Turkish Inflation Hedging
Digital currency ownership is growing among peoples in countries where national currency is weakening, inflation rising, and skepticism on financial future is increasing. Who would expect Turkey to be leading the European nations in percentage of population who currently own Bitcoin? ING Bank has recently conducted an interesting survey that put Turkey on top of a list that includes multiple European countries as well as the United States in Bitcoin ownership from a population perspective. As of right now 18% of the Turkish people own Bitcoin and ING has predicted this number to potentially increase an additional 35%-48% in the future. It says a lot for a country with 12.5% inflation and a position in the global top 20 nominal gdp to be a leader in Bitcoin ownership.
Turkey is unique. The IMF is literally telling them to slow their economy down and chill out, and their President and some of his cabinet are smiling and turning the other way with the full intention on trying to continue momentum from last year. In reality, Turkey has too much debt/foreign financing and is more vulnerable to global economic shifts because of this. Yet the current leadership remains confident in their approach.
So, are the people in Turkey hedging or do they simply have more money to invest? The national inflation reached such a high level that there had to be an emergency hike in the interest rates last month. I am not sure if many people expected President Erdogan to actually lose the recent election and am curious as to what he means when he said he is going to take measures to lower inflation in very different ways after the election. Is he hinting at the possibility of bringing the plans for the Turkcoin back? This is the idea of a national digital currency that was supposed to be backed by the Turkey Wealth Fund. The TVF is a fund operated by the Turkish government that has control over a few high profile companies such as. Below are a few examples of contributors.
· Ziraat Bankasi — a 150 year old state owned bank
· Turksat — the only communications satellite operator in Turkey
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· Bota — the state owned crude oil and natural gas pipeline
This couldn’t be possible since the Turkish government has declared Bitcoin to be an illegitimate form of payment. I mean, what kind of government or organization would say the original digital currency is illegitimate only to be preparing some form of their own digital payment structure internally. That’s crazy.
Regardless of critics, President Erdogan is charging ahead full steam, their central bank is starting to feel the pressure more and the population has the largest Bitcoin ownership in Europe with projections of it doubling. It is interesting to see how central banks are reacting to Bitcoin and the systematic financial opportunity it introduces. On one hand some are impressed with the technology and the magnitude of positive response from the public to a new and different financial system. On the other the Bitcoin tech and network systematically threaten the very institutional order that central banks have in place. Turkey seems to be pushing their way forward at greater speeds than most countries in terms of choosing a direction to take concerning Bitcoin and this could have to do with the fact that their population has in fact adopted the crypto currency at almost twice the rate of any other European nation. Maybe, maybe not. Imagine if Bitcoin adoption in your country was double and what kind of impact that would have on governmental organizations and powers. Crazy and awesome.
The people in Turkey seem to be covering their backs any way you look at it. Either their government is going to adopt BTC and the underlying technologies, or it won’t. But the general public has made its decision obvious in that vote. With the lira continuing to decline, purchasing Bitcoin has shown to be an excellent way to hedge against the failing currency. Vendors in markets that are legitimately centuries old are now accepting Bitcoin for payment. Granted, it is a foreign currency exchange that happens to reside in the market so its not exactly like you can buy a soda with BTC there but amazing none the less.
However one wants to look at the situation in Turkey, it is obvious that the people are supportive of digital currencies. Bitcoin seems to be something the population is more than comfortable with. Turkey is not the only country with inflation problems that is looking for innovative strategies to handle those issues and Bitcoin is again at the heart of strategic discussion concerning future currency and inflation. Last year Turkey might have said that Bitcoin is un-Islamic, but it is obvious the people there do not agree.
The influence is undeniable.
