Will BRICS embrace bitcoin? In any case, this is the thesis of head of research at the investment company VanEck.
BRICS mining bitcoins
Matthew Sigel said on CNBC that the BRICS are very interested in bitcoin:
“The GDP of the BRICS is now higher than that of the G7. And among the new members, three of them, Argentina, the United Arab Emirates and Ethiopia, mine bitcoins with government resources »he said.
Actually, Argentina has not joined BRICS. But it is true that its public electricity company YPF has partnered with US miner Genesis Digital Assets to put oilfield gas to use that would otherwise be flared.
The sovereign wealth fund of the United Arab Emirates has joined forces with the miner Marathon. The latter manages 400 megawatts in Abu Dhabi, or around 3% of the global hashrate. Ethiopia also took the plunge, with its large surplus of hydraulic energy.
And Russia? “Russia's sovereign wealth fund to invest in regional initiatives to build infrastructure for artificial intelligence and bitcoin industry, the idea being to carry out international transactions in bitcoins”launched Matthew Sigel.
Note that the Russian Parliament recently voted in favor of a legal framework favorable to the bitcoin industry. According to the CEO of the Russian exchange Kickex Anti Danilevski, Russia produces 17% of the world's hashrate.
The Russian Central Bank also launched an experimental cryptocurrency payment platform in September to circumvent sanctions (Bitcoin and Stablecoin). Russia is probably waiting for the United States to officially endorse bitcoin to reveal its enthusiasm in the open.
Speaking of the United States
Bitcoin was the special guest of this presidential election. Aware that tens of millions of voters are investing in bitcoin, the Republican candidate has rallied to the cause.
A victory this Tuesday, November 5 would bode well since Donald Trump has promised to constitute a “strategic bitcoin reserve”. In fact, he has above all committed not to sell the 200,000 bitcoins that the government already holds (following legal seizures).
However, several Republican senators have prepared a bill aimed at building a reserve of one million bitcoins. In any case, a Republican victory will certainly encourage many countries to seriously consider that bitcoin could become the reserve currency of the 21st century.
Remember that it is the only currency existing in absolutely finite quantity, unlike gold. There are already two fewer bitcoins mined than gold (S2F ratio). It will even be four times less in 4 years, 8 times less in 8 years, 16 times less in 12 years, etc.
Stateless bitcoin has all the assets to oil international trade. The CEO of the miner Marathon said nothing else last week during a conference in Dubai:
“Why two presidential election candidates put forward the notion of a strategic bitcoin reserve[Trump et Kennedy]? For the same reason we have a strategic gold reserve. If the share of bitcoin in international transactions increases, which it will, it is up to the government to hold a large reserve of BTC in case we see a boycott of the dollar by other nations”.
The greenback is no longer profitable
The BRICS have the firm intention of getting rid of the dollar. Let us recall that two member countries (Russia and Iran) have been disconnected from the SWIFT network. Not to mention the freezing of 300 billion euros and dollars belonging to Russia.
There is no doubt that BRICS will eventually trade without the dollar. China and Russia, for example, trade entirely in their national currencies and their own version of the SWIFT system (CIPS and SPFS).
That being said, this system has its limits. We saw this demonstrated quite recently when Russia refused Indian currency as payment for its oil. The reason being that the rupee is a poor store of value and India produces little of interest for the Russian market.
In other words, the BRICS will not do without a universal store of value. Some countries will always have trade surpluses that will have to be placed somewhere, preferably in solid assets.
Gold played this role before the end of the Bretton Woods agreements in 1971. The problem is that it is very difficult to make payments in gold. It's long and very expensive. Conversely, it is possible to carry out transactions of any amount for next to nothing with bitcoin. These transactions are also instantaneous and can be carried out at any time.
Having the United States buy bitcoins first is probably the price to pay to finally see the emergence of a neutral international monetary system. In this system, bitcoin becomes the absolute and non-seizable store of value par excellence. As at the time of the Gold Standard, it is a question of trading on equal terms, without “exorbitant privilege”.
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