Turkey bans use of cryptocurrencies for payments
reuters.com
reuters.com
Erdoğan has done nothing good to solve the crisis and is just firing the central bank administrator one after the other.
The central bank has brought so much lira with its foreign currency reserve to try to maintain the price that it is almost running dry of any foreign currency, making the future look even bleaker.
Because of this, the population has been rushing in putting their money in other currency/assets (like euro, gold, dollar, ...), which is making the situation worse, so the government has been actively trying to force people to keep their money in lira and even buy more lira if they can.
So whatever they say about it, it is just another move in this direction. They want to prevent people from buying cryptocurrency and further risking depreciating the lira.
7tps on the base layer, you're ignoring layer 2s and all other places where you can exchange crypto without it being recorded on the blockchain, as a matter of fact, unless you're buying directly from a miner, the single transaction that you use to put it in your wallet actually corresponds to many other transactions elsewhere.
> (supposedly of criminal origin)
Big bold claims also require some proof. It's a decentralized protocol that can't be controlled by anyone.
Do you really trust that your gov and the politicians/bankers have your best interest at heart?
I don't have much trust in my government either (Ukraine), but at least I know who they are.
Also there are many other ways to store a value.
So if you don't trust them, why would you let them control your money, knowing them doesn't change much.
Sure there are other ways and people are free to choose whichever one they prefer.
On a scale of 0-1, representing my estimate of P(no catastrophic economic/valuation failure in any given year), my trust is: {Government (German): 0.99, Government (UK): 0.85, Politicians (UK): 0.67, Bankers (collectively and internationally): 0.95, BTC: 0.15, Cryptocurrencies in general: 0.05}.
> you're ignoring layer 2s and all other places where you can exchange crypto without it being recorded on the blockchain,
Thus negating all the so-called benefits of the Blockchain, but without the benefits of a double-entry bookkeeping database audited by professionals and with public liability insurance.
Personally I wish Bitcoin Cash didn't even need to exist, if BTC had scaled as it was originally planned by Satoshi Nakamoto (increasing the maximum block size before it got full). It was sad watching the adoption rate halt and then regress. Remember when BTC was becoming accepted by Steam, Microsoft, Dell, NewEgg and others back in 2015-2016? There is no doubt in my mind that if BTC had scaled properly almost every online shop and a lot of real-world shops would be accepting BTC by now (and incidentally BTC price would be even higher than it is today).
About "Bitcoin cash also has no place if we take into account other cryptos (Monero or Algorand)", I completely disagree. Bitcoin Cash brings a lot to the table:
- Shared history with BTC up to the fork day (August 1, 2017).
- SHA-256d mining, like BTC.
- Much increased capacity, about 20 times higher, with plans to continue scaling to order of magnitudes more.
- Very low fees (less than $0.01), with a roadmap to keep them low as usage grows.
- Reliable almost instant 0-conf for smaller-to-medium transactions, with plans to improve its security.
- Privacy improvements such as CashFusion [1].
I wish Bitcoin Cash didn't need to exist because BTC scaled, but until then I will keep using it and advising others to do so.
Other coins have low fees and privacy. Neither are unique selling points.
Why not use Algo instead of bitcoin cash? https://algorand.foundation/the-algo/algo-basics
I disagree with your comment about PoW because hashrate moves between coins. It's not impossible for hashrate to move from BTC to BCH in the future, especially if BCH adoption continues to rise.
Disclaimer: I hold huge amount of Algorand as a liquidity or custodial
[0] https://en.wikipedia.org/wiki/2013_corruption_scandal_in_Tur...
[1] https://en.wikipedia.org/wiki/Recep_Tayyip_Erdo%C4%9Fan#Auth...
Are you serious? Honest question.
There are bad surgeons, you should still probably want surgery if you're sick.
The central banks monetary policy is exactly what's destabilizing the economy
Furthermore, stability and monetary policy seems to involve handouts to wealthy people. While I can certainly benefit from that, I don't see why handouts for wealthy people are a good idea. It looks like a bad idea. People seem to be getting angrier about it as time passes too.
These are two unrelated things. The relative instability of improvement doesn't have much to do with whether or not it's preferable to have a stable economic system.
Economic stability can be good. Rapid Improvement can be good. Rapid improvement can occur in economically stable times.
I seem to remember from studying economics and history that usually, economic instability occurs AFTER rapid improvement, not before or during. This is in part because rapid improvement outpaces regulation and the economy around it, leading to an unstable economic environment rife with opportunity for good and bad actors to make fortunes.
Such as...?
- It forces everyone who wants to receive money to constantly run a node at all times. If their node goes down at any time (or is intentionally taken down by a hacker), in certain situations, they could lose money.
- The channel provider needs to lock up a massive amount of BTC to provide liquidity to channels for all users. It costs BTC to open the channels.
- It's brittle because you need many watchtower nodes to constantly monitor every single participant in real time in order to ensure that nobody cheats and rolls back valid transactions.
