Blockchain-based payment system for BRICS
BRICS countries are challenging the status quo of the global financial system. As part of this effort, they announced a blockchain-based BRICS currency and payment system as part of a broader plan to promote it. De-dollarization.
This decentralized finance platform aims to improve the global monetary system by facilitating cross-border transactions and disrupting dependence on the US currency, which dominates over 80% of international trade.
The new payment system is more than just a backup solution. This is a strategic effort to introduce a new world order in which countries can trade and invest using standard digital currencies without being affected by dollar fluctuations.
BRICS currency
This initiative, led by key members of BRICS, leverages the power of blockchain technology to potentially lower transaction costs for governments, businesses and individuals. The core principle is accessibility. This independent system is designed to be user-friendly and politically neutral, creating a more inclusive global financial environment.
By creating a viable alternative to the dollar-centric system, BRICS can foster joint economic growth in its core members and other economies seeking to reduce their dependence on the U.S. dollar. Establishing a BRICS currency and payments system could also be an important step toward a multipolar world order, but kicking out the U.S. dollar would be a significant effort.
BRICS, a powerful but controversial intergovernmental organization, emphasizes the importance of a new currency. BRICS began as an abbreviation for ‘Future Alliance’, established in 2009. raincast Rrussia meIndia, SeedHinawa SHighlights promising investment opportunities out of Africa. However, this initial focus evolved to transform the organization into an important geopolitical bloc.
In a significant expansion, BRICS welcomed Egypt, Ethiopia, Iran, and the United Arab Emirates as members. This means the bloc now covers a vast 44.3 million square kilometers and boasts a population of around 3.67 billion people.
Adding to the demographic and economic significance of BRICS is their combined GDP of US$25.85 trillion, accounting for 27% of the world’s total GDP (US$95 trillion). Their foreign exchange reserves are also enormous, amounting to $4.5 trillion (as of 2018).
Beyond seeking economic influence, BRICS countries are strategically positioning themselves as a counterweight to the G7. Initiatives such as the BRICS Interim Reserves Agreement, jointly developed; BRICS currencyThe BRICS basket of reserve currencies all demonstrate their commitment to reshaping the international financial system.
“We will continue to develop contingent reserve arrangements, primarily regarding the use of the U.S. dollar and other currencies.”
Yuri Ushakov — Advisor to the President of the Russian Federation on foreign policy issues
When discussing BRICS’ new blockchain payment system, it is important to understand the impact of BRICS. It’s important to know how influential this group is and what difference it can make on the world stage.
BRICS strategy and possibility of change
BRICS unites emerging economies around a shared vision for a more equitable global order. Founded on the principles of non-interference and mutual benefit, the organization strives to promote economic growth and development for its members and others.
The core goal of BRICS is to eradicate poverty, unemployment and social exclusion through inclusive economic growth. The strategy, outlined in the official BRICS strategy document, focuses not only on economic expansion but also on innovation and technological advancement to create a higher quality of life for all.
BRICS countries hold a summit every year to discuss challenges to the US-led world order. Although not an official alliance, the organization combats American dominance in trade and finance. Points of friction include the war in Ukraine (Russia versus the United States) and foreign exchange reserve dominance (Chinese yuan versus the U.S. dollar).
The recent expansion of BRICS to include major economies such as Iran and Saudi Arabia signals a growing movement to reorganize global influence.
“We must increase the influence of BRICS and build broader partnerships. As a cooperation platform with global influence, BRICS cooperation is about more than just our five countries. Rather, it contains the expectations of emerging markets, developing countries, and the international community,” he said.
“In line with the principles of open and inclusive cooperation, we BRICS countries attach high value to cooperation with other emerging and developing countries and have established effective dialogue mechanisms with them.”
Chinese President Xi Jinping — Speech at the 2017 BRICS Business Forum
Potential ramifications of BRICS currency and blockchain-based payment system
Economists and policymakers have discussed the possibility of a BRICS digital currency. Stablecoins, which are digital currencies pegged to national currencies, offer stability in terms of value, but they can also be harmful in the long run for two reasons.
- limited growth: Stablecoins are designed to maintain stable value by being pegged to existing fiat currency or other physical assets such as gold. This feature ensures that stablecoins are less volatile than other cryptocurrencies, but it also challenges independent economic growth within BRICS, where stablecoins are often used as alternatives to local currencies.
- central bank control: Despite the “freedom from politics” ideal associated with stablecoins, they may still be subject to central bank regulation. Such oversight could undermine the independence of stablecoins from government control, ultimately weakening their appeal as a decentralized alternative to traditional currencies.
Global adoption rate of cryptocurrency
Although the number of countries that consider Bitcoin as legal tender is small, the number of cryptocurrency holders is growing at a rapid pace.
40% of Turkey’s population owns cryptocurrency, ranking the country. Ranked 12th in the Global Cryptocurrency Adoption Index It reflects Turks’ desire to counter the devaluation of their currency and young people’s interest in new technologies. This trend is clearly evident in the trading volume of Shiba Inus.
Turkey has a rapidly growing cryptocurrency market due to high inflation and currency devaluation. As such, SHIB’s popularity highlights the main advantage of meme coins: accessibility.
With the recent rise of meme coins like Shiba Inu, Doge, and Smog, there may come a point when they are no longer considered “joke coins.” If the adoption of meme coins continues to grow, it would not be surprising to see some of them appear on BRICS blockchain-based payment systems.
