People who find themselves in countries where the fiat currency is going down the drain on a daily basis have always sought solace in other viable means of exchange. In the past, those who faced similar situations opted for gold or similar commodities but today, the lure of cryptocurrency is becoming stronger in the global market.
A closer look at the Turkish economy reveals that it is experiencing a rapid decline. In the last year alone, the Turkish Lira went down 45% against the United States Dollars and from what is obvious, the trend is likely to continue. This is possibly a sign that Turkish investors may abandon the Lira in favor of any viable substitute. On their own part, the Turkish people have responded to this critical situation by pilling into crypto as an alternative. Read on to acquaint yourself with a few reasons why people in Turkey are rapidly turning to cryptocurrency.
1. Necessity
The mainstream media keep reporting how well the global market is doing and they deliver attractive predictions for the future of the global economy. These may turn out to be true for some nations but a good number of countries are not experiencing this. Since a country’s legal tender which is known as its ‘fiat currency’ is only backed by confidence, it becomes completely worthless when the economy (and therefore the currency) crashes. A weak economy is not likely to attract any foreign investors. It only puts excess pressure on the nation’s fiat currency by creating a snowballing effect. In the case of Turkey, it became imperative for investors who saw this impending jeopardy on time to quickly divert to Bitcoin as an alternative. The trend is true even with other countries because as more countries find their economies in danger, more investors will switch to cryptocurrency.
2. Government policy
One of the reasons why a good number of Turkish investors have taken solace in cryptocurrency is their government’s clear stance on the use of Bitcoin. In Turkey, the government declared it legal to buy, hassle-free, through their local banks and their citizens are greatly taking advantage of this policy. So while the Turkish government is busy negotiating with the Americans, the majority of their population is heading towards Bitcoin.
3. Increasing number in Bitcoin users
The headlong plunge in the value of the Lira increased the number of Bitcoin users. This is evident in the enhancement in the volume of trade as Bitcoin gains momentum and confidence with the Turkish population. When placed side by side with the trade volume of more affluent countries, Turkey’s crypto volume might appear low but nevertheless, it is a move in the right direction. The Turkish Lira made 0.07% of all BTC trades in response to the increase in tariff. This figure is calculated as more than double of what it used to be.
The indisputable increase in the local usage of Bitcoin has made it a more viable means of exchange among the locals. People who were ignorant of it before have suddenly become aware of its existence. Those who look at cryptocurrency with a lot of doubt and misgivings have developed more confidence in it. This has given Bitcoin a greater boost – which explains the noticeable increase in their trade volume. Users of the virtual currency in Turkey hit 18% mark nationwide and when this figure is compared to 8% of America, the statistic becomes really startling. Currently, more than 50% of Turkey population has overwhelmingly agreed that cryptocurrency is definitely a viable avenue for online transactions. This is especially true amidst the economic chaos caused by the imposed tariffs on aluminum and steel by the United States.
4. Accessibility of the cryptocurrency
Over the past year, access to cryptocurrency has significantly increased. For instance, in November 2018, local Turkish Bitcoin sites recorded over 140 Bitcoin exchanges which came to about $3 million. It is becoming increasingly easier for citizens in Turkey to access some cryptocurrencies like Bitcoin. This has been helped greatly due to the existence of Turkish platforms like BTCTurk and paribu.com where they can trade the Lira for Bitcoin.
5. The increasing price of cryptocurrency
In recent times, the price of Bitcoin has become stratospheric as it continues rising and as a result. It has become a source of encouragement to local Turkish investors to accept it as a means of exchange. Shopping with Bitcoin is theoretically possible in Turkey, from furniture to real estate. The increased number of merchants accepting the virtual currency is an added advantage. Presently, the numbers of companies who are officially accepting Bitcoin in Turkey are between 40 to 50.
6. The unfairness of being under the influence of central banks abroad
The Turks are fundamentally beholden to maneuvers by central banks in Brussels, Washington, and London which is grossly unfair. The erratic behavior and rhetoric of the Turkish Government are not helping matters. All these uncertainties have contributed to pushing the local investors towards virtual alternatives like Bitcoin. According to Sirer, cryptocurrencies essentially “tie the hands of the of the government on how money should be controlled and issued”. Therefore in nations like Turkey who are operating under the authority of the dollar-dominated monetary system, crypto remains an attractive means of exchange.
7. Instability of the Turkish Lira
The value of the Turkish Lira has been unstable against the dollar. In August 2018, it took a nose dive – though it has recovered 26% since then. The level of inflation has remained high in the country. Again the rate of economic growth in Turkey has dwindled to 1.6% year-on-year in the third quarter of 2018 – down from 7% in 2017. The uncertainties posed by these instabilities have led many local investors to look for ways to preserve the value of their investment and as well as savings and the cryptocurrency seems to be the best option.
