How the emergence of BRICS as an alternative to the global dominance of the US dollar will lead to worldwide adoption of Bitcoin.
This is an editorial written by Milan Stanojević, primary school teacher and director.
Since the end of World War II, the United States has consistently been the dominant global superpower. The Soviet Union vied for supremacy during the Cold War but ultimately failed as it lost control of its satellite states. This was evident when the Berlin Wall fell in 1989.
In recent years, American hegemony has been challenged by China, a country that has accumulated enormous wealth since opening its economy to the world. It now appears that China is poised to usurp global power while continuing to engage in a form of financial imperialism around the world (for more information, read on). “China Unbound” by Joanna Chiu). Today, both Russia and China are part of a global cadre known as brixwhich includes Brazil, India and South Africa – with others, such as Turkey and Saudi Arabia, perhaps waiting in the wings to join in as well.
In case you weren’t paying attention, the world is going through a major paradigm shift, with the BRICS group at the centre. Banks all over the world are collapsing, Saudi Arabia and Iran Negotiating historic peace talks and countries It began to deviate from the US dollar as the global reserve currency.
An important question to consider, then, is how might the current state of geopolitics and macroeconomics shape the future of a hyper-currency world? I acknowledge that no one can predict the future with any real certainty, however, I’d like to share my insights into how game theory might unfold over time.
I believe that over the next few decades, the emergence of the BRICS group as an alternative to American hegemony will lead to the development of the global economy in three stages: The first stage will be a pivot from a unipolar financial world to a multipolar one. In the second stage, Bitcoin becomes a medium of exchange and a unit of account for many countries. In the third and final stage, we test real hypercoins.
The first stage: from the US dollar to gold
Most people have no idea this is happening, but we are in the early stages of the first phase and the creation of a multipolar world.
In the 1970s, under President Nixon, Saudi Arabia It agreed to price its oil in US dollars in exchange for military defense. Essentially, every other country was forced to hold onto the US dollar as a result, making it the world’s reserve currency. Having such an exorbitant privilege means that every time the US government decides to print money, it can essentially buy oil for free. As a result of being the world’s reserve currency, US Treasury bonds have become the safest asset for investors to own (I know that statement sounds funny today). The consensus was that there was absolutely no chance that the United States would default on its debt, as it could print indefinitely. Nation states bought Massive levels of US debt for more than 50 years.
However, this is no longer true of all states. China And Russia Fewer Treasury bills have been purchased over the past decade. Instead of holding American debt as an asset, they were increase their reserves of gold. IndiaAlso, he accumulates a stock of gold. The BRICS countries appear to be working towards a return to the gold standard. Under this system, currencies would once again be pegged to a scarce commodity that many have used as a store of value for thousands of years. But these countries are unlikely to settle the majority of transactions using physical gold, given its difficulty in transporting and securing it. But what is certain is that Russia is now allowing countries to buy their oil there Rubles, yuan and maybe soon rupees. At this point, a minority of countries will continue to reduce their US treasury holdings, dealing in foreign currencies and acquiring as much gold as possible.
The rest of the world, especially in the West, will continue to operate as it has since the 1970s. Many countries will still be forced to hold US dollars to buy oil. American debt, stocks, and real estate will continue to serve as a store of value for most citizens. Fiat currencies, particularly the US dollar, will be the dominant units of account. I expect that this first stage will not last more than 20 years.
During this stage, many countries are likely to default on their debts and experience a currency crash. They will start dealing locally in US dollars as some countries do even today. Rising debt-to-GDP ratio and inflation levels, along with higher taxes and unemployment, will cause massive unrest. Governments will desperately need a solution to an unsolvable problem.
The second stage: the beginning of a new era
The second stage marks the beginning of a new era; This happens when there is no other choice but to switch to a completely different monetary system. At this point in time, non-BRICS countries will quickly adopt bitcoin as a medium of exchange and unit of account. This means that everyone is being paid in bitcoin and using it as a store of value. Real estate would still be owned, but people would buy it as a place to call home, not as a place to park their fortunes. Stocks will still be bought and traded, but Bitcoin will be seen as everyone’s primary savings tool. Sovereigns and individuals (like you, probably) who have accumulated bitcoins for many years will become insanely rich within a very short time.
At this point, globalization will not be as influential as it is today because the BRICS countries will be far from the rest of the world. China and Russia will trade almost exclusively with their allies, which will eventually weaken their economies. These nations will compete in gold production, and the dominant unit of exchange will vary from time to time. The second phase will happen faster than the first, perhaps in less than 10 years.
Third phrase: Hyperbitcoinization
The third and final stage is less complicated. Most of the world will have already moved to the bitcoin standard. For countries that have not already done so, they will see increased wealth and standard of living abroad. By this time, El Salvador will have become one of the richest countries on Earth. Countries still on the gold standard will suffer as a result of their isolation from the rest of the world. Trust in the current system will disappear.
In addition, people will realize that gold, compared to Bitcoin, is an inferior store of value. It is difficult to verify the authenticity of gold. Transporting and securing it is more burdensome. Russia, China and their allies will have no other choice but to adopt bitcoin as a domestic medium of exchange and unit of account. The third phase will happen quickly, too. I expect this to happen in five to 10 years.
This is how I imagine game theory will play out for the next 20 to 30 years. Most, if not all, of my predictions are probably wrong. What I am sure of, however, is that our world is indeed changing rapidly. Our monetary system is broken. This is reflected in the current banking crisis.
Even if most of my predictions are incorrect, we desperately need to get back to a sound financial system. Bitcoin is the only viable solution in my humble opinion. It might be wise to stack a few seats now while you still can. You or your children may benefit a lot from it in the future.
This is another guest post by Milan Stanojević. The opinions expressed are entirely their own and do not necessarily reflect the opinions of BTC Inc or Bitcoin Magazine.