So long Silicon Valley: why Prague is the crypto-anarchist capital of the 21st century

So long Silicon Valley: why Prague is the crypto-anarchist capital of the 21st century
Image: Jonas Jacobsson/Unsplash under a CC licence

Cryptoanarchy dreams of a society which uses the latest in technological advances to ensure greater privacy and promote greater personal freedoms. In Prague, like-minded individuals are banding together to create a blueprint for an alternative society.

13 November 2020

In the autumn of 1988, the Crypto Anarchist Manifesto was typed out on a Macintosh Plus in San Francisco, at a time where digital communication was still in its infancy. “Just as the technology of printing altered and reduced the power of medieval guilds and the social power structure, so too will cryptologic methods fundamentally alter the nature of corporations and of government interference in economic transactions,” wrote cypherpunk and godfather of the movement, Timothy C. May. “Arise, you have nothing to lose but your barbed wire fences!”

Today, in Holešovice, the district of Prague cradled by the Vltava river, you may notice one building stand out with its black façade, inscribed with “Institute of Cryptoanarchy” at the top. The irony in the name reflects a call to action — to bring tools of digital self-sovereignty to the public, from a physical space which exists parallel to the rest of society.

[The Institute of Cryptoanarchy] reflects a call to action — to bring tools of digital self-sovereignty to the public, from a physical space which exists parallel to the rest of society

The institute is part of a bigger organisation which embodies the concept of a parallel society: Paralelni Polis. Inside the building is a hip, dynamic hub, made up of the cafe, Bitcoin Coffee, a coworking space, and an educational centre, namely the Institute of Cryptoanarchy. Once a year in October, Paralelni Polis attracts more attention with a billboard display on its Hackers Congress’ annual theme. This year, it was “Digital Totality”. Speakers from the region and around the world covered the usual topics of decentralised economies, cypherpunk technologies, and political freedom.

“This year we are celebrating our seventh anniversary of Paralelni Polis,” founder Pavol Luptak says, proud of the multi-faceted project which operates completely on cryptocurrencies, boycotting the national currency. “We chose the theme of Digital Totality before the pandemic started, but it became only more relevant given the government interventions during the coronavirus period. We can see that digital privacy is decreasing.”

Paralelni Polis has become increasingly popular, with new faces joining every annual Hackers Congress, and new branches sprouting up in Bratislava, Vienna, and Barcelona. Bitcoin ATMs can be found around the city, and tools for evading government surveillance seem to have an eager audience. How has Prague become the new epicentre of cryptoanarchy?

The Institute of Cryptoanarchy in Prague. Image courtesy of Paralelni Polis

Frank Braun, a privacy extremist and a Paralelni Polis old-timer, explains the differences between the philosophies. “The cypherpunk movement is about using technology to provide more privacy and anonymise interactions; and anarchy pushes for personal freedom with minimal or no interference from the state. Cryptoanarchy simply brings those two together.”

The Czech people do not need to be reminded that invasive government protocols are a dangerous business. For more than 40 years, from 1948 until the Velvet Revolution in 1989, people lived under a strict totalitarian communist regime. Those who did not comply were interrogated, would have their homes invaded, and be put under surveillance. The secret police particularly had their eyes out for illegal literature such as samizdat, makeshift manual publications made by dissidents to evade Soviet censorship. Possession of such material would lead to imprisonment.

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“Because of the scarcity we experienced under the past regime, we had to invent innovative ways to get the stuff that we needed,” says Alena Vranova, a cryptocurrency security expert from Prague and successful figure in the blockchain industry, who was born under Czechoslovakia’s communist regime. “When you know that no one is out there to help you, you need to take care of what you need on your own.” During the communist regime, printers and typewriters were monopolised, inventorised and tracked by the government, so methods of publishing documents had to be improvised with methods such as carbon printing.

Similarly, Czechs have overcome obstacles posed by the government monopoly over masks during the pandemic. When the coronavirus outbreak spread to Europe in March 2020, the Prime Minister confiscated masks and cleaning agents from private companies, in order to distribute them to hospitals — a move which left other members of the public without access to the supplies. “During the first lockdown, people pulled together to gather material and sew masks all night long. Then, they hung the masks outside on the trees so people could take them. Our government had let us down again,” Vranova says. “Not me, since I expected nothing, but some people were expecting some support. We were all obliged to wear the masks, but they were nowhere to be found! I would say that we handled the pandemic despite politicians.”

