Bitcoin, the largest cryptocurrency by market capitalization, could play a crucial role in the BRICS strategy to accelerate global de-dollarization.
De-dollarization is a phenomenon that has gained momentum in recent years, especially among emerging nations seeking to reduce their dependence on the US dollar. In this context, the BRICS bloc of countries, made up of Brazil, Russia, India, China and South Africa, has taken the lead in promoting local currencies and other alternatives such as Bitcoin, the market-leading cryptocurrency.
According to recent reports, the BRICS have begun to rely on these tools to challenge the dollar's dominance in international trade.
The BRICS want to minimize their dependence on the dollar
The BRICS countries have long expressed their intention to reduce their dependence on the US dollar. This interest has intensified in a global context where economic sanctions imposed by the United States have led several countries to rethink their position in the international financial system.
According to data from the International Monetary Fund (IMF), the dollar's share of global reserves has decreased from 72% in 2000 to 59% in 2021, reflecting a significant shift in global economic dynamics.
On the other hand, recently, the president of the New Development Bank of the BRICS, Diane Rousseff, stressed that up to 30% of the bank's financing will be in local currencies, which underlines a clear commitment to the de-dollarization of their economies. Rousseff emphasized that this strategy not only seeks to diversify foreign exchange reserves, but also to encourage the circulation of local currencies among member countries, which could allow the BRICS to establish a more autonomous financial system that is less vulnerable to fluctuations in the dollar.
The key role of Bitcoin and cryptocurrencies
Recently, the incorporation of Bitcoin into the BRICS de-dollarization strategy has gained attention. Russia, for example, has legalized the Using Bitcoin for International Trade, reflecting a move towards the adoption of cryptocurrencies as a viable alternative to the US dollar. Brazil, for its part, has been creating a favorable regulatory framework for the trading and use of Bitcoin as means of payment and investment asset, while in South Africa the growth in the adoption of this digital asset is undeniable.
Experts have noted that the integration of Bitcoin into payment systems in international trade aligns with the desire of many countries to circumvent sanctions and establish an independent payment system.
The use of Bitcoin, as a global and decentralized cryptocurrency, offers several significant advantages and also poses several risks. On the one hand, since it is not controlled by any central authority, Bitcoin is less susceptible to monetary manipulation. Also, one must consider its growing acceptance in international trade, which could facilitate transactions between the BRICS countries and other allies, and promote greater economic autonomy.
However, despite these advantages, the adoption of Bitcoin also comes with certain risks, especially with volatility remaining a major obstacle. Although Bitcoin adoption worldwide has grown, many countries are still reluctant to use cryptocurrencies due to their fluctuating nature in the market.
Despite all this, several experts agree that the possibility of using Bitcoin as a safe haven or as a store of value is increasingly being considered by nations seeking alternatives to the traditional financial system.
Local currencies and stablecoins
In addition to Bitcoin, the BRICS are also exploring the creation of a gold-backed stablecoin. CNF reported that the creation of such a stablecoin could offer a more tangible and less volatile alternative and provide a trading option that is not dependent on the dollar. This stablecoin would allow BRICS member countries to transact with each other without the need to convert their currencies to dollars.
On the other hand, the creation of a currency backed by tangible assets such as gold could increase confidence in the new currency and facilitate its acceptance in the international market.
In conclusion, as de-dollarization is underway, more countries are exploring alternatives to diversify their economies and protect themselves against the instabilities of the global financial system. The BRICS, by promoting the use of local currencies, Bitcoin and stablecoins, are laying the groundwork for a future where the status of the US dollar as the world's reserve currency could be undermined.
