5 months ago
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Yesterday, the well-known investor Robert Kiyosaki published a decidedly negative prediction regarding the US dollar based on the assumption of a cryptocurrency from the so-called BRICS.
Kiyosaki often publishes forecasts, and they are generally always pessimistic about the future of the economy and finance, especially in the United States, while he is decidedly bullish on Bitcoin.
Kiyosaki’s prediction: the end of the US dollar in case of BRICS crypto
Yesterday Kiyosaki was in South Africa, the country that corresponds to the S in the BRICS acronym.
On X wrote that the nations BRICS (Brazil, Russia, India, China, and South Africa) will produce BRICS cryptocurrencies, possibly backed by gold.
If this happens, the author of the bestseller Rich Dad Poor Dad predicts that they will accumulate trillions of fiat money.
This could bring back many dollars to the USA causing hyperinflation, and ultimately leading to the destruction of the American dollar.
In light of this, it explicitly recommends buying gold, silver, and Bitcoin immediately to protect yourself from the collapse of the US dollar.
Gold-based cryptocurrencies
There are already several cryptocurrencies backed by gold, called stablecoins, and none of them has accumulated large capital so far.
Referring to other stablecoins backed by the US dollar, USDT has a market capitalization of over 110 billion dollars and USDC over 33 billion, while stablecoins backed by gold have significantly less capitalization: the two main ones are XAUT (Tether Gold) with a market capitalization of 578 million dollars (0.578 billion) and PAXG (PAX Gold) which does not reach 430 million.
All the others are practically irrelevant.
Overall, all cryptocurrencies backed by gold are worth about one billion dollars, which is not only a thousand times less than Bitcoin, but above all almost 16,000 times less than gold itself.
So far, gold-backed cryptocurrencies are experiencing very minimal success, probably because people prefer to buy gold ETFs rather than gold-backed cryptos. It’s hard to imagine that such a dynamic could change in the future.
The BRICS cryptos: Robert Kiyosaki’s negative forecast on the dollar
Furthermore, to date, it doesn’t even seem like the project to create BRICS cryptocurrencies backed by gold has started.
Indeed, although the BRICS have talked about the possibility of issuing their own currency to compete with the dollar, it is currently rather difficult to imagine that they can come to an agreement.
China and India actually do not have idyllic relationships at all, and in the past they have often been in conflict for territorial reasons: the two nations border each other near the Himalayas, and in particular in Kashmir, which is also the subject of territorial disputes with Pakistan.
So while it may be difficult for the so-called BRICS to reach an agreement to issue a single currency, on the other hand they could individually issue their own stablecoins based on gold.
However, it is not convenient for a State to buy gold to issue money based on it, because States instead benefit from issuing fiat currency by creating it out of nothing.
All BRICS countries, as well as almost all other countries in the world, issue their own fiat currency, which in some cases has also lost a lot of value against the dollar. For example, in the last five years, the Chinese yuan has lost almost 5% against the US dollar, while the Indian rupee has lost 15%. The Russian ruble, on the other hand, has lost a staggering 30%.
It is really hard to imagine that similar states can change course and issue new currencies actually backed by gold.
Gold and fiat currencies
For a long time there has been discussion about the opportunity to link national currencies to gold.
The US dollar, for example, was detached from gold in the early 1970s, but in truth since then the Dollar Index, which measures the value of the American dollar against a basket of other important national currencies, has remained relatively stable.
However, in 1924 1$ had lost 66% of its purchasing power in the following 50 years, until 1974.
Instead, in the last 50 years it has lost 83% of its purchasing power, after being detached from gold.
So the convertibility into gold does not zero out inflation, but only limits it.
Furthermore, there is now no State in the world that has a currency truly backed 100% by gold, also because there does not seem to be enough gold in the world to support all fiat currencies.
Cryptocurrencies and gold
The very limited success achieved by gold-backed cryptocurrencies only underlines how little importance this precious asset has in today’s monetary field.
The most successful cryptocurrencies are those that do not have collateral, like fiat currencies.
In fact, when gold-backed cryptocurrencies were introduced to the market, investors did not buy them in large quantities. Cryptocurrencies backed by fiat currencies, especially the US dollar, are much more popular.
The era of gold as currency is probably definitively over decades ago, and today it doesn’t seem at all that it has the possibility of returning to that role, despite there being theoretically suitable technologies that could help it regain that role.
On one hand, fiat currencies have triumphed in the markets, even though none of them have eternal life, and on the other hand, there is now Bitcoin which serves as an excellent substitute.
Therefore, Kiyosaki’s prediction seems decidedly forced, since it is based solely on a vague idea before any concrete foundation: no BRICS country is working on any cryptocurrency, neither backed by gold nor uncollateralized.
At most, they are working on CBDC, namely fiat currencies that are natively digital, uncollateralized, and non-convertible.
English (US) ·