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Tales from the crypto: lira crisis fuels Bitcoin boom in Turkey | Business

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In the offices of Altcointurk, a cryptocurrency hub tucked away in a sidestreet in Istanbul’s bustling Kadıköy neighbourhood, two wall-mounted TV sets showed the live value of currencies bitcoin and Ethereum, both graphs sloping downwards.

Altcointurk’s all-male inhabitants were not worried – in the chaotic world of cryptocurrency, their fortunes could soon change.

“A lot of people come here, some are rich, some are poor. But the target is always getting rich – although a lot of people think that if they invest a hundred dollars, they will get a million,” said one founder of Altcointurk known only as Shark, who pointedly added that he has trademarked his nickname.

“Other people come here to take their first lessons in the technical side of crypto, and then start to trade,” he said.

Altcointurk was founded to teach Turkish citizens about how to invest in cryptocurrencies, which provide a digital, decentralised alternative to the mainstream financial system.

Cryptocurrency trading has boomed in popularity in Turkey during a financial crisis that halved the value of the lira last year, while inflation recently surged above 30%, a two-decade high.

While most Turkish citizens looking to avoid the devaluation of their savings in lira tend to reinvest in dollars or gold, an increasing number of younger investors see cryptocurrencies as the way forward.

This has drawn the ire of the government, particularly President Recep Tayyip Erdoğan, who declared that “we are in a war against Bitcoin” and recently unveiled a programme to encourage Turkish citizens to switch their savings to lira and stash the cash in the banks.

To cryptocurrency believers, the increasing lack of trust in government solutions is proof that digital currencies are the best alternative to Turkey’s embattled lira.

Yet whether cryptocurrencies genuinely provide an opportunity to get rich is unclear. Evangelists such as the Altcointurk founders say that if the influx of unknowing investors risk falling prey to scams or simply wasting their money, it is the fault of the individual.

“People play at cryptocurrency trading like they’re gambling, like betting,” said Shark. I ask if this means people are essentially trying to gamble in order to get rich. “Yes, yes. It’s exactly like betting,” he said, laughing.

Shark declined to reveal how much money he has made through cryptocurrency investments, citing concerns that the government might suddenly swoop in and tax his gains.

Altcointurk members – by their own estimates – have trained more than 300 people since the hub started five years ago, and more attend a weekly event they host to preach the wonders of crypto.

But they are careful how they operate in an uncertain regulatory environment, sticking purely to teaching people how to trade rather than directly assisting or discussing the benefits of any one currency. “We’re providing a point of view,” said Shark.

Cryptocurrencies exist in a legal grey area in Turkey. The government banned their use to pay for goods and services in April last year, while trading them is still permitted.

Several exchanges, where citizens can trade lira or usually US dollars for cryptocurrency, have closed in recent months amid confusion over the trade’s legal status. Others have closed following high-profile scandals, such as the exchange Thodex, which shut down after the owner fled the country taking at least $2bn (£1.5bn) in funds with him.

But for some, the sense that others are getting rich outweighs their own sense of risk. “The huge volatility encourages people, as well as the news that other people made profits from previous bull runs,” said one crypto investor, who asked to be identified only by his initials, BG.

BG owns a digital media agency, and began investing in cryptocurrencies in 2017. “Even my mother is asking me to help her invest in Bitcoin now,” he said. “This started with the young, and now older people are interested. They give their money to their children or younger people and say: ‘Invest this for me, let’s see how it goes.’

“The risk is not investing itself, it’s because people might invest in unregulated exchanges without any protection from the government and end up losing all their money.”

The true size of the cryptocurrency market in Turkey is hard to estimate as many of the figures are produced by the industry itself. Bitcoin.com, a news site associated with the cryptocurrency, said in December that Turkey had surpassed a million trades a day.

An estimated 5 million people in Turkey currently operate cryptocurrency trading accounts, according to politicians seeking to regulate the trade.

“While there’s clearly some segment of the market that can invest in cryptocurrency, I don’t think it’s for the average consumer to all hold a bit of crypto,” said Ganesh Viswanath-Natraj, an expert in the relationship between cryptocurrency and emerging markets at Warwick Business School.

Viswanath-Natraj pointed to the appeal of cryptocurrency in countries such as Turkey or Venezuela where inflation is high, but added that consumers are more likely to benefit if they choose so-called stablecoins, whose value is pegged to external factors such as the dollar. “The day-to-day fluctuations in Bitcoin are in the order of 10%, it’s high, so I wouldn’t advocate a complete reshuffle of savings to speculative cryptocurrencies,” he said.

Following a steep drop in the value of the lira last December, Erdoğan announced a new financial scheme to encourage citizens to deposit their money in Turkish banks to raise the value of the currency. The scheme has attracted 90bn lira (£4.7bn) in deposits, but little of this has reportedly come from foreign currency as intended.

“It’s a win-win opportunity on paper,” said BG. He said he declined to participate, as the programme requires long-term investments. Others, he said, felt it was simply too risky to trust the government.

