Tokenization is changing everything. This is something that is only going to accelerate over the next few years.
Why is this? Simply, because it is a better system.
It is something that many large players around the world are realizing. Not only do we see Wall Street entering the fray but also countries.
The BRICS are getting a lot of publicity for their stance regarding the US Dollar (and the West in general). While there are a number of issues with this bloc, one thing they have adopted is idea of tokenization.
When establishing a new system, or at least alternate, it is best to have better technology. Tokenization provides that.
For this reason, we are seeing the BRICs turn to cryptocurrency.
One of the benefits of cryptocurrency that are on public blockchains is the inability for any entity to control them. This is no necessarily true for certain token such as USDC or Tether, which have companies behind them. However, if we look at coins such as Bitcoin, Ethereum, or Litecoin, this holds true.
This can expand into many other areas, making digital assets a centerpiece of the financial system.
It is exactly what the BRICs are seeking to accomplish.
The BRICS bloc is taking major steps towards integrating digital assets to promote investments and economic development within its member states and across other emerging economies.
The goal is to move away from the SWIFT system for the settlement of payments.
During the BRICS business Forum on October 18, Russian President Vladimir Putin announced that the alliance had agreed to incorporate digital assets into their investment payment systems. This decision marks a major shift in how BRICS nations plan to handle cross-border transactions and investments.
Of course, this is not a new idea. In fact, it is not really that newsworthy. It is something that was discussed for more than a decade by people involved in cryptocurrency. This, however, expanded to Wall Street. The western banking system is already inserting itself into the tokenized world.
JP Morgan came out with a token a couple years ago which is uses to settle on its network. We are now seeing Blackrock looking to leverage crypto exchanges to use its BUIDL token as collateral for all derivatives.
In fact, we are seeing this essentially being proposed by the BRICS:
Member countries will now be able to settle investment payments using cryptocurrencies such as Bitcoin and stablecoins. There are also ongoing discussions about launching a stablecoin backed by China’s Yuan. This move would further facilitate secure and efficient transactions within the bloc.
The discussion of a stablecoin back by the Yuan is no different than most of the stablecoin market now. Both USDT and USDC, the two largest stablecoins, are backed by US Treasuries. This is also true for Blackrock's BUIDL token.
Ultimately, we end up with a split system where the US dollar and Yuan are backing most of the payment mechanisms, i.e. stablecoins.
This is leading many to proclaim that the US dollar is going to die. Of course, over time, the "dollar killer" is changing.
Remember when it was Bitcoin. Maxis were trying to convince everyone that the future was one where everything was priced in Satoshis. Notice how that died down as the medium of exchange fallacy for Bitcoin was exposed.
The reason why the death of the US dollar is not going to happen anytime soon is because there is a lot more to a currency than simply payments. This is the mistake everyone makes. Also, what operates as currency changed a great deal.
We have to be careful of history repeating itself.
For those old enough to remember, the EU was billed at the next superpower, one that could rival the United States. People looked at the cumulative GDP of member countries and contrast it with the US to proclaim this was on par. It was not.
What happened?
The EU has only moved further behind the US. Nobody will proclaim it a superpower. In fact, it is diminishing in scale. The only reason why it has any relevance is due to US support.
Here is where we see the mistake being made:
The next BRICS meeting, scheduled to take place in Kazan, will address potential further expansion and other strategic initiatives. With the bloc expected to drive a significant portion of global economic growth in the coming years, BRICS is positioning itself as a major force in reshaping the global financial landscape.
The BRICS are not going to change the financial landscape. Did we see the EU change it at all? The answer is no.
Why can I be so certain of this? It is simple: governments do not control the global financial landscape. I know they like to think they do. Politicians and bureaucrats get together for meetings, make speeches, and proclaim what is going to happen.
It never does.
Instead, it is best to look at who is truly running the show. This is the banks (and other financial institutions). They are the ones behind it all. Again, we look at the entire GDP of the EU and compare that to the Repo market. The entire annual GDP is matched through this market in a week.
We hear a lot of talk about this stuff, headline grabbing stuff. However, the financial system is more complex than people seem to believe.
