The BRICS nations have been buying more gold YTD thus raising speculation of a new currency on the horizon.
However, the BRICS movement could end up creating another greenback that is not convertible to Gold, thus making a Bitcoin-backed currency more efficient.

Global geopolitics have significantly changed post Covid-19 pandemic as countries strive to improve their economic status. The ongoing war between NATO and Russia over the Ukrainian territories has increased the rift between G7 nations and the upcoming BRICS movement. Furthermore, more nations want to free themselves from the shackles of depending on the United States dollar, which is largely controlled by a few individuals. Notably, more developing countries and third undeveloped nations have applied to join the Russia and China-led BRICS movement. 

Gold-Backed BRICS Currency Raises Eyebrows 

Despite the officials at New Development Bank, formerly the BRICS Development Bank, claiming a new currency for the organization is long-term, experts argue the narrative could be nearer than expected. Notably, reports have emerged that a gold-backed currency will be a point of discussion during the August meeting in South Africa next month. The launch of a gold-backed currency is undeniably immune as the BRICS member states increase the rate of stashing the precious metals. 

According to a recent report by gold.org, more central banks have increased their gold accumulation pace in the past decade with 2023 outpacing all. 

However, a few aspects of the gold-backed BRICS currency have raised eyebrows among most experts. For instance, will the respective central banks agree to swap paper money for gold since the currency is backed by precious metal?

“For making the new currency as good as gold, a truly sound currency, it must be convertible into gold on demand. I am not sure whether this is what Brazil, Russia, India, China, and South Africa have in mind,” Thorsten Polleit, chief economist at Degussa, noted. “Using gold as money, the unit of account would be a true game changer, no doubt about it. It could lead to a sharp devaluation of many fiat currencies vis-à-vis the yellow metal (including the BRICS fiat currencies), and it could catapult up goods prices in terms of fiat currencies. It could be a shock to the global fiat money system. I am not sure that this is what the BRICS wish to achieve.”

Nonetheless, the BRICS economic bloc is determined to ditch the United States dollar amid increased inflation and debt incremental fears. Furthermore, the United States FED has been printing more money out of thin air in the last few years than in the past few decades in the name of economic stimulus injection.

Bitcoin Dominance 

Amidst all the speculations of a new BRICS currency, the Bitcoin market has continued to flex its dominance and attract new institutional investors. Moreover, the Bitcoin market is accepted almost everywhere in the world, especially after the SEC vs Ripple ruling on Thursday, which gave the altcoin market much-needed clarity. Notably, the use of Bitcoin for cross-border payments through the Lightning network is largely underutilized and could take shape in the coming years following increased demand from large investment fund managers.

 

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Filed under: Bitcoin - @ July 14, 2023 4:20 pm