- Watchtowers could be fooled by attackers to spend all their processing time on fake frauds to distract them from real frauds.
And there are a lot more serious vulnerabilities outlined here: https://www.coindesk.com/bitcoin-lightning-network-vulnerabi...
I think for high volume payment processing, we might as well use centralized payment providers off-chain.
But if you're in a country where your money have been dropping 10% per annum for the last 10 years, and where the concentration is anyway not that different from bitcoin, then things start to make more sense.
Also, most people in this situation are not looking for a day to day transactional currency, but rather for a store of value to hedge against their falling native currency.
Privacy is a feature, not a bug. I don't want people knowing how much money I have.
If government charged a flat rate for its services, tax evasion would become impossible. One would simply show a proof of payment. This would only be ~$10k/year in US according to its current tax receipts and population. Property tax is also impossible to evade.
Furthermore, her cash in a bank is protected by the government, and there are safeguards in place to help protect her from people trying to scam anything she has saved away from her. There are also mechanisms in place that when things 'go wrong' she's looked after.
I'm not arguing for or against cryptocurrency, but there is some value to having a society where those that earn more help those that earn less by paying more taxes. I'm also pretty happy to pay for police, and firemen, and someone to pick up my bins, pave my roads, medical care etc. etc. All too often it seems the crypto argument is "I don't want to pay taxes, it's MY money" - yeah, it hurts, but the benefit of doing so is very real.
The caveat, of course, is I say this living in a country with great free medical care, that's actually a pretty nice place to live, even if I really don't agree with some of our politicians. I appreciate not everyone lives in such a country.
I did say that there is a prevailing undercurrent within the crypto space that government and fiat is bad and wrong and taxing people pretty much amounts to theft. And without some visibility into how much money someone has or is making, ensuring that someone fairly pays taxes becomes a lot harder.
As for the banking part - whilst I understand where you're coming from, cryptocurrency is nowhere near as 'safe' as a regular bank for (probably) 99% of the population. My mum can barely use Amazon...
The banks can give her those same protections and she will be the last to adopt it. She will hardly notice and just tap her card/phone like always
> The caveat, of course, is I say this living in a country with great free medical care, that's actually a pretty nice place to live
Unfortunately, not every country is nice. Not every country uses taxes for the benefits of its citizens. Some countries have governments so thoroughly corrupt even the bare minimum only gets done before elections. Some countries have government officials who purchase goods and services at incredibly inflated prices so they can pocket the difference. Government officials who steal money meant for COVID-19 vaccines.
If you're from such a country, paying taxes is really no different than financing any other type of criminal operation. In these cases, avoiding taxes is a moral imperative. In these places, it's the duty of every single citizen to pay as little taxes as they can get away with.
Is this supposed to be bad? Look at what the US government does with civil forfeiture. Can't do that with cryptocurrencies and that's a good thing.
Cryptocurrencies developed on 10+ year old tech, that have stayed in that state throughout may indeed have very poor tps as you state. However, this is absolutely not the majority, as that base tech has iterated both at the base level, and in the application of layers. Typical these days are tps-handling in the 1k's - 10k's, and beyond. This will only keep improving as the technology progresses.
Many systems capable of such throughout are heavily under-utilised, showing that crypto technology is generally ahead of those needs. That there have been hiccups have been more due to "brand loyalty", not tech deficiency, but even those technologies (Ethereum, mainly), are in the process of being upgraded.
Given tps in the fiat world is somewhat of an inapplicable metric, as fiat transactions typically take in the order of days to complete - it's even more of a misleading comparison. Credit cards achieve 30k tps throughput only with the considerable caveats of reversibility and 30 day (or longer) finality. Crypto suffers from no such limitations.
The majority of worth in the space is absolutely not of "criminal origin", demographics of crypto holders have been studied extensively and are readily available.
While it is the case that most things get priced relative to BTC, and this does have a network effect since you end up exiting to BTC and thus reenforce its price, it's increasingly common to see trading pairs for ETH, LTC, USDC/USDT. There is interest in getting more liquidity into the market and that's a large part of "DeFi". It's not that BTC is self-perpetuating lock-in, it's that they're all growing but everything else is running several years behind, so on a day to day basis BTC still holds relatively more of the market.
Another option is of course that one crypto would just overtake Bitcoin. If I remember correctly this almost happend with Ethereum and was called the flippening. This scenario would be better for crypto of course than a real Bitcoin crash.
... and yet the world turns; and credit cards amount to $3tn of payments in the U.S annually.
As it turns out, businesses do not actually care about instant settlement of payment transactions that much, what's important is instant authorization.
Credit cards are small by comparison.
https://mobile.twitter.com/yassineARK/status/134613927863667...
First of all, global credit card volumes are much larger than Bitcoin volumes. Asia Pacific has been a bigger credit card market than the U.S. for some time - for example.
Secondly, credit cards payments are overwhelmingly payments for services or goods; effectively none of Bitcoin's total volume is in that category.
In fact, virtually all of Bitcoin volume is gross settlement and relates to speculative trading activity.
