As its value soars again, interest in Bitcoin in Turkey has grown with it. Where it stands from a legal point is somewhat up for debate as it is not backed by anything physical or another traditional fiat currency, which makes it difficult to even call it a currency at all. However, with a recession looming, Turkey may well be looking to set stage by becoming the hub of crypto currency and blockchain in Eurasia.
With inflation rates as high as 30% (2019), interest rates near historic lows and the Turkish lira both devalued and volatile, Turks are looking to other solutions that will let them be profitable.
In any case, it’s easy for Turkish citizens to get access to bitcoin, with Turkish platforms such as Koineks making it fairly simple to convert Turkish Lira into Bitcoin or other altcoins. Furthermore, a number of physical shops in Turkey are now accepting Bitcoin, around 70 at the time of writing. Turkey is now a place where you can buy furniture, food and even real estate with cryptocurrency.
Whilst you may wonder who in Turkey even has Bitcoin to spend in the first place, here are some facts. A 2019 poll by ING Bank (a Dutch bank and financial services company) found that 18% of people in Turkey own some form of cryptocurrency – compared with just 8% in the United States. Leading the way, ahead of the 14 other countries in Europe that formed part of the survey. Furthermore, the survey uncovered an overall positive attitude towards cryptocurrencies, with 62% agreeing that they were positive about the use of crypto in the long term. For reference, just 20% of Germans surveyed felt the same way. Perhaps even more interestingly, 46% of Turks said they would prefer that cash wasn’t used at all. The survey also asked Turks if they felt that traditional banks in the country should offer bank accounts based on digital currencies such as bitcoin – 63% said they agreed that they should. One challenge they highlighted was that Bitcoin transactions can sometimes be slow, however bitcoin transaction accelerator services like BTC Nitro now exist to minimise the wait.
Right now in 2020, the legal position however is somewhat unclear. There is a huge variance between countries when it comes to regulation of cryptocurrencies including Bitcoin – many have declared that they do not count as legal payment instruments, however, using them for payment itself remains legal. This situation could persist for some time too… The United States which largely drove the proliferation or Bitcoin, still doesn’t regulate it, so it’s difficult to say with any confidence when other parts of the world might either. Part of the challenge is that digital currencies have become a way to evade tax, as well as use it for more nefarious purposes. because of these inherent risks, many countries are not comfortable with sanctioning them and Turkey is no exception.
As it stands today, Turkey is no closer officially recognising Bitcoin, let alone regulating it. However, the government has talked about plans for Turkey to have its own altcoin called “Turkcoin“. There has also been some conversation around regulation in order to prevent people using bitcoin for criminal activities, but much else is publicly known about that initiative. In late 2019, President Erdogan announced that the government would continue and likely conclude testing of a national cryptocurrency. The main driver here being to attract investment and to help the country become a centre of global crypto-finance.
Some of the countries larger banking corporations have already invested in blockchain based digital transfer systems, such as Takasbank and its BiGA Digital Gold. This system is designed to simplify the issuance of digital gold, allowing any participating banks to transfer some digital assets that map back to an amount of physical gold. Unlike Bitcoin however, this system is backed by a physical store of value – gold.
At a more micro level, the city of Konya (in Anatolia) is currently in the development stage of an altcoin called “City Coin”. According to their mayor, the plan here is to allow government services to use decentralised ledgers (stores of records not held by any one person or entity) such as blockchain. This could then be extended further to allow the Turkish city to utilise cryptocurrency for other services such as public transport.
So while the temptation to join the gold rush may be enticing, anyone looking to invest should heed some caution. It wouldn’t be beyond the realm of possibility for Turkey to create its own regulated digital currency, but this could well come at the same time as prohibition of other cryptocurrencies, banning its citizens from using altcoins that the government has no control over. And let’s be honest, any nation would rather find a way to generate tax revenue than outlawing crypto entirely. Regardless of the name of the currency, it would seem that Turkey is braced for the launch of a crypto ecosystem, whilst aligning itself as the regional leader in blockchain application and adoption of cryptocurrency – whether it’s ultimately Bitcoin or something else entirely, remains to be seen.