The lira weakened significantly against the US dollar last year. Investors’ concerns about Turkey’s monetary policy, which is heavily influenced by President Recep Tayyip Erdogan, were to blame. The Turks, desperate for rising inflation, which has exceeded 21 percent in the country, are paradoxically fleeing even less stable cryptocurrencies, notes the WSJ.
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According to Chainanalysis, the volume of cryptocurrency trading in pairs with the lira on three cryptocurring exchanges averaged $ 1.8 billion (CZK 38.3 billion) per day in the last quarter. According to the Bank for International Settlements (BIS), this is less than in 2019, but most in more than a year.
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The cryptocurrency tether became especially popular among the Turks. This is the so-called stablecoin, the price of which is pegged to the US dollar. The Lira became the most traded currency issued by the state’s government last fall in tether with the tether. The dollar and the euro are behind the lira, according to data from CryptoCompare.
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The Turks have long fled economic shocks to hold the US dollar, euro or gold, WSJ said. In recent years, however, in their eyes, cryptocurrencies have also become new preservers of value, despite sharp price movements in both directions.
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The lira has lost 40 percent of its value against the dollar since September. Bitcoin strengthened against the dollar by almost 40 percent in early November, but is now more than ten percent weaker.
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The popularity of cryptocurrencies is growing
Cryptocurrencies are gaining in popularity in Turkey and in parts of the developing world where there is a great deal of distrust of government economic policy. Nigerians use bitcoins to pay because of the devaluation of their currency and also because the government strictly controls access to foreign currencies.
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Salvador President Nayib Bukele is also a big supporter of cryptocurrencies. It was at his instigation that bitcoin was introduced in this Central American country last November as an official currency alongside the dollar. The government has supported the cryptocurrency payment financially, and Chivo is distributing a bitcoin of approximately $ 30 (CZK 640) to all users when it first activates the official virtual wallet.
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Bitcoins and other virtual currencies
There are many virtual currencies. One of the oldest and currently most popular are the so-called bitcoins. They were established in 2009, but have enjoyed greater popularity in recent years. This currency was designed so that it could not be influenced by any government or central bank.
Cyber coins are “minting” a network of computers with specialized software programmed to release new coins at a steady but declining pace. The number of coins in circulation is expected to reach 21 million in the end, which is to be around 2140.
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