On-chain transactions are for a variety of things, but they are all payments, which was the criteria in question you brought up.
Regardless of how you might opine on those payments "merit" (I could equally deride the usefulness of plastic trinkets ordered from China on Amazon - for what good it would do), they are not insignificant on Bitcoin compared to legacy systems. They are all payments settled either from one party to another, or between one party's multiple accounts, and just because they are almost entirely "only" settlements does not imply they are somehow not useful or otherwise to be derided.
Where does that number even come from? I've been trying to source anything that's even vaguely in the same ballpark and coming up empty. Most of the sources I can find suggest ~$100bn a day.
But no, in any case, that's not what I'm talking about either. Nor am I trying to apply any moral value to the purposes to which payments are put.
The point is: you can't say "credit cards are small relative to BTC" without consider the segmentation of the payment market in the fiat world.
I encourage you to provide evidence of the size of the "credit card" usage (i.e. goods and services payments) of BTC. Good data is hard to find but it's self-evidently not in the "trillions of USD per year" order-of-magnitude.
If you want to talk about the gross settlements segment, again, BTC is a minnow. Sure counting every transaction on the BTC blockchain, it's a few $tn a year currently. Fedwire does that much every day, and that's only for inter-institutional transfer.
You said "credit cards amount to $3tn of payments [my emphasis] in the U.S annually.", doing so as if this somehow made crypto appear small. I pointed out that Bitcoin alone does more than this per year in payments since 2018, and that there are thousands of other crypto projects. Many of these are also making comparable numbers of payments.
By the simple metric of how much value cryptocurrency users are transmitting with each other as payments, versus how much users of credit cards are doing - which was the original framing as I understood it - crypto wins. And of course it does, you may be right its an apples to hand grenades comparison, but the simple fact of the matter is we are comparing apples to hand grenades.
In some ways this is all about as useful as comparing how many miles horses and carts are doing versus steam or combustion engines.
The point is, even early on, per mile travelled, engines win. And they do so not just because they can travel further faster, but because they enable new use-cases by doing so - just like crypto.
Crypto has been here for ten years already and despite being derided as a toy early on, is now worth, and transferring, trillions.
See you after the next ten years, when credit cards will almost certainly be as VHS tapes are now.
The bulk of fiat does not move around on peoples payment cards or in cash in their hands, it moves in bank-to-bank transfers that indeed do take days or even weeks, and further have an up to 10% failure rate.
It may well be that through the use of caveats you don't see or think about, you are able to execute small transactions quickly with fiat, but it is the counterparty to your transactions who is bearing the burden of fiats shortcomings in these cases.
For example, if we're comparing digitally, in most cases, you are able to arbitrarily reverse the transaction up to or even over a month later, claiming it as fraudulent, or rejecting it for some other reason justifiable to you, but for which the vendor has little recourse. This is the concept of "transaction finality", and with fiat it is very, very broken.
With cash a similar problem exists with counterfeit money, a vendor may collect up a weeks earnings, only to take them to the bank and have a percentage of them rejected.
All of these problems are solved by crypto, it improves on money in many key ways (these are just a couple), that's its point, and why people are excited about it enough to drive its collective value up to the region of Apple's stock value, around 4x faster than Apple took to do so.
Worked quite well for me when my credit card details were stolen and I could revert $8k of purchases immediately. If my wallet keys are stolen or cracked, I will lose everything with "transaction finality" - that would be a problem which is enabled not solved by crypto.
That crypto can do new things, and yet may also facilitate all of the (useful) old things, simply makes it a superior tool. There can be no fundamental argument against this.
It's a bit like worrying about how internet users will deal with IP packets that don't arrive, in the context of thinking about about how smooth an experience they're going to have surfing the web. It's not, and won't be, their problem to deal with.
The fact adoption has rushed ahead such that many multi-millions of users are faced with the base layer is analogous to if millions had rushed into using the internet when it was command-line only. Sure, if that had happened, many people would make mistakes and delete their drives or whatever - and this illustrates how wanted and overdue crypto is.
There are tremendous consequences of using this tech at the base layer incorrectly, but it doesn't appear to be dissuading adoption.
Now, on the UX topic, btc has a lot to improve. But I’m always surprised how rapidly people assume their transactions in fiat are settling as a comparative criticism for Bitcoin.
Do you have a source for that? I tried looking and everything I saw is it would take between 24 hours and 3 days on average, for credit cards.
You very well could be right, I'd just like to see something that confirms it, and wasn't able to find anything.
Example source: https://lifehacker.com/this-is-why-your-credit-card-transact...
But you can't make a trustless exchange on top of a custodial framework.
Base layer has to be trustless / permissionless; all manner of third parties can build all kind of things on top of that.
But reverse isn't true - if base layer controlled by small number of third parties; nothing built on top can claw back that control.
Only once have I ever use the deferred payment aspect of a card, and that was a 0% APR offer.
The necessity for reversibility, and the inflexibility of being limited either to it, or some form of it, is indicative of an inherent, unfixable flaw in the system itself.