In 1976, a group of anti-communist dissidents was formed, who were known by the following year as Charter 77. One notable member, the mathematician and intellectual Vaclav Benda, wrote an essay in a samizdat titled Paralelni Polis. In it, he called for his fellow dissidents to abandon hope that protest could change the existing government, and instead focus on creating parallel institutions to answer their basic needs. To preserve their freedom, they established parallel structures for education (teaching critical thinking to counter ideological indoctrination), economy (based on peer-to-peer exchange of goods), information systems (samizdat and unofficial periodicals), and culture (an illegal underground scene).

Alena Vranova sits centre during a panel at the annual Hackers Congress. Image courtesy of Paralelni Polis

Today, many are similarly worried about increasingly invasive policies. In the Czech Republic, since 2016, every payment is sent directly to the tax office to create an electronic registration of sales known as EET in Czech. This means the institution has up-to-date information of all transactions and people’s shopping habits. “For me, digital totality starts with misuse or exploitation of mass data,” Luptak says, who has ensured that Paralelni Polis is able to evade EET by accepting only cryptocurrencies.

In Slovakia, Luptak’s home country, the EET law is even more invasive, with greater detail about people’s purchases. Internet censorship is also growing, with a list of banned sites. The location tracking of citizens without a court order has been possible since March 2020, and in September, Luptak’s IT security firm, Nethemba, claimed that it was able to extract information about more than 130,000 patients who got tested for Covid-19 in Slovakia, including their personal identification numbers and the results of their tests.

“Political change depends on democratic majority, but we know we are a minority. We don’t want to improve the current political system, only to be free to create the environment we choose to live in”

It is these gradually accumulating laws, together with the fresh cultural memory of the totalitarian regime, which makes Czech people “extremely untrusting of governments. There is a natural disgust for the thought of being oppressed under such a regime again,” Vranova says. The concepts originally circulated by dissident Vaclav Benda, as well as the tools proposed by cypherpunk Timothy C. May to achieve digital self-sovereignty, are warmly welcomed.

It also means that in the past decade, Prague became a buzzing hub for the actualisation of cryptoanarchist philosophies with cyberpunk tools. The very first Bitcoin mining network, Slush Pool, was set up in 2010 in the Czech capital. In 2011, the anarchist revolutionary Amir Taaki organised the very first Bitcoin conference. Alena Vranova’s own company, Satoshi Labs, was established in 2013, which creates secure tools for cryptocurrencies like the Trezor hardware wallet. In the same year, Bitcoin ATM manufacturers, General Bytes, set up their headquarters in Prague and in 2014, Pavol Luptak, together with the guerrilla artist collective Zhtoven, set up Paralelni Polis and began organising the annual Hackers Congress.

The menu at Bitcoin Coffee. Image courtesy of Paralelni Polis

“In Paralelni Polis, we don’t believe in political change,” Luptak explains. Benda’s ideas are at the root of his organisation. “Political change depends on democratic majority, but we know we are a minority, so we do not expect things to change the way we envision them. We don’t want to improve the current political system, only to be free to create the environment we choose to live in.”

Paralelni Polis ultimately also want to empower others to make those choices, particularly to a receptive Czech audience — although as all of the classes are in English, they certainly reach more further. At this year’s Hackers’ Congress, Vranova was in charge of various workshops on how members of the public could secure their laptop, how to set up a censorship-resistant chatroom, and how to use a Bitcoin wallet. “Although Paralelni Polis is known as the Bitcoin place, the Congress is not primarily for Hackers and Bitcoiners. We want to attract people that heard about it but never dared, or tried but not successfully, or are interested in making their lives more secure but don’t know how.”

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In a time where technology is evolving fast, and institutional adoption is following right behind, more and more people are anxious about our privacy and digital security. Frank Braun, the privacy extremist from Berlin, keeps his mask, sunglasses and cap on in public, or in the presence of a camera, to preserve his physical identity. His biggest fear is the many countries of the world heading into dystopian totalitarian regimes, with tools for surveillance and manipulation more powerful than at any point in history. “If we reach that stage, we may no longer be able to get out of it. When the Nazis were expanding across Europe, there were forces to fight against them. But this cannot be fought externally anymore.” Braun also reflects on the growing interests in alternative ways of life, like homeschooling or living in vans.

But as Alena Vranova points out, most of the time, companies or governments are not outright malicious. They just make mistakes, and they are also incapable of protecting data. Hackers will always be ahead. And even if the company has their users’ best interests, hackers may not. “People should not rely on external organisations – be that Facebook, the government or your employer – to protect them or their rights.” Politicians, she says, usually only have four years of influence, so don’t carry the consequences of their decisions.

“I think people need to realise that our grandparents worried about securing their valuables in their homes, so why am I not securitising my digital home?” Vranova points out. “We have not yet translated this in our transition from a material to a digital life.”

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