Turks are flocking to cryptocurrencies in search of stability

Despite having a masters degree and a steady career, middle life has seemed unattainable in recent years for Orhan, a 39-year-old cyber security expert in Turkey.

Disappointed by its rapidly declining purchasing power, Orhan last year joined millions of Turkish citizens who have flocked to private currency in the wake of rising inflation and lower in turkey lira.

“Lira is as stable as shitcoin,” he said, referring to a period of work among crypto lovers due to the failure of digital currencies. The lira fell by about 45 percent against the dollar in 2021. “While there are many economic crises. [in our country], people are looking for other ways to make money, ”says Orhan, who did not want his second name released.

Orhan earned $ 4,000 in his initial investment of $ 1,500 and raised enough money to buy a new computer for himself.

The growing interest in cryptocurrency – a disgrace last year that saw the sudden closure of Turkey crypto exchanges that left hundreds of thousands of customers unable to access their funds – shocked officials who now want to control the sector.

President Recep Tayyip Erdogan has announced that a cryptocurrency law will be passed soon in parliament. He said his government was waging a “war” against cryptocurrency.

The governor of a central bank in Turkey, speaking to foreign investors last month, said he was “not comfortable” with the amount of money that goes into crypto assets.

These concerns are shared by rulers all over the world, who see cryptocurrencies as unstable and speculative. Many are concerned about banned activities such as money laundering and terrorist-led terrorist attacks.

Increased use of digital resources can reduce the impact of financial decisions and reduce the control of the country’s finances. China has banned both bitcoin and its creation, or mining, possibly due to concerns that it will fail to control the flow of funds in cryptocurrencies.

The popularity of bitcoin has risen in countries with stable inflation and rising inflation. Turkey has the highest crypto volume in the Middle East, with volumes growing by 1,500 percent last year compared to 2020, according to a report on global trends from data analysts Chainalysis.

“Research shows that many in the Middle East are turning to cryptocurrency to save their money against inflation, which we are seeing in other emerging markets such as Africa and Latin America,” the report said, adding that research shows “the most important relationship between them. lira devaluation is [the amount of] lira cryptocurrency exchange “.

Although the Turks have long chosen to protect themselves from the instability of the lira by keeping their money in dollars or euros, data shows that some of them are turning to “stablecoins”, which are tied to strong currencies or other assets and act as a bridge between digital currency. and national currency.

Information from cryptocurrency analyst Elliptic has shown that Turkish lira trading has risen by 360 percent in the last six months of 2021 against the well-traded stablecoin, tether. CryptoCompare, a well-known data company, calculated that approximately TL211bn ($ 15.8bn) in value was sold last year, compared to only TL20bn in 2020.

“Hopefully, we are looking forward to the emergence of crypto growth in Turkey as the uncertainty surrounding the rise in lira prices,” said Alissa Ostrove, chief executive officer at CryptoCompare.

The Central Bank of Turkey last year announced a ban on the use of digital assets to pay. Recently, a bank regulator in the country told lenders to prevent customers from taking lira loans in order to deposit foreign currency or crypto currency. Despite the limited confirmations of the forthcoming bill, experts said they are expected to focus more on improving crypto exchanges.

“Based on what I understand, they are looking at a law that protects cryptocurrency users,” said Elcin Karatay, director of law firm Solak & Partners who conducted a panel discussion with members of parliament on the legislation. “I don’t think he wants to ban cryptocurrency.”

The law would be good for companies if they “support the sector, protect investors, contribute financially, and ensure compliance with global markets”, said Onur Altan Tan, chief of Bitci, Turkey’s cryptocurrency platform.

Some users fear that the government may prevent them from taking their earnings from Turkish banks – although it may be difficult to comply.

So far the prospect of reform has done little to diminish interest in Turkey. Television programs show the prices of bitcoin and ethereum along with the dollar and euro exchanges. Short-term TV commercials on football games reflect the benefits of crypto exchanges.

“When I talk about crypto, everyone – my hairdresser, my taxi driver, my waiter – is asking: ‘What do you put in?'” Said Sima Baktas, co-founder of CryptoWomen Turkey, which promotes women’s involvement in the cryptocurrency world. . Everyone is interested.

About one-third of the 2,000 or more people who participated in the training group whose group is working with housewives, Baktas said. “She says: ‘My husband is earning less and I want to invest in crypto’,” she said.

Officials have tried to persuade people to return to the Turkish lira money with a new scheme that promises to protect investors from losing money. Such a move is unlikely, as long as Erdogan is still poised to retain the lowest inflation rate, which stood at 36 percent in December and is expected to rise in the coming months.

Orhan, a crypto trader, says that, instead of trying to control the digital economy, the government should investigate the causes of its appeal. “They should ask: why are people so interested in cryptocurrency? Why are they doing this?” “When there is peace, people are looking for alternatives.”