This flaw limits the systems growth, adaptability, and usefulness.
Governments do that on their own they don't need any help from crypto.
Banning crypto payments is like an airport refusing landing clearance to bicycles.
I'm fine with that. Current monetary policy sucks.
I think their point is criminals are bad, so anything they use is also bad. Like guns, and drugs, and cars, and food, and beds, and houses, and air. All bad. We shouldn't use those things, and we should ban them at the earliest opportunity.
I agree with you. Comments like that have such a low intellectual effort that they are mainly noise.
People in stable countries (us, uk, western Europe) don't understand the lack of confidence that citizens of underdeveloped countries have in their own government and financial institutions.
The argument that criminals also use ordinary money doesn't work here. Crypto was adopted by them at first, e.g. look at Silk Road, or billion volume hacks of exchanges. If BTC will grow then their relative power will grow.
And you could use this exact argument against the Turkish government banning crypto to protect its own exploitative currency scheme..
* roughly false on unknown entities for two reasons.
1) btc is fairly easy to surveil [1], and see Chainalysis
2) logic here doesn’t make sense. Are you saying you know all owners of cash deposits, or just assuming someone does? A lot of folks keep cash “in a mattress.” Is that bad as well, as it’s a mirror of holding crypto?
[1] https://decrypt.co/66411/cia-bitcoin-surveillance
And
https://cryptoforinnovation.org/resources/Analysis_of_Bitcoi..., for the primary source.*
* Is this source from a crypto lobbying group - yes. Is the author the deputy director and twice acting director of the CIA, so he probably knows bitcoin’s use for criminal payments more than the average critic - yes.
- me: criminal activity not a majority of btc use and severely overstated overall, and it enables surveillance, aka intelligence gathering for LEO/IC if properly utilized.
- 30 year veteran, ex-deputy director of the CIA:
“However, based on our research and discussions with industry experts, I have confidence in two conclusions: • The broad generalizations about the use of Bitcoin in illicit finance are significantly overstated. • The blockchain ledger on which Bitcoin transac- tions are recorded is an underutilized forensic tool that can be used more widely by law enforcement and the intelligence community to identify and dis- rupt illicit activities. Put simply, blockchain analysis is a highly effective crime fighting and intelligence gathering tool.”
“ All of this together suggests a broader point—that the illicit use of cryptocurrencies in general and Bitcoin in particular, as a share of total market activity, is cer- tainly not higher than it is in the traditional banking system and is most likely less”
Quite literally does say something/anything like what I said.
Their evidence is: "the firms we spoke with believe the unseen illicit activity is relatively small". That's it. The confident conclusion that it's overstated doesn't even allow you to infer if it's more or less than 50%; it doesn't even say which statistic they actually used.
If it's total percentage of transactions or sum of traded bitcoins, that isn't even that important: you can amass a small fortune in just a handful of transactions, whereas trading bitcoin for investment generates many more transactions, all completely irrelevant to the influence of bitcoin on crime.
There are other quotes from experts available, such as “Bitcoin — and virtual currency in general — is widely used in the trafficking of weapons and drugs, and in ransomware and extortion cases. It is used a lot by criminals.”
Cryptocurrencies are not destroying government run financial systems. They are just an alternative.
Bitcoin's 7 tps is a base-layer limitation. Layer 2 technologies like Lightning aim to address this issue. Lightning is functioning well and growing rapidly.
I don't think it's fair to say most Bitcoin holders are unknown entities. The AML/KYC requirements for converting crypto into spendable fiat are strong. The criminal use of Bitcoin is a small compared to it's legitimate use as a store-of-value.
Not your keys, not your coins. Your response now will, of course, be “well that’s why you rotate your coins out into cold storage” which is sort of like me saying “you just convert your lira to dollars at the end of the day when you’re done buying food and water.”
Corruption is causing the devaluation of the currency in this case. The devaluation is already a method for hurting the ones responsible.
I'd think that the ones that are corrupt would be able to store their currency in crypto, while the rest of the citizens are not.
Crypto doesn't help anything. It could help some who know how to use it ( and will not forget their password)
Imagine if the Turkish government had allowed their citizens to use DogeCoin a few days ago before the big pump, they'd already be out of their recession ;p
If Bitcoin is global currency system then there's no chance of using such a mechanism-tool-lever, however with current system of governments it can be used; Biden's recent financial acids actions against Putin's actions against the US is another example of this.
You are in a thin line in Turkey, your life can change dramatically in a blink of an eye, and where you find yourself in really dangerous positions for very basic reasons.
Not true.
Since Erdogan took over and increasingly showed his true face (he started as a moderate muslim democratically elected leader and and basically turned into an Ayatollah since then) many folks in Europe (France, Germany) are very reluctant to travel there for vacation.
It's not as simple as that, he's no religious zealot. Erdogan simply leverages conservative support in order to act as an imperialist (and illiberal) king - a new sultan.
