an unfair advantage.
Unlike a BRICS currency, no member country has dominant influence over Bitcoin’s value or operation.
Global Reach:
Bitcoin can be used for trade not just within BRICS, but with non-BRICS countries as well. This global acceptance makes it a flexible option, extending its utility beyond the borders of BRICS nations.
It ensures that BRICS nations are not limited to their own trading bloc but can freely participate in international trade.
No Exchange Rate Fluctuations:
As a single, universal currency, Bitcoin eliminates the need for managing exchange rates between different national currencies.
This reduces the complexities and costs associated with currency fluctuations, making Bitcoin a stable medium for international trade.
No Political Coordination:
Bitcoin operates on a decentralised protocol, meaning it doesn’t require inter-governmental agreements or political coordination to function.
This allows for smooth and cost-efficient operations without the bureaucracy associated with managing a BRICS currency.
Existing Infrastructure:
Bitcoin’s global infrastructure is already in place, with a growing number of participants, nodes, and miners around the world.
Its network is secure, scalable, and continually being improved upon, making it a ready-to-use solution for international trade.
Cost-Effective:
Bitcoin is significantly cheaper to store, secure, and transfer than gold. There are no physical reserves to guard, no transportation costs, and no need for costly security infrastructure.
This makes Bitcoin an efficient, low-cost option for settling international trade transactions.
Conclusion
Bitcoin’s neutrality, cost-efficiency, flexibility, and established global infrastructure make it the superior option for BRICS trade.
It bypasses the complexities and challenges posed by both the basket-based and gold-backed BRICS currency models.
While the idea of a BRICS currency might seem appealing in theory, in practice it is very unlikely to succeed.
It is only a matter of time before BRICS nations realise that Bitcoin offers the only viable solution for their goal of achieving financial independence and international trade efficiency.