When news broke that Turkey’s President Recep Erdoğan had suddenly replaced the head of the nation’s central bank on March 19, Tilbe Yardım, 30, rushed to convert her Turkish lira into crypto.
“Turkish investors and people who understand finance are really angry and saddened about what happened on Friday night,” Yardım told CoinDesk.
The abrupt firing marked the third replacement of a central bank chief by Erdoğan since mid-2019, and signaled currency and institutional instability to investors. Erdoğan, who favors unorthodox monetary policies like slashing interest rates to curb inflation, allegedly fired the central bank head after he raised interest rates. Following Erdogan’s surprise move the lira, Turkey’s local currency, plunged 15% against the U.S. dollar on Monday, although it has recovered slightly since then.
Central bank instability tends to attract people to cryptocurrency. As the lira dropped on Monday, internet searches about cryptocurrencies spiked in Turkey, while searches for precious metal gold (Turkey’s go-to safe-haven asset) remained flat. In Turkey, where the crypto space is not regulated, its young tech-savvy population can buy and trade digital assets freely. Crypto exchanges do not need licenses to operate and there are currently no specific tax laws that apply to crypto.
But the uptick in crypto searches on Monday is the continuation of a much larger story. Turkish interest in crypto has been growing steadily for years, according to Ismail Hakki Polat, lecturer at the Kadir Has University in Istanbul, Turkey, where he teaches a course on cryptocurrency and blockchain.
“From the very beginning of bitcoin, Turkish people have been eager for and interested in cryptocurrencies so it’s not a new thing like in Venezuela or Argentina,” Polat told CoinDesk, referring to countries that have more recently seen a dramatic growth in crypto use as a hedge against inflation.
In fact, local media reported that in the beginning of 2021, moving in tandem with the bitcoin price run, the two largest crypto exchanges in the country, Paribu and BtcTurk, were trading over $1 billion worth of crypto daily. By 3:12 p.m. local time on Wednesday, 11 popular crypto exchanges in the country recorded a combined 24-hour trading volume of more than $6 billion.
Global pandemics and bitcoin bull runs
Yardım discovered cryptocurrencies after her family business was put on hold when the COVID-19 pandemic hit last year.
Her family’s factory – which produced and supplied baby clothing to their stores around the world – was shuttered for three months, and Yardım began looking for alternative ways to generate income. She felt that leaving her savings in the bank was “one of the worst things” to do because the Turkish lira had been depreciating against the dollar for some time now.
“I decided to invest my money at least against inflation,” Yardım said.
Yardım has since invested her savings in bitcoin, ethereum and other cryptocurrencies. Although Yardım now uses Binance, she first invested in crypto via BtcTurk. In Turkey, interested investors can buy crypto on traditional crypto exchanges or by simply walking into a physical store at Istanbul’s Grand Bazaar.
A 2020 crypto research report published by Turkey’s Information Technologies and Communications Authority (ICTA) estimated there were around 2.4 million crypto users in the country, about 3% of its total population. Polat feels this number might be much higher, especially after the 2020 bitcoin price run.
For instance, the average daily registrations of Turkish users on the British cryptocurrency exchange CEX.IO since March 14 is 783% higher than the first half of March and February, according to Konstantin Anissimov, its executive director.
Read more: Why Money Scarcity Means Someone Goes Hungry
Due to the availability of traditional exchanges in the country, peer-to-peer crypto trading platforms like LocalBitcoins are not as popular. But even LocalBitcoins is seeing considerable growth in Turkey this year. Between 2019 and 2020, new user registrations on the platform only went up by 10%, while in February 2021, new registrations and website traffic were three times higher than the average month in 2020, according to data shared with CoinDesk.
One reason for the seemingly undeterred growth of Turkey’s crypto market is the absence of regulation. The government is, at least for now, staying out of the crypto space.
“I think the regulations will eventually come, but not right now,” Polat said, adding that crypto is not the central bank’s top priority for the moment because the institution is dealing with an economic and currency crisis.
On the one hand, regulations will be beneficial for the long-term acceptance of digital assets, and they will help dispel the common perspective that crypto is only used on the “dark web” for illegal transactions, Yardım explained.
“On the other hand, government interaction would mean high taxes in Turkey. This is many crypto investors’ concern at the moment,” Yardım said.
Future and freedom
In 2018, Polat co-created an introductory course on cryptocurrency at Kadir Has University in Istanbul. Although he limited attendance to 30 students at the start, Polat says requests to join the class started increasing after large institutions including MicroStrategy and Tesla invested in bitcoin during the price run. Responding to the interest, he decided to open the class to students from other departments in the university and integrated a program that gave 30 more students from any profession the opportunity to take the course.
Around 200 people have completed the course since its launch, Polat said.
“Especially youngsters are very eager to experience and learn about cryptocurrencies … I mean, youngsters generally don’t prefer gold or don’t understand gold, but then they discovered ‘digital gold,’” Polat said.
Read more: MMT, Crypto and the New Nature of Money
Of course, some young Turks may just be looking at crypto as an escape from the country’s economic crisis.
“Let’s say if crypto was not profitable, would anyone invest? Would Americans invest? Would [Turks] invest? Of course not,” Yardım said.
Turkish youths are open-minded and are fond of new technologies and trends, Yardım explained, adding that her 17-year-old cousin is not only investing in crypto but also mining.
“Crypto means basically two things to the young people in Turkey: future and freedom,” Yardım said.