And "we" let him do it because "we" need to keep Russia out of Anatolia and the straits, and "we" consider most of the Southern coast of the Mediterranean Sea as a de-facto concentration camp for African and Middle-Eastern migrants.
I couldn't find anything regarding arresting and torturing foreign tourists.
It seldom works very well though in terms of bringing prosperity to the country.
Turkey has a lot more going on than tourism, it has a significant manufacturing sector.
If the Russians took payment for S400s in Bitcoin, they would soon reverse this ban.
Historical context: https://tradingeconomics.com/turkey/interest-rate
The last central bank head was fired after increasing the rates. Erdogan consistently installed figureheads to high ranking positions to implement his theories and those who failed at it were swiftly removed.
The previous Ministry of Treasury and Finance is married to his daughter, for example. The new governor of the central bank is a low grade academician who was paddling Erdogan’s theories in his column at a pro-Erdogan newspaper.
Turkey is that close to become Turkmenistan. Turkmenistan at least has gorgeous horse statues.
All it needs to do is stop doing that and make it clear to the market that it will no longer do that. That removes the patsy from the market and the currency will find its level.
What you have to do is make lira scarce. And you do that by putting taxes up, stop paying interest on lira savings, and putting into administration any firm borrowing in foreign currency but earning in lira, and then refinancing them with lira loans.
All of which is the precise opposite of the view suggested by the "Washington Consensus".
Unfortunately Erdogan is a sound finance guy. Like Putin he thinks money is gold coins and that we're playing some D&D game.
He needs to understand its about the flow of money, not the stock. People holding savings in Gold, Crypto or dollars is a benefit to the lira economy, since it means lira will flow more freely and rapidly increasing economic velocity.
The Washington Consensus was on life support by the year 2002 -- that's two decades ago -- and was completely dead by 2008 -- well over a decade ago.
Making strawman arguments against things 15 years out of date doesn't make your argument look stronger.
Yet that is still how central banks operate. They are completely out of date, continuing to target inflation using interest rate movements and getting absolutely nowhere. In fact largely getting the opposite response. Everybody knows that they are making no impact, yet nobody dare point it out out of politeness. However this emperor definitely has not clothes at this stage.
The central banks haven't moved on because their operational mode is still stuck in the 1990s. Eventually one will change tack - as New Zealand did before.
Hope that is a Western one, not Erdogan.
What Turkey needs is more foreign investment (plus the trust of its citizens) and that requires eliminating corruption.
Since when did trade liberalization and legal security for property rights die? Did the world Bank suddenly tell us these things didnt matter after all?
Or, is this a variant of the weird perpetual claim made by dyed-in-the-wool neoliberals that they actually don't exist and never did?
I think that after the sack of the previous governor by Erdogan, it is clear to investors who is really running the Central Bank and what he think. For many investors the only way to make it clear that it will no longer do that is a change not in the CB, but in the Presidency.
> What you have to do is make lira scarce. And you do that by putting taxes up, stop paying interest on lira savings [...]
I disagree with this part. To make lira scarce you have to make it so people are willing to buy lira. If you stop paying interest on lira savings people will sell their liras and buy dollars (this is exactly what happened in the past years).
On the other side if the interest rates are higher people and foreign investors will be more eager to change their dollars for lira, helping the exchange rate. Also higher rates means less people will take credit, reducing the amount of lira circulating. This was exactly was happening with the previous governor.
More importantly, people will buy lira only if they trust the Turkish state and consequently the lira. Just imagine, simply by firing the previous governor (which was considered a competent person), Erdogan caused the Turkish Lira to lose about 10-15% of its value in a single night. I think that the situation will not improve much unless there are serious economic and institutional reforms, but I don't see them coming while Erdogan is still ruling the country.
Which is what you want them to do since that puts lira back into circulation where it passes (higher) tax points which then drains the currency. Reducing government spending would do the same thing.
When there is less lira in circulation, then obtaining it to purchase Turkish output becomes more difficult and the price rises.
People saving in any currency is the problem since the lack of spending it represents denies somebody else an income.
You don't want 'foreign investors'. Turkey has its own currency and can purchase anything available for sale in lira on its own. In fact 'foreign investors' have to obtain lira before they can buy anything so why not cut out the middleman?
> More importantly, people will buy lira only if they trust the Turkish state
Again a myth. People will obtain lira if Erodogan will otherwise jail them for tax evasion. The lira always has value to those with a tax liablity in lira and who are sufficiently scared of Erdogan's tax collectors.
Of course COVID caused massive problems that need a one time fix but Turkey is not in the position of the USA where excess corporate savings are dragging inflation down. If inflation is in the double digits, then people are simply not saving enough. The only thing the central bank needs to do to encourage saving is to keep the interest rate above inflation and it did. The Turkish government can also raise taxes to reign in inflation as you said. If inflation falls faster than the interest rates this would further encourage savings.
This isn't really an option. No lender is going to exchange foreign denominated loans for Lira denominated loans during a currency crisis.
If he really cannot get the country's finances in order, he's better off just defaulting on all the loans, and starting fresh like Russia did.
