The Head of
the Russian Direct Investment Fund (RDIF) Kirill Dmitriev has stated
that the BRICS may opt to create their own cryptocurrency for the
purposes of global commerce.
A
cryptocurrency is a digitally based means of exchange wherein the
value of said currency is not determined by a central-bank. Most
cryptocurrencies can be converted into state-issued currencies
(Dollars, Euros, Yuan, etc.) through various foreign exchange
services.
Currently,
one of the biggest issues facing cryptocurrency development is the
fact that they are not backed up by any central bank. However, many
also see this apparent disadvantage as a possible opportunity,
particularly where unilateral Dollar based sanctions are concerned.
While the US
Dollar remains the most popular global trading and reserve currency,
this is rapidly changing. A BRICS backed cryptocurrency may be both
the proverbial ‘Dollar buster’ as well as a ‘sanctions buster’.
In May of
this year, China and Russia agreed to begin a process of trade in
local currencies. Turkey and Iran have also begun steps to break away
from the Dollar.
Even more
recently, China announced that is plans to allow for oil trading in
Yuan which will be convertible to gold at the Shanghai and Hong Kong
international gold exchanges.
The creation
of a BRICS cryptocurrency could potentially retain the flexibility of
current cryptocurrencies with the additional benefit of being backed
by the leaders of a large economic-trading union which would give
traders confidence in such a currency that many existing cryptos such
as Bitcoin are lacking.
It is not
certain what the exchange rate of a would-be BRICSCoin would be, but
there is every chance that it could be based on a derivative of what
is known as Special drawing rights (XDR) a current means of exchange
which pools the values of the US Dollar, British Pound, Japanese Yen
and the Euro.
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