“People opposed to the government, those that support the [political] opposition, they have trust issues,” he said. “Once you have trust issues, you don’t convert your money and enrol in a government campaign like this. It’s a good idea on paper but fundamentally it won’t solve any economic problems. Long-term, it’s not going to help anything.”

As the government attempts to encourage lira investments, Turkey’s parliament is drafting a law to regulate cryptocurrency markets, currently the subject of fierce debate among crypto enthusiasts.

Some fear undue regulation in an industry where freedom is prized. Others say that limited regulation is necessary to protect consumers from predatory exchanges.

Professional traders such as Bünyamin Emeç were dismissive of the government’s attempts to regulate the industry. “They have no clue what they’re doing, and decisions will be made by people who don’t understand how cryptocurrency works,” he said.

The appeal of engaging with an industry without government interference is also seen by some like Emeç as a reason to invest. “I call on people to move towards these liberating [trading] platforms – this is my mission, basically. It’s a way of life,” he said.

Emeç said continuing to invest in cryptocurrency was the only way for him to recoup $10m in digital currency trading losses and a Bitcoin scam that cost him more than $1m. “It’s a very volatile market, so I can only get that amount of money back through the same market,” he said.

Additional reporting: Gökçe Saraçoğlu

This article was amended on 25 January 2022. The name of the cryptocurrency hub in Istanbul is Altcointurk, not Altcoin as stated in an earlier version.

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Rocket Lab setting up for first Moon mission • The Register

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Rocket Lab has taken delivery of NASA’s CAPSTONE spacecraft at its New Zealand launch pad ahead of a mission to the Moon.

It’s been quite a journey for CAPSTONE [Cislunar Autonomous Positioning System Technology Operations and Navigation Experiment], which was originally supposed to launch from Rocket Lab’s US launchpad at Wallops Island in Virginia.

The pad, Launch Complex 2, has been completed for a while now. However, delays in certifying Rocket Lab’s Autonomous Flight Termination System (AFTS) pushed the move to Launch Complex 1 in Mahia, New Zealand.

The wet dress rehearsal for the launch was completed last night, prompting CEO Peter Beck to say: “Next stop…the Moon!”

“I always wanted to say that,” he added. Beck has long dreamed of sending his rockets beyond Low Earth Orbit (LEO) and is planning a mission to Venus in 2023. However, the Moon is than the company has sent its rockets to date.

CAPSTONE is to be sent to a Near Rectilinear Halo Orbit (NRHO) around the Moon, a location planned for the NASA, ESA, and CSA Gateway. CAPSTONE’s primary mission is to verify simulations that the interaction gravity of the Earth and Moon will make for a stable orbit.

The milestone was hit as Rocket Lab announced its first quarter 2022 results. Overall, the company made a net loss of $26.7 million, down from the $15.9 million loss of the same period last year, but revenues jumped to $40.7 million from $18.2 million. Most interesting was the make-up of that revenue. Space Systems (the company’s Photon spacecraft and the components it sells) accounted for a whopping 84 percent of Q1 revenue. Actual Electron rockets fared less well; during a call with analysts, CFO Adam Spice said that launches contributed just $6.6 million.

Going forward, the company expects second quarter revenues to be between $51 million and $54 million. It is including three dedicated launches in that figure (of which CAPSTONE is one). Two have already happened, and there is potential for a fourth, but the company has opted to take a prudent path and not include it in the figures.

As for CAPSTONE, it will be integrated with the Electron rocket and Photon spacecraft bus ahead of the launch window opening on May 31. The Electron will launch the spacecraft into LEO and the Photon will take care of the ballistic lunar transfer via multiple orbit raisings. A final burn of Photon’s engine will occur on the sixth day, enough to escape Earth orbit and send CAPSTONE on a course for the Moon. ®



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Dublin’s UrbanVolt bags €36m for its solar energy business

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A DCU Alpha spin-out, UrbanVolt says it sells power generated from solar energy at up to 30pc lower rates than traditional suppliers.

UrbanVolt, a Dublin-based clean energy company, has secured €36m in financing to expand its solar panel business in Ireland and the UK.

The funding includes a €30m asset-backed seven-year loan from Swedish credit fund PCP and €6m from existing funding partners, BVP and Beach Point Capital.

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Founded in 2015 by Kevin Maughan, Graham Deane and Declan Barrett, UrbanVolt finances and installs solar panels on the rooftops of commercial and industrial businesses, selling the solar electricity generated to the businesses at up to 30pc lower rate than traditional suppliers.

The company said it also guarantees the price for up to 30 years, protecting businesses against rising energy costs for decades to come, with no minimum amount payable or standing charges – meaning that customers pay proportionate to their consumption.

“This is a transformational deal, which will allow us to scale at pace to meet the significant demand in the market while also streamlining the process of installing solar panels for our customers’ benefit,” said Maughan, who is also the CEO of the DCU Alpha spin-out.

“This first funding facility from PCP will see our project output grow by 20x over the coming years.  It is also happening at a time when the demand for renewable energy is rising significantly given climate and geopolitical crises.”

The loan facility will be used to fund the installation of solar panels and related equipment on UrbanVolt’s primary target of commercial and industrial client sites in both Ireland and the UK.

