Tales from the crypto world: Turkey’s lira crisis is fueling a Bitcoin Boom

Tales from the crypto world: Turkey's lira crisis is fueling a Bitcoin Boom
AltCoin Offices in Turkey/Courtesy of Facebook

Two wall-mounted TV sets showed the live value of currencies bitcoin and Ethereum, both graphs sloping downwards, in the offices of AltCoin, a cryptocurrency hub tucked away in a sidestreet in Istanbul’s bustling Kadköy neighborhood.


The all-male residents of AltCoin were unconcerned; in the chaotic world of cryptocurrency, their fortunes could change at any time.


“A large number of people come here; some are wealthy, while others are not. But the goal is always to get rich – even if a lot of people believe that if they invest a hundred dollars, they will get a million,” said one of AltCoin’s founders, who goes by the moniker Shark and points out that he has trademarked his moniker.


“Others come here to get their first lessons in crypto’s technical side and then start trading,” he explained.


The altCoin was established to educate Turkish citizens on investing in cryptocurrencies, a digital, decentralized alternative to the traditional financial system.


During a financial crisis that saw the value of the lira halve last year and inflation rise to a two-decade high, cryptocurrency trading has exploded in popularity in Turkey.


While most Turkish citizens who want to protect their lira savings reinvest in dollars or gold, a growing number of younger investors believe cryptocurrencies are the way to go.


This has enraged the government, particularly President Recep Tayyip Erdoan, who has declared “we are in a war against Bitcoin” and recently announced a program to encourage Turkish citizens to convert their savings to lira and deposit the money in banks.


The growing lack of trust in government solutions, according to cryptocurrency supporters, proves that digital currencies are the best alternative to Turkey’s beleaguered lira.

However, it is unclear whether cryptocurrencies offer a genuine opportunity to become wealthy. According to evangelists such as the AltCoin founders, it is the individual’s fault if the influx of uninformed investors falls prey to scams or simply wastes their money.


“People treat cryptocurrency trading as if it were a game of chance,” Shark said. I wonder if this means that people are essentially trying to get rich by gambling. “Yes, yes,” says the speaker. But, then, heBut, thenghed and said, “It’s exactly like betting.”


Shark refused to say how much money he’s made from cryptocurrency investments because he’s worried the government will come in and tax his profits.


Since the hub’s inception five years ago, AltCoin members have trained more than 300 people, according to their estimates, and more attend a weekly event they host to preach the virtues of cryptocurrency.


However, in an uncertain regulatory environment, they are cautious about how they operate, limiting themselves to teaching people how to trade rather than directly assisting or discussing the advantages of any particular currency. “We’re presenting a point of view,” Shark explained.


In Turkey, cryptocurrencies exist in a legal gray area. In April of last year, the government made it illegal to use them to pay for goods and services, though they can still be traded.


Several exchanges where citizens can trade lira or, more commonly, US dollars for cryptocurrency have closed in recent months due to legal uncertainty surrounding the trade. Others, such as the exchange Thodex, have shut down due to high-profile scandals, with the owner fleeing the country with at least $2 billion (£1.5 billion) in funds.


However, the prospect of others becoming wealthy outweighs their sense of risk for some. “The huge volatility, as well as the news that other people profited from previous bull runs,” one crypto investor, who asked to be identified only by his initials, BG, explained.


In 2017, BG, which owns a digital media agency, began investing in cryptocurrencies. “Even my mother is now asking me to assist her in investing in Bitcoin,” he explained. “It started with the young, and now it’s catching on with the older generation.” They give their money to their children or younger people with the instructions, “Invest this for me, and we’ll see how it goes.”


“The risk isn’t in investing; it’s in people investing in unregulated exchanges without government protection and losing their entire investment.”


The true size of the Turkish cryptocurrency market is difficult to estimate because many of the figures are generated by the industry. However, in December, Bitcoin.com, a cryptocurrency news site, reported that Turkey had reached a million daily trades.


According to politicians attempting to regulate the cryptocurrency market, an estimated 5 million people in Turkey have cryptocurrency trading accounts.


“While there is clearly a segment of the market that can invest in cryptocurrency, I don’t believe it is appropriate for the average consumer to hold a significant amount of cryptocurrency,” said Ganesh Viswanath-Natraj, a Warwick Business School expert on the relationship between cryptocurrency and emerging markets.


According to Viswanath-Natraj, consumers are more likely to benefit if they choose so-called stablecoins, whose value is pegged to external factors such as the dollar. While cryptocurrency has appeal in countries like Turkey and Venezuela, where inflation is high, he added that consumers are more likely to benefit if they choose so-called stablecoins, whose value is pegged to external factors such as the dollar. “I wouldn’t advocate a complete reshuffle of savings to speculative cryptocurrencies because the day-to-day fluctuations in Bitcoin are in the order of 10%,” he said.


Following the lira’s sharp depreciation in December, Erdoan announced a new financial scheme to encourage citizens to deposit money in Turkish banks to boost the currency’s value. The scheme has received 90 billion lira (£4.7 billion) in deposits, but only a small portion of this has reportedly come from foreign currency.


“On paper, it appears to be a win-win situation,” BG said. However, he stated that he would not participate because the program necessitates long-term investments. Others, he said, believed it was simply too dangerous to put their faith in the government.


“Those who oppose the government, especially those who support the [political] opposition, have trust issues,” he said. “You don’t convert your money and enroll in a government campaign like this if you have trust issues.” It appears to be a good idea on paper, but it will not solve any economic problems. It’s not going to help in the long run.”


Turkey’s parliament is drafting a law to regulate cryptocurrency markets, which is currently the subject of fierce debate among crypto enthusiasts as the government attempts to encourage lira investments.


Some people are concerned about excessive regulation in an industry where freedom is prized. Others argue that only a limited amount of regulation is required to protect consumers from predatory exchanges.


Professional traders like Bünyamin Emeç scoffed at the government’s efforts to regulate the industry. “They have no idea what they’re doing,” he said, adding that “decisions will be made by people who have no idea how cryptocurrency works.”


Some, like Emeç, see the appeal of engaging with industry without government interference as a reason to invest. “I urge people to join these liberating [trading] platforms – this is essentially my mission.” He described it as “a way of life.”


Emeç claimed that the only way o recoup $10 million in digital currency trading losses and a $1 million Bitcoin scam was to keep investing in cryptocurrency. “I can only get that amount of money back through the same market because it’s a very volatile market,” he explained.


About Robert Oluoch

My focus is economic, politics, entertainment and gaming reviews. My aim is to depict the complication of life through the combination of words and creativity.

Have a tip we should know? tips@rhd.news

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