Replies to post #14623 on Bitcoin (BTCUSD)

[Investors3]

Yemen’s Civil War Shows the Dangers of Crypto
Feb 28, 2020 at 21:00 UTC
Updated Feb 28, 2020 at 22:23 UTC

https://www.coindesk.com/yemens-civil-war-shows-the-dangers-of-crypto

The Takeaway:

* Yemen, home to what the United Nations calls the world’s biggest
humanitarian crisis, is in a state of civil war.

* Half of the country is controlled by the Iran-backed Houthi militant
group, which has developed its own cryptocurrency.

* People from Yemen are often wary of being associated with
cryptocurrency, in part because of the Houthis’ crypto efforts.

* Despite the potential advantages of a trans-national, censorship-
resistant cryptocurrency in the country, connectivity issues make it
very hard to get bitcoin into this war zone.

* “It’s too soon for bitcoin,” one researcher said.

So far, it appears using bitcoin (BTC) in a war zone may be riskier than cash, especially when illicit actors use cryptocurrency as well as civilians.

The ongoing civil war in Yemen highlights the contradictions underlying bitcoin adoption: It’s difficult for civilians to acquire cryptocurrency without heavily regulated infrastructure that makes them vulnerable to coercion and surveillance. Such is the case in Yemen, where the Iran-backed Houthi militia controls the northern half of the country and a failing government controls the central bank in the south.

For most people in Yemen, purchasing bitcoin is nearly impossible. Most international companies avoid doing business in Yemen due to concerns over U.S. sanctions, which aren’t comprehensive like the sanctions against Iran but nonetheless raise compliance questions. This week the United Nations Security Council approved further sanctions against Yemen in an attempt to curtail arms trading between Iran and the Houthis. With the Houthis now functionally governing the northern half of the country, the Trump administration may reportedly suspend humanitarian aid.

“Everyone’s looking at a timeline of a month or two. ... That’s the point at which different [donors] will start to suspend some of the programs,” a senior U.S. State Department official told Reuters on Tuesday.

Plus, peer-to-peer markets are hampered by both cash shortages and a lack of reliable communications infrastructure. Yemeni-American researcher Ibraham Qatabi at the Center for Constitutional Rights said telecom and electricity companies are owned by governments, both foreign and domestic, depending on the region. There’s no need for a warrant if Big Brother already owns the pipes. Plus, Qatabi said, most international money transfers are monitored by local authorities.

“Everything is monitored. They have everyone’s information,” Qatabi said. “If they want to go after somebody, they’ll have access to those files.”

Hamza Alshargabi, a doctor who worked in Yemen until 2012 and briefly mined ether (ETH) after he immigrated to the U.S., agreed it’s “almost impossible” to get a safe and reliable internet or phone connection in most of Yemen. He said in big cities connectivity is “so expensive that it’s unusable,” so he can’t imagine his sister using bitcoin in Yemen. Although someday mesh networks may help bitcoiners transact without reliable internet, there’s hardly any bitcoin to trade on the ground.

Meanwhile, it appears the Houthis are promoting cryptocurrency adoption, just not censorship-resistant bitcoin.

According to a report from the Yemen-focused Sana’a Center for Strategic Studies (SCSS) in December 2019 the Houthi militia instructed civilians in northern Yemen to trade in the internationally recognized bills for “an equivalent amount of e-Rials,” a cryptocurrency developed by the militant group.

As such, some Yemeni civilians and expats are scared to be associated with cryptocurrency, including bitcoin. If protests last year in Iran and Lebanon offered a peek at bitcoin’s limitations, then Yemen is the full picture of bitcoin usage still relying on government infrastructure.

Crypto wars

Cryptocurrency has itself become a weapon in Yemen’s civil war.

By issuing a digital currency, the Houthis strived to establish a circular economy with less dependence on banks hostile to their cause. The group even banned the possession of new Yemeni rial bills.

“They are denying the government the most basic function, printing money,” Alshargabi said. “At least in Iran there is a lot of wealth and oil, commerce they can build around. … In Yemen, there’s nothing to sell.”