It started supplying solar-generated electricity directly to businesses in Ireland last summer, since when it has agreed contracts with more than 60 companies and completed seven installations.

Maughan sad that there is “simply no compelling reason” for commercial and industrial operators to opt for traditional energy sources anymore, adding that UrbanVolt offers “unparalleled” price security and clean energy.

“By incorporating an ‘as a service’ business model, our customers only pay for the energy they use without a standing charge, and the cost of our equipment and its maintenance is kept off their balance sheet.”

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$7.6bn of ‘stablecoin’ tether redeemed since start of crypto crisis | Cryptocurrencies

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Digital investors have withdrawn savings in the “stablecoin” tether worth $7.6bn (£6.2bn) since the cryptocurrency crisis began last week, suggesting the company has paid out a sum almost twice its total cash holdings to spooked depositors.

Stablecoins are supposed to have a fixed value matched to a real-world asset, in most cases $1 a token. However, faith in the concept was rocked last Tuesday when another big player, terra, broke its peg to the dollar. That has fuelled a wider sell-off across the crypto sector, which relies on stablecoins for much of its financial engineering.

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What is a stablecoin?

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A stablecoin, like the name suggests, is a type of cryptocurrency that is supposed to have a stable value, such as US$1 per token. How they achieve that varies: the largest, such as tether and USD Coin, are effectively banks. They hold large reserves in cash, liquid assets, and other investments, and simply use those reserves to maintain a stable price.

Others, known as “algorithmic stablecoins”, attempt to do the same thing but without any reserves. They have been criticised as effectively being backed by Ponzi schemes, since they require continuous inflows of cash to ensure they don’t collapse.

Stablecoins are an important part of the cryptocurrency ecosystem. They provide a safer place for investors to store capital without going through the hassle of cashing out entirely, and allow assets to be denominated in conventional currency, rather than other extremely volatile tokens.

Thank you for your feedback.

Tether, the third biggest cryptocurrency by “market cap”, experienced a short-lived crisis on Thursday when its value dropped from $1 to 95¢ as savers feared it would follow its fellow stablecoin terra and collapse. However, the token, which is controlled by a private company with close links to the crypto exchange Bitfinex, has since largely restored its dollar peg by honouring a promise to allow savers to always withdraw $1 for every tether they give back to the company.

The company only allows direct withdrawals of at least $100,000 for each request, and charges a fee of 0.1% on redemptions. Anyone with less tether than that minimum can only turn their money into dollars by finding someone to buy it from them – a disparity that fuelled the temporary collapse in value.

Despite the difficulties, according to public blockchain data, $7.6bn of tether has been reallocated in this way since Thursday. That is almost twice the cash that Tether had in its reserves at the end of last year, according to accounts published on its website.

Most of the rest of its reserves are held in “cash-like” assets, the majority of which are $35bn of US government debt and $25bn of corporate bonds. However, the company has refused to share any further details of the investments, with its chief technology officer, Paolo Ardoino, telling the Financial Times: “We don’t want to give our secret sauce.”

There have long been fears as to Tether’s ability to honour all redemptions. The company had once said it backed its currency with “US dollars”, a claim the New York attorney general said in 2021 “was a lie”. Now, it simply claims its currency is “backed 100% by Tether’s reserves”.

By contrast, terra was backed by a complex algorithm that required the value of a sister cryptocurrency, luna, to constantly rise in order to maintain the dollar peg. When the crash hit last week, the system went into a “death spiral”, automatically printing more luna, which crashed the price further, until luna lost 99.9995% of its value in a matter of days and terra was left languishing at $0.11.

The charismatic founder of the Terra project, Do Kwon, has said he wants to relaunch the currency. In a proposal posted to the project’s message board on Friday, he suggested wiping all ownership of luna, and redistributing 1bn new tokens, with most going to those who hold the stablecoin, or who held luna before last week’s crash.

“It is a hard balance – and no easy answers in redistributing value within the network,” Kwon wrote. “But value must be distributed to allow the ecosystem to survive, and in its current state it will not.”

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Kwon also faces questions about how the vast sums of bitcoin that his project had amassed to back terra were spent. According to a breakdown shared by the organisation, it sold more than 80,000 bitcoins, worth more than $2.4bn, to unnamed parties in exchange for terra valued at $1 – at a time when the public price of the currency was under 75¢.

The jitters around stablecoins have combined with a general slump in tech stocks and the wider US downturn to trigger a wider crisis of confidence across the crypto sector. Bitcoin and ethereum, the two biggest cryptocurrencies, are down more than 10% over the last seven days, with ethereum dropping 17% to less than $2,000. Smaller currencies have, as always, been more volatile, with dogecoin falling 26% over the week.

Even some of the most vocal backers of digital currencies are now querying the promises of the sector. The founder of the crypto exchange FTX, Sam Bankman-Fried, said in an interview with the Financial Times that bitcoin has no future as a payments network because of the inherent inefficiencies of its blockchain, the public digital register that records its transactions. Instead, he argued, it could only function as a gold-like store of long-term value.



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