Turkey increasingly turning to less volatile cryptocurrency - analysis
This summer's crisis, along with with the country’s savvy youthful population could help explain why many are searching for alternatives to fiat currency and increasingly turning to cryptocurrency in Turkey, Slate Magazine reported.
Trading volumes on Turkish cryptocurrency exchanges increased by 37 percent since October, which saw record losses for Bitcoin, the article said, pointing to the massive sell-off cryptocurrencies in the country this year.
The article cited a study by a Turkish research firm called Twentify, which found that nearly one-fifth of survey respondents admitted to purchasing and selling Bitcoin after August, when the lira went on a downward spiral.
Though the lira has since recovered much of its value since the summer when an ongoing row between Washington and Ankara sent the lira on a dive against the U.S. dollar, it is still down by more than 30 percent so far this year.
As Inflation also continues to be a major concern, hitting a 15-year high in September, Slate said, analysts are warning that the Turkish economy could be headed in the direction of a recession.
‘’With a plummeting national currency and fluctuating prices, it’s no wonder Turks would consider investments set apart from state-regulated institutions, even given cryptocurrencies’ risk and volatility,’’ it said, recalling that the anonymous co-owner of Bitcoin.org tweeted Aug. 13 that there had been a sizeable increase in the number of visitors to the site from Turkey.
Culturally, Turks are drawn to financial schemes with a high profit margin, Emin Gün Sirer, a Turkish-American professor of computer science who runs the Initiative for Cryptocurrencies and Smart Contracts at Cornell University, told Slate.
Noting that a ‘’trustable decentralized currency that cuts the middleman out is a dream not just for the techno-anarchists among us, but also for countries like Turkey,’’ the article highlighted that despite bitcoin’s popularity in Turkey, state authorities have tried to sway people toward more conventional investments.
Erdogan urged citizens to convert their dollars to shore up the flagging lira and the state’s top religious body, Diyanet, also ruled that it was not “permissible” for Muslims to use and trade cryptocurrencies.
However, trust in financial institutions is at an all-time low, not just in Turkey, according to Vedat Akgiray, a professor of finance at Bogazici University in Istanbul.
For countries like Turkey, the Slate article noted, operating under the hegemony of the dollar-dominated financial system, cryptocurrency is an attractive, but risky dream.