They won't get that chance. When the firm is put into administration those foreign loans will be written off, which pushes the loss home to where it belongs - people lending in dollars to entities that have unhedged income in lira.
The state/local investors then buy the firm out of administration with lira loans.
...which eliminates their ability to borrow money for several years. And that can have severe impacts on the trade that exists today as creditors scramble to seize Turkish assets held in foreign banks/ports/contracts.
It's a much much more destructive move than what you're describing.
Not really. It's a refinancing of the firm in a new structure. That happens all the time - with huge amounts of borrowed money.
Getting rid of deadweight loans and refinancing elsewhere is what administration is for, and what happens regularly.
In fact freeing up collateral and sending losses abroad makes a firm more creditworthy, not less.
If the government is under reporting inflation that is a problem with the government. The obvious solution is to just report correct inflation. Once the government has reported correct inflation numbers the Turkish central bank must raise interest payments and that would mean at least 52% interest. The fundamental problem doesn't change though. People are still fleeing the influence of the Turkish government, not the currency. You need to trust the government and the government must eliminate internal corruption.
...which is exactly why they're turning to crypto.
...which is exactly why Turkey enacting currency export controls, like banning crypto.
Now, this should in fact raise the inflation, but it seems that they indeed chose a way to compute inflation that doesn't show this effect as much.
The problem was they allowed the currency to devaluate in a matter of days. People with CDs or mutual funds with long withdrawal time lost a lot of money. I'm talking about going from 18pesos = 1 usd to 36 pesos = 1 usd in something like one week.
You can actually see how the lira is losing against the usd since 2008.
Why would anyone want to hold a depreciating fiat currency when even dogecoin increases in value? They should just stop fighting it and let it happen.
The way I understand it, you can buy and sell cryptocurrencies and store your money into Bitcoin instead of lira. However you can't say, "I will sell you this for X BTC", instead you have to sell it for Y lira (or euros, dollars, ... I suppose). How the buyer gets the money and what the seller does with it, including selling/buying cryptocurrencies is not part of the payment process, what matters is that there is no BTC on the bill, and presumably, the payment has to be traceable.
How it relates to currency stability, I don't know, but it looks more like an anti money laundering / tax evasion law.
In the end you realize that it‘s officially not forbidden, but that you rather don‘t touch these assets.
This is the world we are in 2021. Officially these are measures trying to prevent money laundering and tax evasion, but eventually we wake up in a pretty darn restrictive world where you can‘t even transfer 10k euros from A to B without having to explain things. (If and when you get the chance to explain.)
## Edit
But banks cancelling your account is not something without consequences. Your credit rating may and propably will suffer.
They are probably right in most of cases, given how widespread corruption is.
What you want, and what the administration of the Gulag you currently live in are - on average - two very different things.
Once you make a transaction over 10k€, the bank has to report it and request from you the reason of the transfer and where the money comes from (initially). They cannot block the transfer but they have several flags attached to the report where they can hint that the transfer is illegal.
You buy a house and transfer the money to the notary? No problem.
You receive money from the UE, there is some explanation do but not that much.
You receive money from a shady place, or send to one (the definition of "shady" is up to the bank and Tracfin), you will need to explain really carefully the move, and you will be on a list.
All in all this is fine, the real problem is if you get into a situation where you are OK but your explanations are not - then you are in trouble.
If anything I feel like investing in crypto is indirectly incentivized in Germany given that you basically don't owe tax on profits if you buy and hold for over a year without doing anything else.
Going via Revolut can be a good option though I find them annoying.
This is the exact problem cryptocurrencies were invented to solve. We're supposed to be free to spend our money without the indignity of having to explain things to some bank or government. The better the technology, the more tyrannical the government must become to maintain the same level of control. We'll either end up with total subversion of government controls or totalitatian governments.
Unfortunately fiat currencies will always be necessary due to force of law. All governments want to have their own currency for some reason. They make laws forcing businesses to accept their currency and refuse to accept taxes in any other currency.
Wouldn't that imply high levels of inflation, which isn't happening in many economies, especially widely available and exchanged ones like USD, EUR, etc.? The value of the Lira is falling and there is high inflation, but it's disingenuous to pretend this is common for currencies and economies around the world.
Why do you think that?
Anything else means the money doesn't actually belong to us, it belongs to the bank or government and they're just generously allowing us access to it. People work hard every day for a living, they shouldn't have to suffer this sort of indignity.
We are forced to try and change the system from within. The means for doing it vary. Lobbying the government, electing favorable politicians, violent revolution... In current times people can just build technology that implements whatever change they want to see in the world. Technology so powerful it alters the "social contract" whether governments want it or not.
A deflationary currency is actually terrible for a world with population growth. It ensures if you were born earlier you have more wealth.
And I say this with 50% NW in crypto.
Time to change bank.
And you're in Europe, which means you should be able to go bank-shopping beyond German borders.
Competition is a good thing, but customers must make use of it.
