Yesterday, the well-known investor Robert Kiyosaki published his decidedly negative forecast regarding the US dollar based on the hypothesis of a so-called BRICS crypto.
Kiyosaki often publishes forecasts, and they are generally always pessimistic about the future of the economy and finance, especially US ones, while instead 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 acronym BRICS.
On X he wrote that the BRICS nations (Brazil, Russia, India, China and South Africa) will produce BRICS cryptocurrencies, perhaps backed by gold.
If this happens, the bestselling author Rich Dad Poor Dad predicts they will accumulate trillions in fiat money.
This could cause many dollars to return to the US, causing hyperinflation, and thus destroying the US dollar.
In light of this, he 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 gold-backed cryptocurrencies, called stablecoins, and none of these have accumulated large capital so far.
Taking the other stablecoins backed by the US dollar as a reference, USDT capitalizes more than 110 billion dollars and USDC more than 33, while the stablecoins backed by gold capitalize enormously less: the two main ones are XAUT (Tether Gold) which capitalizes 578 million of dollars (0.578 billion) and PAXG (PAX Gold) which does not reach 430 million.
All the others are practically irrelevant.
In total, all gold-backed cryptocurrencies are worth around a billion dollars, which is not only a thousand times less than Bitcoin, but above all almost 16,000 times less than gold itself.
So to date, gold-backed cryptocurrencies are enjoying very little success, probably because people prefer to buy gold ETFs rather than gold-backed cryptocurrencies. It is difficult to imagine that such a dynamic could change in the future.
BRICS cryptocurrencies: Robert Kiyosaki’s negative forecast on the dollar
Furthermore, to date the project to create BRICS cryptocurrencies backed by gold does not even seem to have started.
Indeed, although the BRICS have spoken about the possibility of issuing their own currency to compete with the dollar, to date it is rather difficult to imagine that they could reach an agreement.
In fact, China and India do not have idyllic relations at all, and indeed in the past they have often been in conflict for territorial reasons: the two nations border, near the Himalayas, and in particular in Kashmir, which is the subject of territorial disputes also by the Pakistan.
Therefore, if on the one hand it appears difficult for the so-called BRICS to be able to find an agreement to issue a single currency, on the other hand they could individually issue their own gold-based stablecoins.
However, it is not at all convenient for a State to purchase gold to issue money based on it, because it is instead convenient for States to issue fiat currency by creating it from 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, over the past 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, lost as much as 30%.
It is really difficult to imagine that similar states could change course and issue new currencies truly backed by gold.
Gold and fiat currencies
The advisability of repegging national currencies to gold has been discussed for a long time.
For example, the US dollar was detached from gold at the beginning of the 1970s, but since then the Dollar Index, which measures the value of the US dollar compared to a basket of other important national currencies, has remained relatively stable.
However, the 1924 $1 had lost 66% of its purchasing power over the next 50 years, until 1974.
Instead, in the last 50 years it has lost 83% of its purchasing power, after having detached itself from gold.
Therefore convertibility into gold does not eliminate inflation, but simply reduces it.
Furthermore, there is no country in the world that has a currency that is truly 100% backed by gold, also because there doesn’t seem to be enough gold in the world to support all fiat currencies.
Cryptocurrencies and gold
The very limited success achieved by cryptocurrencies collateralized in gold does nothing but underline how little this precious asset is now important in the monetary field today.
The most successful cryptocurrencies are those that have no collateral, such as fiat currencies.
In fact, when cryptocurrencies collateralized in gold were put on the markets, investors did not buy them en masse. Cryptocurrencies collateralized in fiat currencies, and in particular in US dollars, are much more popular.
The time of gold as a currency probably ended definitively decades ago, and today it does not seem at all that it has the possibility of becoming one again, although in theory there are suitable technologies that could help it regain that role.
On the one hand, fiat currencies have triumphed on the markets, even if none of these have eternal life, and on the other, there is now Bitcoin which acts as an excellent substitute.
Therefore Kiyosaki’s prediction seems decidedly forced, given that it is based only on a vague idea before any concrete foundation: no BRICS country is working on any cryptocurrency, neither gold-backed nor non-collateralized.
At most they are working on CBDCs, i.e. non-collateralized and non-convertible natively digital fiat currencies.
