By Nermeen Nabil Khear 
Bitcoin and BRICS are considered to be helpful for reducing Russian dependence on the US dollar. Russia began international dealings through Bitcoin. Russia trusts digital currencies to make inter-nation trade easier in ways that can protect it from US sanctions and give greater control over global trade with and over the US dollar.
Russia has been trying to wean itself off the US dollar, especially due to international sanctions from the United States. This makes it challenging for Russia to do business with other countries because most transactions worldwide are still carried out in the US dollar.
Hence, Russia is exploring alternative means of substituting the dollar, one being Bitcoin and other digital currencies to make international payments.
Russia seeks other ways around the US dollar to settle trade balances with foreign parties and shun the American banking system, which leaves its hands open for freezing or blocking transactions. It finds such alternatives in Chinese yuan or even Bitcoin – purely electronic money that is highly secured and, hence easy to exchange.
In the case of Russia, the BRICS grouping seems to be an arrangement where the country protects itself more than it challenges the US dollar in power.
Russia’s economy isn’t strong enough to replace the dollar as the main global currency. Its move is merely symbolic; it shows defiance against the sanctions that have cut it off from global finance.
Due to not being able to access the global bank and markets, Russia must opt for other alternatives such as trading in local currencies of allied countries and even using their gold reserves. The entire shift is not to get rid of the dollar altogether, but Russia is trying to be more self-reliant and less vulnerable to further economic pressure.
What would this mean for Russia?
Switching to Bitcoin, BRICS, or digital currencies would be helpful for Russia’s financial independence, avoiding interference by the US in its trades, and reducing dependency on the US financial system.
But there are also some challenges. Not all countries are ready to use Bitcoin, and not all of them trust digital currencies. The security issues of Bitcoin and the value of Bitcoin are also part of the challenges.
If Bitcoin or BRICS becomes a major medium of payment, Russia must establish a robust support system and educate businesses and its people on how to use digital currencies safely. And there are also speculations that Russia will launch its Bitcoin Reserve soon since that is one reason.
What does it Mean for the US?
Russia’s stepping away from the US dollar will be an issue. The dollar is used for a lot of international trade and as a store of value, making the US pretty powerful in matters of economics around the world, such as imposing sanctions.
The Russian Ruble (RUB) is weaker compared with the US dollar and it’s not commonly used in international trade. This has allowed the US to have substantial control over global trade. If countries like Russia use Bitcoin for transactions instead of the dollar, it would possibly allow the country to boycott sanctions.
Global Impact
With more countries, including Russia, embracing Bitcoin, international transactions could become cheaper and faster as it eliminates the need for banks or middlemen.
On the other hand, the price of Bitcoin is volatile and might cause economic uncertainty in the future if used as a major currency. Also, since many countries are not regulating Bitcoin entirely, it leaves much room for fraud and security concerns.
Although Bitcoin has the potential to reduce reliance on the US dollar, it still has a number of challenges, such as price instability and lack of wide acceptance.
Russia is also trying to use Bitcoin in international trade and make digital currencies more accessible. It is unlikely that the US dollar will be replaced by Bitcoin in the near future because Bitcoin is still unstable and not accepted everywhere.
While Russia aims to reduce its reliance on the dollar, Bitcoin’s volatility and the lack of infrastructure to support it make it a risky alternative. If more countries follow suit, we could see a gradual shift away from the US dollar, but it remains the dominant global currency for now.
This articles is written by : Nermeen Nabil Khear Abdelmalak
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