I read something interesting about this behavior a while ago, if you've put money into crypto, of course you're going to be cheerleading it, nobody puts money in something expecting to lose it (oh wait... I can see the /r/wsb crowd raising their hands). And the more people you recruit into your ponzi scheme, the more profit you stand to gain, so consciously or not, you'll be trying to convince everyone to get in on this whole scheme.
On the flipside, the skeptics are convinced it's a bubble that can implode any time and that the argumets "it will replace fiat and central banks!" are just silly delusions. And yes this is how I think. To be honest, I like money too, and I wished I had put some money in BTC. Someone's going to reply "Sour grapes!" under here, but still, I'm in the opinion, the rise of BTC is irrational.
Then again, it can be argued that the current world economy is also running on galactic amounts of irrationality...
replace crypto with $TSLA or $XXXX , people will try to justify their whatever decisions
Money supply and the resulting inflation does not serve a good purpose to fiat in the long run, because it diminishes its ability to serve as a store of value. If its other abilities (unit of exchange and accounting) are undermined, fiat will be in real trouble. So, I guess a crypto bubble serves a good purpose as a sort of a buffer for the inflation. In other words, if lots of people lose fiat money on a crypto bubble, there will be less money lost due to inflation for the ordinary folks. Replace crypto with stock, property and other bubbles and you basically get the same effect.
So I guess what the Turkish government is doing is diminishing the ability of crypto to serve as a unit of exchange. If they don't do it, they might very well lose control of their monetary system. That is, all financial transactions (except maybe taxes) bypassing their local currency and leading to even more inflation and a default (or some kid of war).
Isn't it a zero sum game? Someone's loss is anothers gain?
But generally the point about the loss of control of the monetary system, plus the billions made annually from the printing press will be in my opinion the limiting factor of crypto as a currency, but will stick around as a store of value purely on inertia for the medium term.
Regardless of the irrationality of current valuations, the cypto asset industry is here to stay and it will slowly syphon more use cases from the traditional financial system. The overall trend is real, just like the Internet trend in 2000 was real, regardless of the subsequent crash. Position yourself accordingly.
is a pretty unusual sentiment on HN. In the comments above I only saw a couple of mildly positive ones.
It's true people do tend to talk their book as it were. I feel I'm semi neutral as I've bought a bit in the booms and sell it when it seems to have peaked.
The truth is probably somewhere in the middle. It won't replace fiat but it's also not going away in a hurry.
> the rise of BTC is irrational.
Yeah but humans are irrational creatures. Life itself is kind of irrational. You muck around a while then die and try to have fun while doing so. Crypto is quite fun.
>To be honest, I like money too, and I wished I had put some money in BTC.
Never too late! ETH is probably going up some more.
https://www.youtube.com/watch?v=sZHCVyllnck
Sorry, couldn't resist.
Two weeks ago: https://www.dailysabah.com/business/finance/turkey-demands-u...
Two days ago: https://ahvalnews.com/turkey-gold/turkey-tightens-regulation...
This has nothing to do with Crypto, or Istanbul not understanding how Crypto markets work. Citizens of Turkey could exchange their Liras freely (cash) on the many small exchanges that exist.
If I was there, I would know that these days are over; and capital/exchange controls are just a few days (weeks at most) of being implemented.
That's exactly what they made for, duh
They are printing too much money for the rich and not helping/saving anyone and want to block all from getting away.
That's probably not gonna work. Banning something has proven to never work in history.
By definition there are lots of banned things in every legal system, and I'd argue many of them for very good reasons.
What's usually ineffective is banning something without providing a viable alternative.
alcohol sold to minors.
unlicensed doctors.
guns.
hard drugs.
tanks as private vehicles.
old polluting cars.
the list is endless.
But it probably would. Not completely, but few people would risk putting their life savings or any significant amount of money into something that was illegal.
It means you cannot do the bank transfer to move your Liras to a crypto exchange. It definitely puts a meaningful barrier on buying crypto.
because people don't like to go to jail
> "oh it's banned, I guess I'll stop using it then"
that's exactly what's gonna happen in Turkey though. But even if it wasn't Turkey which is ruled by an autocrat, a ban would steer away casual users that usually means the thing banned won't succeed in the long run.
imagine if YouTube was banned in some country and the ban would stay even after public protests (admitting that public protests were allowed)
YouTube usage would immediately drop to a number very close to zero.
> YouTube usage would immediately drop to a number very close to zero.
Let's take the real example of HADOPI in France, the illustration of the institution that was supposed to hunt bittorrent use in France.
When it was announced, some people dropped bittorrent, but not that much. You had zillions of tutorials on how to avoid it.
What is killing bittorrent is Netflix. As someone else put it very well in another comment: this is a viable alternative.
Now that bittorrent usage is stable and that lots of people moved to netflix because it is easier, HADOPI is slowly dying.
that's not the same thing.
torrenting illegal material was already illegal, before Netflix.
and France is not Turkey, but no Germany either where the ban on illegal downloads actually works, because they will get you.
