Can BRICS build something with Bitcoin?

BRICS is a term you may have heard thrown around in the news or in conversations about the global economy. But what exactly are BRICS?

In short, BRICS is an acronym for Brazil, Russia, India, China and South Africa. These five countries, representing some of the world’s largest economies, came together in 2009 (and South Africa in 2010), with Saudi Arabia wanting to join.

The population of this group is estimated at 3.2 billion people.

One of the most interesting aspects of the BRICS is their plans to back a new currency with commodities. China first proposed this idea, and since then the group has been working to make it a reality. The aim of the new currency is to reduce dependence on the US dollar.

The creation of this new currency aims to restore the link between hard assets and currency. A currency backed by gold, oil and other commodities would recreate a link between money and reality. As this relationship is absent in the dollar system today, reducing the weaponization of the dollar and the risk of economic instability is the main driver behind the initiative.

To support the new currency, the BRICS countries have been working to increase their gold reserves, which will serve as a potential support for the currency. They have also explored the possibility of creating a BRICS development bank to finance infrastructure projects in member countries and reduce dependence on institutions such as the World Bank and the International Monetary Fund.

But how practical is it to back a currency with physical goods?

While the idea of ​​a new currency backed by gold or other physical commodities would solve the current problem of fiat currencies being backed by thin air, there are also valid concerns about the practicality of such a system in the digital age.

An alternative to a physical commodity-backed currency is a Bitcoin standard. One of the main problems with backing a currency with physical goods is trust. There must be trust that the goods are actually there and that they are of the stated quality and quantity. This can be difficult to ensure, especially when dealing with several countries with different regulatory systems and levels of transparency.

There are concerns about the environmental impact of using physical goods to back a currency. These goods are not digital and cannot be carbon neutral, which can pose a challenge to meet the needs of the ESG initiative.

Another question is who will audit the goods? This is a crucial issue that needs to be addressed in order to maintain the integrity of the new currency system.

Will they send in an auditor to verify China’s gold reserves, and similarly, will China send in investigators to validate Russia’s oil reserves? What we do know is that this type of arrangement will require trust, and while these countries have a mutually beneficial relationship now, it may not last forever. They will need a commodity-backed currency that is not based on trust.

While the idea of ​​backing a new currency with physical commodities may have its appeal, it faces significant challenges that make it impractical in today’s world. Contrast this with a Bitcoin standard, which can offer a viable alternative that is transparent, secure and decentralized.

Is it possible that these countries have already thought this far ahead? Will the US witness an epic own goal? Will they rise to the challenge and launch a revolutionary digi-dollar backed by Bitcoin? Or will the BRICS nations step up and embrace Bitcoin in their financial systems? Or, in a stunning twist of fate, will Bitcoin itself emerge as the ultimate champion and rule them all? The excitement is palpable!