The Turkish economy is in serious trouble. Even before US President Donald Trump unleashed a series of import tariffs at the start of August, inflation had already reached an annual rate of 15.9%. The Turkish Lira has long been considered one of the globe’s worst-performing fiat currencies, having dropped 50% against the US dollar over the course of the last 12 months alone.
Yet America’s new steel and aluminium tariffs caused a violent sell-off of the currency, sending it crashing by nearly a third in a matter of days to reach a new record low. The International Currency Exchange posted such a huge rise in trading volume it simply had to remove Turkish Lira from its website.
That being said, a pledge from Qatari officials to loan the Turkish government $15bn – along with a loosening of reserve requirements and desperate plea from President Recep Tayyip Erdogan encouraging locals to “save the honour of the Turkish Lira” by swapping foreign held currencies for Lira – has provided a temporary stay of execution for the currency.
The Lira’s free fall has stopped for now. Yet the crisis will inevitably pose long term effects on Turkey’s unique payments sector in the form of an increased crypto presence across the country.
Above all else, this dramatic turn of events has caused a massive surge of interest in cryptocurrencies – helping to solidify the already formidable position Turkey’s crypto exchanges have been building over the course of the last several years.
Last week all three Turkish exchanges, Paribu, Poinim and BTCturk, reported a 100% rise in trading volumes between Bitcoin and the Lira. The largest of Turkey’s exchanges, BTCTurk, now has an active local userbase of more than 500,000 customers and has been handling an average $11.6m per day in transactions since the Lira’s crash.
In order to accommodate those cashing out Lira for cryptos, Bitcoin ATMs have already been popping up across Turkey, and dozens of local markets, ecommerce sites and merchants are deploying crypto POS solutions to accept Bitcoin transactions. Products like bitpay now accept Turkish Lira, and are easily integrated with a range of existing POS terminals across the country.
Turkey’s rush on Bitcoin is bound to receive a hearty welcome cryptocurrency advocates across the globe, as wavering investor confidence has shaken the trading prices of flagship currencies like Bitcoin and Ethereum in recent months. Yet because the Lira’s dire recovery appears to be almost entirely reliant upon foreign aid, crypto traders seem confident the volatile nature of the Lira and President Erodan’s erratic monetary policy will continue to drive cryptocurrencies to the forefront of the Turkish payments sector.
Yet while there’s been massive movement across Turkey’s digital payments landscape, it looks as if the rest of Turkish payment providers and market participants are poised to simply ride the storm out in the hope that Qatari funding and a fresh liquidity injection from the Turkish central bank will buoy the Lira.
The recently launched, incredibly popular and localised TROY card payment system, which is managed by Bankalararası Kart Merkezi A.Ş, has close ties to Turkey’s central bank and has remained silent and steadfast in its position as “Turkey’s payment method”.
Meanwhile, international payment providers appear to be reporting business as usual. International gateway PayPal abandoned Turkey long ago over political differences, but competitors like Stripe haven’t budged – and Worldpay only just moved into Turkey after launching a new transactions partnership with local PSP iyzico in January. Likewise, mobile payments provider Tap2Pay only just entered the country at the start of 2018.
Though still a burgeoning technology, most Americans today are at least familiar with digital assistants (like Apple’s Siri voice recognition software or the Google Assistant virtual personal assistant), even if they don’t have one of their own.
Bullish investors have spent the better part of the past decade tightly gripped in a tumultuous love affair with Bitcoin. Yet the opportunities that have arisen as a result of distributed ledger technology extend further than the dramatic travails of a single cryptocurrency – and in many cases, dynamic alternative uses are proving to be far more sustainable.
US-based blockchain enterprise solution provider Ripple has already proven that.
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