Demystifying Turkish Cryptocurrency Owners: A Comprehensive Analysis

Cryptocurrency adoption is rapidly increasing worldwide, and Turkey is no exception. With above-average ownership rates, Turkey presents a unique opportunity to study and understand the diverse cryptocurrency user landscape. In this blog post, we break down a recent academic article that profiles and characterizes Turkish cryptocurrency owners, identifying three distinct groups: (1) payment users, (2) crypto investors, and (3) crypto traders.

We'll delve into the characteristics of each group, discuss the implications of these findings, and explore potential directions for future research. By understanding the nuances of cryptocurrency usage in Turkey, we can gain insights into how this emerging market may foreshadow similar developments in comparable economies. The peer reviewed article “Profiling Turkish Cryptocurrency Owners: Payment Users, Crypto Investors and Crypto Traders” is published open access in the academic outlet Journal of Risk and Financial Management. The article draws on survey data that CoinGecko collected in January 2021 and used to publish a market report named “Cryptocurrency Awareness in Turkey 2021”.

Background: Cryptocurrency in Turkey

The Turkish cryptocurrency landscape has been largely unexplored in academic research, despite its high ownership rates and unique market conditions. Turkey has one of the highest cryptocurrency ownership rates globally, with an estimated 16% of the population owning some form of digital currency. This high rate of adoption can be attributed to factors such as the country's volatile economic situation, characterized by high inflation rates and a depreciating Turkish lira, which may encourage citizens to seek alternative forms of investment and payment methods.

As an emerging market, Turkey provides a valuable case study that may offer insights into how other similar economies could develop in the future. By examining the demographic, behavioral, and motivational factors of Turkish cryptocurrency owners, this study sheds light on the country's unique usage patterns and how they compare to those observed in other countries, such as the USA and Germany, where cryptocurrency is primarily used as an investment or speculative asset.

Distinct User Groups

The study identified three distinguishable groups of cryptocurrency owners in Turkey using exploratory factor analysis and regression models as empirical methodology. Each group is characterized by different motivations and usage patterns, providing a more nuanced understanding of the diverse landscape of cryptocurrency ownership in the country.

1. Payment Users

Payment users primarily view cryptocurrency as a means of making payments, rather than as an investment or speculative asset. This group is unique to Turkey and may be reflective of the specific economic conditions and challenges faced by the country, such as high inflation rates and the volatility of the Turkish lira. This group's focus on using cryptocurrency for payments is in contrast to findings in other developed countries, where users are typically more interested in the investment and speculative aspects of cryptocurrency. We discuss that the high demand for cryptocurrency as a payment vehicle in Turkey may be specifically related to the use of USD-backed stablecoins such as USDT or USDC.

2. Crypto Investors

Crypto investors are experienced investors who hold cryptocurrency as part of their broader investment strategy. They are typically male, have a higher income, and a higher education level compared to other groups. This group's membership is influenced by the use of domestic cryptocurrency exchanges, suggesting a preference for local platforms. We found that crypto investors in Turkey exhibit a negative relationship with short-term purchase intention, which is more pronounced than in the payment users' group. This finding implies that crypto investors are more likely to hold their investments for the long term, rather than engaging in frequent trading activities.

3. Crypto Traders

Crypto traders are risk-tolerant individuals who actively engage in trading activities. Like crypto investors, they are typically male and have a higher education level. However, their membership is significantly influenced by the use of both domestic and foreign exchanges, with foreign exchanges having a stronger effect. This group also exhibits a positive relationship to short-term purchase intention, in contrast to the other two groups. We highlight that the trader group is more inclined to utilize foreign exchanges compared to the other groups, indicating that potential regulations on foreign cryptocurrency exchanges in Turkey may primarily impact this group.

Implications and Future Research

The identification of these three distinct user groups provides valuable insights into the diverse landscape of cryptocurrency usage in Turkey. By understanding the unique motivations and characteristics of each group, policymakers and industry stakeholders can develop more effective strategies and regulations tailored to the specific needs of each segment. For example, our results can inform the debate on the regulation of foreign and local cryptocurrency exchanges or the use of cryptocurrency for payments in Turkey.

The findings of this study also contribute to the broader understanding of cryptocurrency usage patterns in different countries and economies. As the first study to profile and characterize Turkish cryptocurrency owners, it adds to the literature on cryptocurrency user characteristics and usage, complementing previous research focused on different economies.

One interesting direction for future research is to explore the potential role of stablecoins in the observed usage patterns, particularly among the group of payment users. Understanding whether payment users prefer stablecoins over more volatile cryptocurrencies can provide valuable insights into their motivations and the factors driving their decision-making process.

Moreover, further research is needed to assess whether the identified group of payment users in Turkey represents a unique characteristic of emerging markets in general. If similar adoption patterns are observed in other emerging markets facing comparable economic challenges, this could provide valuable information for policymakers and industry stakeholders seeking to develop effective strategies and interventions in these contexts.

Lastly, the study raises the question of whether Turkey could become a "lead market" for cryptocurrencies, as the country's high cryptocurrency ownership rates and distinct user groups may provide valuable insights into the future development of cryptocurrency adoption in other markets.

Conclusion

This study offers a comprehensive analysis of Turkish cryptocurrency owners, identifying three distinct groups with different motivations and usage patterns: payment users, crypto investors, and crypto traders. By understanding the unique characteristics of each group, we can gain insights into the diverse landscape of cryptocurrency usage in Turkey and how this emerging market may foreshadow similar developments in comparable economies. These findings not only provide valuable information for policymakers and industry stakeholders in Turkey but also contribute to a more nuanced understanding of cryptocurrency usage in other countries and markets.

Reference: Ante, L., Fiedler, F., Steinmetz, F., & Fiedler, I. (2023). Profiling Turkish Cryptocurrency Owners: Payment Users, Crypto Investors and Crypto Traders. Journal of Risk and Financial Management, 16(4), 239. https://doi.org/10.3390/jrfm16040239