IAt the offices of AltCoin, a cryptocurrency hub tucked away on a side street in Istanbul’s bustling Kadıköy district, two wall-mounted TVs showed the live value of bitcoin and Ethereum currencies, with both graphs angled downward.
The all-male inhabitants of AltCoin were not worried – in the chaotic world of cryptocurrency, their fortunes could soon change.
“A lot of people come here, some are rich, some are poor. But the goal is always to get rich – although many people think that if they invest a hundred dollars they will get a million,” said an AltCoin founder known only as Shark, who pointedly added that he had registered his nickname.
“Other people come here to take their first lessons on the technical side of crypto and then start trading,” he said.
AltCoin was founded to teach Turkish citizens how to invest in cryptocurrencies, which provide a digital and decentralized alternative to the traditional financial system.
Cryptocurrency trading exploded in popularity in Turkey during a financial crisis that halved the value of the lira last year, while inflation recently topped 30%, a two-decade high.
While most Turkish citizens looking to avoid the devaluation of their pound savings tend to reinvest in dollars or gold, a growing number of young investors see cryptocurrencies as the way forward.
This has drawn ire from the government, particularly President Recep Tayyip Erdoğan, who has declared that “we are at war with bitcoin” and recently unveiled a program to encourage Turkish citizens to convert their savings into pounds and hide money in banks.
For cryptocurrency enthusiasts, the growing lack of trust in government solutions is proof that digital currencies are the best alternative to the beleaguered Turkish lira.
Yet, it is unclear whether cryptocurrencies truly offer an opportunity to get rich. Evangelicals such as the founders of AltCoin say that if the influx of ignorant investors are at risk of falling prey to scams or simply wasting their money, it’s the fault of the individual.
“People play cryptocurrency trading like they’re betting, like they’re betting,” Shark said. I ask if this means that people are basically trying to gamble to get rich. “Yes yes. It’s exactly like betting,” he said with a laugh.
Shark declined to reveal how much money he made from cryptocurrency investments, fearing the government would suddenly step in and tax his winnings.
AltCoin members – by their own estimates – have trained over 300 people since the hub launched five years ago, and more attend a weekly event they host to preach the wonders of crypto.
But they are careful about how they operate in an uncertain regulatory environment, sticking only to teaching people how to trade rather than helping or directly discussing the benefits of a single currency. “We provide a point of view,” Shark said.
Cryptocurrencies exist in a legal gray area in Turkey. The government banned their use to pay for goods and services in April last year, while their trade is still permitted.
Several exchanges, where citizens can exchange liras or generally US dollars for cryptocurrency, have shut down in recent months amid confusion over the legal status of the trade. Others have closed following high-profile scandals, such as the Thodex exchange, which closed after the owner fled the country carrying at least $2bn (£1.5bn) in funds with him.
But for some, the feeling that others are getting rich outweighs their own sense of risk. “The huge volatility is heartening for people, as well as the news that other people have made profits in previous bull runs,” said one crypto investor, who asked to be identified only by his initials, BG.
BG owns a digital media agency and started investing in cryptocurrencies in 2017. “Even my mom asks me to help her invest in Bitcoin now,” he said. “It started with the youngsters, and now the older ones are interested. They give their money to their children or young people and say, “Invest this for me, let’s see how it goes.
“The risk is not in investing itself, it’s because people could invest in unregulated exchanges without any protection from the government and end up losing all their money.”
The actual size of the cryptocurrency market in Turkey is difficult to estimate as many figures are produced by the industry itself. Bitcoin.com, a news site associated with cryptocurrency, said in December that Turkey had surpassed one million transactions per day.
An estimated 5 million people in Turkey currently operate cryptocurrency trading accounts, according to politicians seeking to regulate the trade.
“While there is clearly a segment of the market that can invest in cryptocurrency, I don’t think it’s up to the average consumer to hold some crypto,” said relationship expert Ganesh Viswanath-Natraj. between cryptocurrency and emerging markets. at Warwick Business School.
Viswanath-Natraj highlighted the appeal of cryptocurrency in countries like Turkey or Venezuela where inflation is high, but added that consumers are more likely to benefit if they choose so-called stablecoins. , whose value is linked to external factors such as the dollar. “Bitcoin’s daily fluctuations are in the 10% range, that’s high, so I wouldn’t advocate a complete reshuffling of economies towards speculative cryptocurrencies,” he said.
Following a sharp drop in the value of the lira last December, Erdoğan announced a new financial plan to encourage citizens to deposit their money in Turkish banks in order to increase the value of the currency. The program attracted 90 billion lira (£4.7 billion) in deposits, but a small part of these deposits would come from foreign currencies as expected.
“It’s a win-win on paper,” BG said. He said he declined to participate because the program requires long-term investment. Others, he said, felt it was simply too risky to trust the government.
“Opponents of the government, those who support the [political] opposition, they have trust issues,” he said. “Once you have trust issues, you don’t convert your money and sign up for a government campaign like this. It’s a good idea on paper, but fundamentally it won’t solve any economic problems. In the long run, it won’t help. »
As the government attempts to encourage lira investment, the Turkish parliament is drafting a law to regulate cryptocurrency markets, which is currently the subject of fierce debate among crypto enthusiasts.
Some fear undue regulation in an industry where freedom is prized. Others say limited regulation is needed to protect consumers from predatory trading.
Professional traders such as Bünyamin Emeç rejected government attempts to regulate the industry. “They have no idea what they’re doing, and decisions will be made by people who don’t understand how cryptocurrency works,” he said.
The allure of engaging in an industry without government interference is also seen by some like Emeç as a reason to invest. “I call on people to go for these releases [trading] platforms – that’s my mission, basically. It’s a way of life,” he said.
Emeç said continuing to invest in cryptocurrency was the only way for him to recoup $10 million in digital currency trading losses and a bitcoin scam that cost him more than $1 million. “It’s a very volatile market, so I can only get that amount of money back through the same market,” he said.
Additional reporting: Gökçe Saraçoğlu