In my opinion cause and effect are reversed here: Netflix is going strong because there is a ban on torrents and sharing copyrighted material in general and it worked.
If it was the other way around, Netflix would earn peanuts.
Also, people get around a ban on torrents because there is no risk, the worse thing that can happen is that you won't watch a movie illegally.
Now think about using illegal money and the consequences...
> HADOPI is slowly dying.
again, wrong comparison.
How many people watch YouTube videos in China and how many would if it was not banned?
That's your benchmark.
Look at the ban on guns, where the ban exists the number of guns in people hands is very low.
If it worked as you said, where arms are banned people would use them illegally.
But instead they do not (again: generally speaking).
Think about prostitution, it's legal in Germany where the government estimates the real number may be as high as 400,000 almost 0.5% of the population.
In Italy, where it's practically illegal (it's complicated, but we can safely assume it is not legal as in Germany) the number is estimated at 100,000 or 0,15% of the population.
Bans do work, the fact that not all bans work the same way, doesn't mean that they don't work.
Also an overlooked detail in the article: "Last week, Turkish authorities demanded user information from crypto trading platforms." Your BTC can be an asset that can be seized as part of a confiscation procedure –also in Turkish law... Seriously, not your keys not your money. DEX is under-appreciated in this ecosystem.
"BTC, timeless store of value, as acknowledged by many dictators around the world" (tm)
In Venezuela they haven't banned cryptos, they banned mining, especially if it's done on state funded electricity (for obvious reasons)/and because other cryptos compete with the state backed crypto, the Petro.
Dictators love cryptos, especially bitcoins.
If they didn't, criminals wouldn't use them.
> A total of 100 million Petros will be sold, with an initial value set at $60, based on the price of a barrel of Venezuelan crude in mid-January.
Unfortunately we know that its purpose is raise cash because they can't repay their huge national debt.
Which is why every dictator loves cryptos if they can control them as they control state currencies.
The narrative can be shifted to we are all in this together, we live and die together.
If they'd allow bitcoins for the general population (they love them only for themselves) some would become richer, but the country as a whole would not benefit a bit from it.
And failing at that is something no politician can survive.
This will however not help with their financial crisis, because the national issuing of money and collection of taxes is still in Turkish Lira. All payment by the government for goods and services is in Lira and needs to be converted to cryptocurrency and all cryptocurrency needs to be converted back to Lira to pay taxes.
UPDATE: It's fun watching how this comment votes keep fluctuating up and down :-)
Shame really, up until not long ago (before Erdogan) Turkey was a really nice place to visit and on its way up economically (and the food, yum).
But now, they're headed straight back to the dark ages.
OTOH they were elected by their population so statistically the population should be happy (this is the case in Poland, where the corrupted/hypocrite government is elected I think now three times in a row. This is pitiful to the population that is against them but at some point you have the country you have, or you leave)
Is that true?
With a lot of crypto activity happening in China, would a crackdown there cause a fall in the market?
Certainly not banned outright though. Parts of Chinese gov have actively invested cash into ICO-less projects
Blockchain in general is also on their five year plan - though at a regional level not the national five year plan
The US will then continue developing solution with and for it, eventually building the next big thing, revolutionizing a market.
Wouldn't that then place the EU in a position of a consumer until they can then catch up eventually, if that would even be possible?
...glances at Greece
I have both the feeling that we should have just dropped them to not have a weight on us, and I am empathic to the people who lived there (who were avoiding taxes as well, so that may not be the correct feeling I should have)
I was rather trying to show the mixture of "why bother, just let them go" and "there are real people out there" that was expressed several times (and that was feeling as well).
Once they understand the notion of separation of church and state at a cultural level, that may become a possibility again.
This will likely be a very long while though.
I never stated that it was. Turkey is meaningless in regards to the future of crypto, just like Germany or Peru is. But the EU has a power of regulation which affects a somewhat significant amount of earth's population, so it makes sense to play with the thought of it.
Blanket statements like this verge on being racist. Totally okay if you state your reasons, and I would also agree that Turkey, in its current political and economic climate is far away from EU compatibility. But, when you say "hopefully never", you indicate that there's something categorically wrong with Turkey joining EU and most people would think race or religion.
In short: Please don't do blanket statements.
source? I dont use coinbase because of higher costs and all the US shenanigans with other people's data
They certainly don't.
Coinbase is one of the, if not THE most expensive exchange on the planet.
Their infra stack is a disaster, and their feature set, espectially when it comes to transacting with non-US bank is a freaking nightmare.
Only the captive US market that can't use EU-based exchanges is forced to use coinbase.
Custodial solutions like Coinbase can be banned. Full nodes are much harder to ban.
I can believe they’ll make a new currency, might even call it a “cryptolira” or whatever as branding, but there is exactly zero value in a government-run money Blockchain. Databases already exist, much lower energy cost, well studied, easy to audit and backup or rollback.
And as the article lays out, for sure all those potential fintech companies who would like to participate with crypto are not going to touch Turkey.. Seems like a counter productive action for a struggling economy.