Why Bitcoin's Star is Rising in the Czech Republic
Bitcoin's public image may have taken a beating recently, with its price dramatically falling at the beginning of the year and the recurring coverage of the Silk Road trial dominating the headlines.
However, there is evidence to suggest that bitcoin's popularity may be rising in the Czech Republic. Downloads of the free bitcoin-QT client in the country have soared in the last month, surpassing the US – the former world leader – and topping the downloads table with 777.
Martin Stránský, CEO of Prague-based bitcoin center wBTCb, attributed the rise in part to the country's "strong community", one that he said extends beyond what he called "the hardcore anarcho-capitalists, libertarians and hackers" usually associated with bitcoin.
"We have noticed an increase in our bitcoin services as the word about bitcoin is spreading to larger groups and people are starting to notice this technology."
Despite these on-the-ground reports, though, the Czech Republic has ranked 157 in the Bitcoin Market Potential Index (BMPI), a study that conceptualises and ranks the potential utility of bitcoin across 178 countries.
So, what is the actual state of bitcoin in the country and what is driving its seeming popularity?
Good technical education
Vranova said that she can "only speculate on a number of influences", but pointed out that the emergence of bitcoin-related businesses may be partly due to its strong education system, "particularly when it comes to technical training".
Marek Palatinus, creator of Slush Pool, the first pooled bitcoin mine, attended the Hradec Králové University – whilst his colleague, Pavol Rusnak, was educated at Prague's Charles University where he read computer science.
Czechs have a long-standing engineering history. Under socialism, Czechoslovakia was considered, together with the German Democratic republic, the most technically advanced country in the Soviet bloc.
The Czech Technical University in Prague, one of the largest in the country, is also the oldest non-military technical university in Europe.
The university's long tradition of cutting edge science and engineering ensues from the work of many great personalities – including the famous physicist Christian Doppler and renowned engineers such as FJ Gerstner and J Bozek.
The Czech education system has also produced a significant amount of video game developers, who have created many successful games.
Lack of trust, DIY tradition
Despite the long-standing reputation of their public education system, Czechs have traditionally had a low level of trust in national political institutions.
A public opinion survey conducted by the European Commission in 2009 found that only 28% of people trust the Czech Government, compared to the 32% of people who trust governments and parliaments in the EU.
Vranova agreed that the country's totalitarian past has had an effect, stating:
"The Czech government and public institutions have a very poor public image. The economy is struggling between poor efficiency and low innovation."
She continued to say that "[the government] has the biggest innovation opportunity of the last two decades [in bitcoin] before their eyes and yet they miss to see it".
An OECD economic survey about the Czech Republic states that "innovation is overly dependent on foreign patents and researchers, making production vulnerable to relocation".
Unlike the US, where there is a strong capital investment culture which saw it raise $260m in 2014, Czechs are much more reliant on their own resources.
Vranova said that bitcoin startups are "not emerging because of good market conditions or governmental support", adding that "luckily there is a strong DIY tradition here".
"Our nature allows us to find solutions even with very limited resources", she explained. "There is no secure hardware wallet? Okay, let's create it. There is no solution to decreasing rewards from mining? Do a mining pool."
Fringe ideas flourish
The ramifications of totalitarianism in the Czech Republic are also affecting the way in which people are embracing technology.
Paralelni Pollis is a non-profit organisation based in Prague that focuses on the "potential sociopolitical impact of new technologies, particularly those based on the idea of decentralisation".
It is a unique space, comprising of a hackerspace, café, cowering space and a workspace for 3D printing. Bitcoin is the only valid form of payment.
The cryptoanarchists set out to provide "tools for unlimited dissemination of information on the Internet and encouraging a parallel decentralised economy, cryptocurrencies and other conditions for the development of a free society in the 21st century", because they believe that "new technology brings the possibility of choice".
Petr Žílka, a spokesperson, said:
"Czech people are very open to some new technologies. These spread relatively quickly once they become available."
There seems to be a prevailing libertarian sentiment among some cohorts of the population, who challenge the status quo by seeking alternative ways of doing things.
Žílka attributed this attitude to the Czech Republic's communist heritage. He explains that there is an old custom which reads "if you don't cheat the state you cheat your family", meaning that if one finds a way of avoiding regulation then it is acceptable to do so.
Long way to go
However, Žílka said that it is still early to quantify the real increase of bitcoin users.
"It is year 6 AD, after decentralisation, so we are still at the very beginning. All we need now is to show people that it can benefit everyone both on a small and large scale," he said.
Stránský also pointed out that there have been some "good and bad" articles about bitcoin "in major newspapers".
Despite bitcoin's seeming popularity among the Czech population, he said that bitcoin is still in its early stages in terms of reaching daily adoption, adding:
"I spoke to a restaurant manager, who said that they had only four customers during the six months that they had been accepting bitcoin."
Perhaps unsurprisingly, Stránský added that "people hold bitcoin for speculation or investment" but its volatility means that they still find it hard to pay with it.
A cobbler, whose repair shop is located in Prague, also said that he had been accepting bitcoin for a year but is yet to be paid in bitcoin.
Czech Republic via Shutterstock
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