Will it be Bitcoin vs BRICS currency or will Bitcoin become the new BRICS currency to achieve De-Dollarization
The financial world is abuzz with debates about Bitcoin vs. BRICS reserve currency as an alternative to the US dollar. Let’s explore experts’ opinions on these competing financial systems’ possibilities, challenges, and implications with shifting global trade dynamics.
BRICS Nations’ Quest for a Reserve Currency
The BRICS alliance of Brazil, Russia, India, China, and South Africa has long sought alternatives to reduce dollar dependence. A unified new reserve currency backed by physical assets like gold might offer global investors a haven. This is where the idea of creating a BRICS currency started.
Andy Schectman, President of Miles Franklin, emphasized that “a BRICS currency might validate the idea of alternative currencies. It may enhance Bitcoin’s legitimacy as a digital asset.” At the same time, he warns that Bitcoin could experience competition from a gold-backed BRICS currency.
Bitcoin: A Hedge against Instability
Joe Sullivan, a senior advisor at the Lindsey Group and former White House economist, provides a more subtle view. Sullivan says, “While he would agree that BRICS-denominated assets are attractive for foreign investors, Bitcoin’s value as a non-governmental alternative, reigns supreme.” He goes on to explain that Bitcoin can co-exist with a BRICS currency as a hedge in case of instability. This is because the new currency might be hard to adopt initially.
Robert Kiyosaki, author of Rich Dad Poor Dad, similarly emphasizes Bitcoin’s potential as a protective asset against economic mismanagement. Kiyosaki believes introducing a BRICS currency will increase demand for Bitcoin as a hedge against risks associated with fiat currencies.
Challenges to BRICS Adoption
While there is excitement, experts caution against overestimating BRICS’ ability to dethrone the dollar.
Associate Fellow at the Observer Research Foundation, Sauradeep, says, “Different economic conditions of BRICS countries might be one of the limiting factors to an effective implementation of a common reserve currency. In times of uncertainty, volatility would soar for both traditional and digital currencies as investors scramble for safe havens.”
Sergei Ryabkov, Russia’s former deputy foreign minister, shares similar concerns. He insists on reducing dollar dependence while being aware of the issues a new unified currency would face.
Global Market Volatility
Bradlow, a speaker quoted by Al Jazeera, says, “BRICS can’t easily take the dollar’s place.” He fears that even partially adopting a BRICS currency would introduce tremendous volatility in the global markets, particularly for cryptocurrencies like Bitcoin.
This view is shared by Sauradeep and others who believe that Bitcoin will flourish during uncertain and unstable times.
Bitcoin v/s BRICS Currency: Expert Opinions.
Schectman and Kiyosaki also shed light on the interplay between traditional and digital currencies. They claim that even amidst competition, Bitcoin can gain legitimacy while the BRICS currency might not.
Ryabkov and Sullivan mention Bitcoin’s resilience as an alternative asset, especially in scenarios wherein BRICS nations face challenges implementing the currency.
The debate continues, as it is yet to be seen whether Bitcoin and BRICS currencies will be pitted against each other or if Bitcoin will become the new BRICS currency. As BRICS nations decide whether to adopt Bitcoin as their unified currency, questions arise on how that will affect the global market and the dollar’s dominance.
Bitcoin: A New Alternative for BRICS
Bitcoin offers a decentralized and neutral currency perfect for being adopted as the new unified BRICS currency:
Streamlined Trade: Bitcoin can simplify cross-border transactions, lowering costs and enhancing trade efficiency among BRICS members.
De-dollarization: As a neutral currency, Bitcoin could reduce reliance on the US dollar, mitigating exchange rate risks.
Financial Inclusion: Bitcoin’s accessibility can provide financial services to unbanked populations, boosting economic participation.
Sanctions Resilience: To Russia, say, Bitcoin provides an outlet to circumvent sanctions while keeping trade streams running.
Investment Opportunities: In fact, the ability of institutions and businesses to take bitcoins would allow foreign investors to channel their investment into innovating blockchains and cryptocurrency.
However, Bitcoin’s transparency and lack of centralized control may be a challenge. For instance, countries that want secret financial practices would avoid it because it has a public blockchain.
So, let’s explore in detail what challenges or opportunities will arise for Bitcoin if BRICS create a new unified currency.
Ripple Effect on Bitcoin Prices
“As BRICS seek alternatives to the dollar, Bitcoin may just see greater demand,” says Macro analysts.
“The price of the cryptocurrency may go up as it becomes a hedge asset amid surging global debt and economic uncertainty,” reports Sputnik International.
According to prominent analyst Noelle Acheson, even if Bitcoin cannot become the official currency of BRICS, its perceived value as a decentralized alternative will grow. Such developments will attract investor interest, leading to an improvement in Bitcoin’s market performance.
If a BRICS reserve currency is ever introduced, that single currency would drastically impact how Bitcoin fares in world finance. Here are five of the major effects of BRICS currency on Bitcoin:
Direct Competition: A BRICS currency would rival Bitcoin, making it less attractive as a reserve asset.
A Safe Haven: Economic uncertainty during the adoption of the BRICS new currency would still drive demand for Bitcoin as a haven. It will serve as a hedge against market volatility.
Co-Existence: Bitcoin may coexist with a BRICS currency if blockchain is adopted.
Regulatory Shift: BRICS countries may harden their regulations regarding cryptocurrencies to protect the currency, thereby affecting Bitcoin’s and blockchain assets’ growth.
Global Perception: The success or failure of a BRICS currency could shape Bitcoin’s narrative as an alternative financial system.
Conclusion
Challenges and opportunities arise for Bitcoin with BRICS nations’ evolving financial strategies. A unified BRICS currency could present a source of competition for Bitcoin, but its decentralized nature and hedge status would sustain its relevance. These initiatives will yield nothing less than a new paradigm for global finance. So, market analysts and prominent economists will closely watch the relationship between Bitcoin and BRICS in the coming years.
