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Bitcoin is the newest tool in the battle against inflation

Increasingly expensive groceries, wages unable to keep up and desperation amongst the people are proof of the necessity of decentralized currency.

Inflation is considered to be a ‘necessary evil’ in any growing economy, including Turkey.

Turkey is a cautionary tale and perhaps a harbinger of things to come for other countries with weakening currencies. The Turkish lira has fallen by nearly 45% against the dollar so far this year and has plummeted as much as 20% in one week. Economists believe that Turkey could be on the brink of hyperinflation as year-to-year Consumer Price Index could end up over 30% in the coming months.

While experts blame the Central Bank of the Republic of Turkey for not raising interest rates, people like Tal suffer the consequences of double-digit inflation. Tal (name changed to protect his identity) who works at a global coffee shop in Turkey, has observed “During the first week of January 2021, I was earning about 4,774 lira (or $360), but as of November it is about 2,917 lira (or $220). If I wanted to drink a large toffee nut latte, I would have to pay about 25% of what I earned for that day.”

For those who have not experienced the kind of inflation that Tal is living with, he shared a few of the dramatic changes in food prices: A box of vanilla sandwich cookies increased from 5.75 lira in September to 8.50 lira in November 2021; in many places baby formula has doubled in price. “People need to understand how bad the economy is here. I believe Bitcoin is the solution. In Turkey, we now have over 5 million people investing in bitcoin and cryptocurrencies,” said Tal. “I try to save as much money as I can to bitcoin, because bitcoin is the best solution.”

Retirees on limited monthly incomes and civil servants have also had similar experiences. Grocery prices have climbed so rapidly that a purchase of tomato paste, bread, yogurt, fruit juice and crackers costs over 46 lira. For a family living on a 2,500 lira monthly income, just eating is prohibitively expensive. Although Erdogan recently raised the salary of many government workers by nearly 30%, this has done little to counteract spiraling inflation.

“Let the president come here and do shopping together with us.” 

Turkey’s escalating living costs have led to more protests and dissent in the country, which is known for stifling opposing views and detaining political opponents.

Mehmet Bozgeyin of the Confederation of Public Employees Trade Unions (KESK) called the government’s economic policies a coup against the people and said “Every day, we wake up to a day with price increases. We have found ourselves in such a situation that we cannot meet our basic needs.”

Worse, shortages are occurring in imported medicines, medical equipment and electronics. Bakeries are threatening to close as ingredients for making bread have become too expensive to obtain. Even the otherwise pro-government supporter Abdulkadir Selvi. Of the Turkish Hurriyet Daily News expressed concern over the present economic course being taken, stating that, “economic turmoil has broad political consequences [that] we can’t ignore.”

Can Bitcoin be a ‘reserve’ currency?

There is a limited supply of Bitcoin – partially like gold. Moreover, the last few years have seen the price of Bitcoin rise faster than other financial instruments, fast enough to retain the value of money and then some. That has enthusiasts on social media asking whether Bitcoin is a preferred investment.