Cryptocurrency has seen a pandemic-era explosion in Turkey, complete with ads at the airport and in the metro.
BTC Turk, the country’s largest crypto platform, sponsors national sports teams. On YouTube, Turkish enthusiasts dole out advice, setting up live streams where investors in digital currencies can ask questions in real time.
As Turkey’s economy spirals, millions are turning to risky cryptocurrency investments in hopes of protecting their savings or bringing in a side income.
In the first year of the pandemic, the number of Turkish crypto traders doubled to 5 million, according to statistics released by major trading platforms.
“[Turks] are seeing hope in the crypto market."
“They are seeing hope in the crypto market,” said Enes Özkan, an economist at Istanbul University, working on the behavioral economics of cryptocurrency. He said official Turkish statistics put inflation at a three-year high of 21.31% last month, but the actual number is probably twice that amount.
In the past year, the average salaried worker has seen the value of their wages cut nearly in half compared to the US dollar.
Last month, Turkish President Recep Tayyip Erdoğan insisted that the Central Bank cut interest rates — against the advice of most economists — and sacked his finance minister to ensure that it happened.
Turkey’s national currency, the lira, tanked in one of the currency’s largest monthly sell-offs in history.
This pushed many Turkish workers to find alternate investments to protect their earnings, such as real estate, gold or foreign currency conversions. But cryptocurrency has also emerged as a particularly risky option.
“If you gain money in crypto, you gain big. But the opposite is also true,” Özkan said.
According to Chainalysis, a New York-based crypto consultancy firm, Turkey has the highest transaction volume by far for cryptocurrency in its Middle East category.
Ahmet Usta, an author and cryptocurrency expert, runs a Blockchain 101 class in downtown Istanbul. He said 3,000 people have completed his program.
“In all of my trainings, I advise people to invest in cryptocurrency. However, I say that they must state two basic rules: They should take as much risk as they can manage, and never invest what they will regret losing.”
“In all of my trainings, I advise people to invest in cryptocurrency. However, I say that they must state two basic rules,” Usta said. “They should take as much risk as they can manage, and never invest what they will regret losing.”
One should never become over-excited and break the second rule, he added.
Globally — and locally — cryptocurrency is volatile.
Over the weekend, Bitcoin, the largest cryptocurrency in the world, lost a fifth of its value, shaking investors and liquidating nearly a billion dollars.
Earlier this year, the 27-year-old founder of the Turkish crypto firm Thodex closed the venture and fled to Albania, along with $2 billion in investors’ money. Later, Turkey banned using cryptocurrencies as payments, but has done little to regulate the market otherwise.
“It’s a casino operation. They’re not really investments, they’re speculative assets."
“It’s a casino operation. They’re not really investments, they’re speculative assets,” said Steve Hanke, a professor of applied economics at the Johns Hopkins University in Baltimore. He's also a senior fellow and director of the Troubled Currencies project at the Cato Institute.
Hanke said many countries with high inflation rates are showing a growing interest in cryptocurrency, but he sees it as misguided — to put it politely.
“It’s stupid,” he said over the phone from Baltimore, Maryland, in the United States. “In crypto, there’s no fundamental value — the value is zero. It’s just for speculation. And they’re not used much in transactions. Half of [the] transactions for Bitcoin are associated with illegal activity.”
But at least some cryptocurrency users in Turkey said they’re happy with their investments.
“Everyone’s going into cryptocurrency because of the economic crisis."
“Everyone’s going into cryptocurrency because of the economic crisis,” said one small-scale investor, who asked not to share his name, because criticizing the economy in Turkey can bring legal trouble.
He said he keeps his investments small, and puts away 10% of his cryptocurrency earnings into a savings account every month. This way, he believes he’s protecting himself from losing too much on a bad Bitcoin day.
“I didn’t want to wait until 2050 — say I knew about blockchain and didn’t do anything about it,” he said.
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