This isn’t the Houthi’s first crypto venture. The group has been mining decentralized cryptocurrencies since 2017, according to the cybersecurity company Recorded Future, which declined to comment for this article. It is not clear which currencies the Houthis mined. However, some Iranian military leaders are looking to create cryptocurrency tools in order to circumnavigate sanctions. And, according to the Brookings Institute, “Iran’s influence with the Houthis is growing.”

Perhaps this is, in part, why the Houthis tested a payments pilot in April 2019, using the Houthi-run Yemen Petroleum Company and other public institutions, like the Yemeni Telecommunications Corporation. But the employees protested and refused to accept e-Rial salaries.

“Nine months on, the e-Rial can still only be used to pay limited expenses, such as water and electricity utility bills and mobile phone services,” the recent SCSS report noted. “There is currently no mechanism for using the e-Rial for normal daily economic activities.”

One SCSS researcher, who requested anonymity for safety, said the Houthis started these cryptocurrency experiments to deal with a local cash shortage. He added bitcoin may be caught in a paradigm where, socially, people mostly trust sources a friend or relative personally vouched for. Yet, talking about bitcoin on social media or local phone networks could get that person “targeted.”

(Note that all sources for this article commented from the Yemeni diaspora, due in part to what the SCSS researcher described as a “high level of scrutiny” through local telecommunications networks and “general concerns about monitoring financial activities in the area.”)

That’s why Alshargabi eventually stopped mining ether in the U.S., scared the American government would profile him for additional surveillance. Even if he has no connection to illicit crypto users in Yemen, Alshargabi isn’t confident the legal system would protect a foreign-born Muslim.

“How do I know I’m not going to get a knock on my door someday?” Alshargabi said.

So Alshargabi sends money to family in Yemen the old-fashioned way instead.

“You call your friend and say, ‘You give my mom $200 and I’ll give your mom over here $200.’ There are regular people in that type of business,” he said.

Dangerous public ledgers

This same ad hoc system Alshargabi uses to send his family cash also works for the few civilians in Yemen who want to own bitcoin, not e-Rials.

Since most global cryptocurrency exchanges don’t accept credit cards or bank transfers from Yemen, small groups of crypto-curious Yemenites show personal relationships across the diaspora are the key to accessing bitcoin in times of crisis.

Such was the case for a small group of roughly eight friends around 2018, including computer science student Manal Ghanem. She didn’t buy any herself, just played with simulations and testnets. But a few of her friends with family abroad got bitcoin by using foreign bank accounts on global exchanges. One bitcoiner would shop online for foreign products, then sell it locally for cash, she said, because shipping was the least difficult part of the cumbersome process.

“I do believe with the collapsing financial institutions in Yemen, if people get a bit educated they can leverage bitcoin to their benefit,” she said. “They are eager to create new opportunities but it can be really dangerous to go online and gamble what little you have and then lose.”

Her friend Faissal Alshaabi said he struggled to use exchanges in Yemen because his internet connection was too weak to even load a website. Alshaabi turned to a cloud mining service instead, but American regulators shut it down and he lost his capital.

Despite all these challenges, Alshaabi said he still believes cryptocurrency could be useful inside Yemen.

“It's a fast way to send money and with low fees, so I think people would use it as payment method,” he said.

In the meantime, the most important thing Yemenites can do is establish situations where they can acquire bitcoin without attracting the wrong type of attention. This education requires in-person meetings. Governments may not be able to confiscate your bitcoin, but they can take your life.

“In terms of increasing awareness, that would have to be verbally transmitted,” the researcher said. “It’s too soon for bitcoin.”

[Investors3]

As Lira Plunges, Bitcoin Interest Among Turkey's Poor Spikes
By Ekin Genç
4 min read
Mar 22, 2021

As the Turkish lira hit today near historic lows, Turkey's Google searches for Bitcoin has reached "peaked popularity."

In brief

* The Turkish lira plunged today 15% following President Erdogan’s
appointment of a new central bank governor.

* The new governor, unlike the previous short-tenured governor, is
aligned with the president’s policy of low interest rates.

* Google searches for Bitcoin surged amid lira turmoil, especially in the
poorer parts of the country.

