Is BRICS a Cryptocurrency? What to Know About the Alliance

The question of whether BRICS is a cryptocurrency frequently arises due to the evolving landscape of global finance and digital assets. This article clarifies the distinct nature of both BRICS and cryptocurrencies, addressing common misconceptions. It will define each concept and explore their fundamental differences, providing a clear understanding of why BRICS is not a cryptocurrency. The discussion will also delve into the ongoing conversations within the BRICS bloc regarding digital currencies and alternative payment systems, distinguishing these initiatives from decentralized cryptocurrencies.

Understanding BRICS

BRICS is an acronym representing an intergovernmental organization comprising major emerging economies. The term initially referred to Brazil, Russia, India, and China, with South Africa joining in 2010, formally changing the acronym to BRICS. The group has further expanded, with Egypt, Ethiopia, Iran, and the United Arab Emirates becoming member states in 2024. This expansion aims to increase the bloc’s global influence.

The primary objectives of BRICS include fostering economic, political, and social cooperation among its member states. It serves as a political and diplomatic coordination forum, seeking to strengthen economic ties, promote sustainable development, and increase the influence of countries from the Global South in international governance. The organization aims to reform global financial and political systems, such as the UN, IMF, and World Bank, to better reflect the interests of emerging economies. BRICS is an informal grouping without a founding treaty or secretariat, with activities revolving around politics, security, economy, finance, and people-to-people exchanges.

Understanding Cryptocurrency

Cryptocurrency is a digital form of money that uses cryptography to secure its transactions and control the creation of new units. Unlike traditional currencies issued by central authorities like governments or central banks, most cryptocurrencies operate on a decentralized system. This means they do not have a central issuing or regulating body, with transactions recorded and verified by a network of participants rather than an intermediary such as a bank.

The underlying technology for most cryptocurrencies is a distributed public ledger known as a blockchain. This secure, chronological record of all transactions is maintained and updated by currency holders across the network. This decentralized nature and cryptographic security are foundational to cryptocurrencies like Bitcoin, introduced in 2009, and Ethereum, developed in 2015.

Is BRICS a Cryptocurrency?

BRICS is not a cryptocurrency. BRICS is an intergovernmental organization, a political and economic bloc of sovereign nations that collaborate on various global issues. It is a collective of countries, not a digital asset or a medium of exchange.

In contrast, a cryptocurrency is a form of digital currency that operates independently of a central authority, relying on cryptographic security and blockchain technology for transactions. Cryptocurrencies are digital payment systems, whereas BRICS is a forum for international cooperation. The fundamental difference lies in their very essence: one is a geopolitical alliance, and the other is a technological innovation in financial transactions.

BRICS and Discussions on Digital Currencies

While BRICS itself is not a cryptocurrency, the bloc has engaged in extensive discussions regarding alternative payment systems and digital currencies. These conversations often stem from a desire to reduce reliance on the U.S. dollar in international trade and enhance financial autonomy. Member states are exploring ways to facilitate cross-border transactions and potentially mitigate the impact of external financial sanctions.

One area of discussion involves the potential for a common BRICS currency or payment mechanism. This could take the form of a state-backed or inter-governmental initiative, fundamentally different from a decentralized cryptocurrency. For instance, proposals have included a BRICS Bridge multisided payment platform that would connect member states’ financial systems using central bank digital currencies (CBDCs) for settlements. Such a system would offer an alternative to existing international platforms like SWIFT, which is heavily reliant on the U.S. dollar. While a common BRICS currency remains an ambitious long-term goal facing challenges due to the diverse economies and monetary policies of member states, the focus is currently on practical measures like increasing trade in local currencies and developing joint infrastructure projects. These efforts highlight the bloc’s pursuit of financial sovereignty and a multipolar global financial system, distinct from the decentralized, privately issued nature of cryptocurrencies.