The established blood donation and transfusion system has contributed a lot to human health and welfare, but for this system to function properly, it requires a sufficient number of healthy donors, which is not always possible. Pakistan was a country hit hardest by COVID-19 which additionally reduced the blood donation rates. In order to address such challenges, the present study focused on the development of RBC substitutes that can be transfused to all blood types. This paper reports the development and characterization of RBC substitutes by combining the strategies of conjugated and encapsulated hemoglobin where magnetite nanoparticles would act as the carrier of hemoglobin, and liposomes would separate internal and external environments. The interactions of hemoglobin variants with bare magnetite nanoparticles were studied through molecular docking studies. Moreover, nanoparticles were synthesized, and hemoglobin was purified from blood. These components were then used to make conjugates, and it was observed that only the hemoglobin HbA1 variant was making protein corona. These conjugates were then encapsulated in liposomes to make negatively charged RBC substitutes with a size range of 1–2 μm. Results suggest that these RBC substitutes work potentially in a similar way as natural RBCs work and can be used in the time of emergency.