The Turkish lira plunged this morning 15% against the dollar as President Erdogan sacked late Friday night the reformist central bank governor Naci Agbal, replacing him with an ally figure, Sahap Kavcioglu.

Turkey’s currency is historically plagued by high inflation, having also recorded a 23% drop against the dollar last year, and was in free-fall until the previous governor, appointed in November, raised interest rates to rein in inflation despite Erdogan’s stance against high interest rates—the reason why he was ousted, according to analysts who spoke to Decrypt.

According to Google Trends data, which tracks Google searches, the number of searches for “Bitcoin” in the country last night reached “peaked popularity” (a relative score of "100") within the last seven days, coinciding with the Turkish social-media shockwaves as Asian markets opened amid fresh lira turmoil.

But a further analysis into the Google Trends data shows that the interest in Bitcoin spiked particularly in some of the country's most impoverished provinces, among the top three are Diyarbakir, Batman, and Hakkari.

A nation of 82 million sees its currency crash 15% in a single day.

No coincidence that Turkey has some of the highest per-capita Bitcoin usage in the world.

A growing number of Turks are peacefully choosing a different monetary system that their oppressors can’t control. https://t.co/BD0bl7URic

— Alex Gladstein 🌋 ⚡ (@gladstein) March 21, 2021

A Turkish cryptocurrency industry representative, who wished to remain anonymous as a recent update to the Turkish Lira Protection Law penalizes what may be interpreted as defaming the country’s currency, said that their company recorded today a particularly high trading volume, speculating that fears over capital controls may eventually push regular citizens toward seeking alternatives that don’t involve regular bank accounts.

“For many, especially the young, crypto investment is increasingly seen as the digital version of the country's tradition of hoarding physical gold at homes,” the crypto executive said.

Turkish Lira Woes

Coinciding with Bitcoin’s online search popularity in Turkey is Erdogan’s abrupt decision last Friday that replaced the central bank’s governor by a presidential decree.

The decision follows attempts by the previous governor, appointed only last November, to rein in inflation through rate hikes.

“Central Bank's decision to increase the interest rates by two percentage points last week was an unexpected event despite being the right response,” Özge Öner, assistant professor of economics at the University of Cambridge, told Decrypt.

That was unexpected because Erdogan, who has much influence on the central bank, is a staunch promoter and practitioner of an unusual economic theory that high interest rates fuel inflation, a theory that is also espoused by the new governor, as per op-ed he has penned over the year for the Islamist daily Yeni Safak. The paper also accused last week the previous central bank governor of being part of a conspiracy against the economy due to his pro-high interest rates policy.

Turkey’s new governor of Central Bank in February:

• CBRT shouldn’t insist on its high interest rate policy
• Many countries with domestic/foreign problems have negative real interest rates so could Turkey
• Rate hikes indirectly creates inflation https://t.co/sY518SKSiI

— Ragıp Soylu (@ragipsoylu) March 19, 2021

“For crypto enthusiasts who love to bash fiat, defined as money by decree, the whole lira drama provides a convenient anecdote,” Alper Akalin, a financial analyst and the co-founder of DEVA, an opposition party co-led by Erdogan’s former economic minister, told Decrypt.

“Turkish lira languished this morning near record low literally following a presidential decree.”

But it’s only the beginning of another downward spiral, he explained, adding that there is an unequivocal expectation among analysts that the new governor will reverse rate hikes initiated by the previous governor.

To calm market fears, Treasury and Finance Minister Lutfi Elvan tweeted a statement this morning saying that the country will stick to free markets and a liberal foreign-exchange regime.

But the damage is already done, according to Öner. “It’s more appropriate to define the situation as hyper erosion of trust caused by political turmoil,” she said, “rather than just a currency crisis as a lot of people seem to assume.”

Government failures like these give credibility to crypto in the eyes of ordinary people living under high-inflation regimes like Turkey, Akalin said.

"Turkish government's handling of the country's currency has been an unintended promotion for crypto."

https://decrypt.co/62438/lira-plunges-bitcoin-interest-turkey-spikes?&utm_medium=referral&utm_campaign=feed&utm_source=coinbase