HomeBusinessHow Turks Are Using Tether to Protect Their Wealth from Hyperinflation

How Turks Are Using Tether to Protect Their Wealth from Hyperinflation

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Turks are flocking to stablecoins like tether (USDT) as their national currency, the lira, continues to lose value against the U.S. dollar. The lira hit a record low after the central bank stopped intervening in the foreign exchange market following the reelection of President Erdogan. In this article, we will explore why Turks are choosing tether over other crypto assets and how stablecoins can help them preserve their purchasing power in times of economic turmoil.

Tether is a cryptocurrency that is pegged to the U.S. dollar, meaning that one USDT is always worth one USD. Unlike other cryptocurrencies, which are volatile and subject to market fluctuations, tether maintains a stable value and can be easily exchanged for fiat currencies. Tether is also widely accepted on many crypto platforms and has high liquidity.

According to data from Kaiko, a crypto market data provider, tether transactions in lira have been increasing since May, despite the global crackdown on crypto assets. Tether’s share of trading volumes on Btcturk, a leading Turkish crypto exchange, reached 20% in June, compared to 1% on Binance, the world’s largest crypto exchange.

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The reason behind this trend is simple: Turks are looking for a safe haven from the rampant inflation that is eroding their savings and income. The lira has lost 80% of its value since 2018 and 20% in 2023 alone. The inflation rate reached 19.7% in May, well above the central bank’s target of 5%. The situation worsened after the central bank withdrew its support for the lira following the controversial reelection of President Recep Tayyip Erdogan, who has been accused of undermining the independence of the monetary authority and pursuing unorthodox policies.

With limited access to dollars or gold due to strict regulations, Turks have turned to crypto assets as an alternative store of value. However, not all crypto assets are suitable for this purpose. Major Cryptocurrencies like Bitcoin and Ethereum are subject to high volatility and regulatory uncertainty. Stablecoins like Tether offer a more reliable and convenient option for Turks who want to hedge against inflation and currency devaluation.

“Investing in stablecoins allows people to keep the value of their wealth, it’s one of the ways to hold on to some value when inflation is this high,” said Ebru Güven, a former banker and university lecturer. “Stablecoins are also easier to use than other crypto assets, as they can be transferred quickly and cheaply across borders and platforms.”

Stablecoins are not without risks, however. Tether has faced scrutiny over its reserves and transparency, as well as legal challenges from regulators and authorities. Some critics have also questioned the sustainability of its peg to the dollar and its impact on the crypto ecosystem. Moreover, stablecoins are still subject to regulatory uncertainty and potential bans in some jurisdictions.

Nevertheless, for many Turks who are facing economic hardship and currency instability, stablecoins like tether offer a viable solution to protect their wealth and access global markets. As long as the demand for stablecoins remains high in Turkey, the tether will likely continue to dominate the local crypto scene.


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