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The liberating idea behind Prague’s bitcoin-only cafe

The service table at the Paralelní Polis cafe blends into the surrounding space, allowing patrons and workers to move freely and without restriction. (Paralelní Polis)

Step inside the newest coffeehouse on Dělnická street in Prague and it doesn’t take long to notice that something’s amiss. There’s no cash register, nor a counter where customers would typically form a line.

Instead, you’ll find a long, wood slab table situated ever so slightly towards the left side of the room, where a wide selection of pastries, along with menus, plates, cups, utensils, jugs of water and an expresso machine can be found neatly laid out in the open.

Oddly enough, there’s something about the arrangement that’s refreshing, and at the same time, a bit disconcerting. Upon passing through the first time, my initial reaction was to quickly scan the room for any apron-wearing employee. And as the confusion intensified, so did the urge to grab a cup and, heck, whip up a latte myself.

Just as I began mulling over that very notion, a gentlemen with a tightly-trimmed beard and who looked to be in his 20’s, got up from a nearby table, where he had been seated with a couple of young women, and walked over to greet me.

“I know the set-up can be sort of disorientating, but that’s the whole point,” Michal Navrátil, operations manager and part-time barista, assured me. “The idea is that by not having uniforms, we also get rid of the imposed separation between patrons and workers.”

Paralelní Polis, which in Czech means “Parallel World,” is known mostly for being perhaps the world’s first bitcoin-only cafe. (Here’s my photo essay of what it’s like to buy coffee in the shop.) All transactions — from wages to point of sale — are processed virtually, using one of the most well-recognized cryptocurrencies. More broadly though, the recently-renovated space, which includes a co-working room and hacker space, was conceived as way to demonstrate on a micro level how an entirely decentralized society might function.

“Even within the management team, there are no hierarchies,” said a spokesman for the cafe who goes by the pseudonym Petr Žílka. “Everyone who works here is considered a partner in the organization.”

To understand what’s going on here is to peer into the collective mind of Ztohoven, the rabble-rousing band of artists and hackers that run the joint. Known for their elaborate, guerrilla-style pranks, the anonymous group made headlines back in 2007, when six of its members hacked a live news broadcast signal and inserted a computer-generated atomic mushroom cloud that projected  onto viewers’ TV screens. Prosecuted for scaremongering, they characterized the stunt as nothing more than a statement about the media’s capacity to “brainwash” the public. Criminal charges was subsequently dropped.

Since then, almost all involved have come clean with their true identities and are now channeling their penchant for subverting authority toward educating the public about what they perceive to be the encroaching tyranny of centralized institutions.

Projects such as Paralelní Polis are, hence, central to these efforts. For instance, new computers will be installed in the coming weeks. Through a special type of software called The Onion Router (TOR), they’ll allow for anonymous access to what’s known as the deep Web, which also includes unindexed Web content that few users ever get to explore. One workstation, however, will provide a much more constrained viewpoint, by giving visitors access to the Internet as experienced by those living in China.

“If you ever look at the Web through Chinese portals, it’s so controlled that it’s scary,” Žílka says. “How can you we ever be sure that we all won’t eventually end up living under a regime like that? We want people to see the difference.”

Housed on the third floor of the building is the Crypto-Anarchy Institute, where artists, activists and others committed to “preserving freedoms which we have been loosing as a society,” can take advantage of more advanced technological tools and resources,” according to the group’s Web site.

And it’s in this spirit of utter freedom, of wanting to disentangle business activities from the meddling influence of powerful authorities that have enabled “digital” currencies, such as bitcoin, to flourish. Unlike conventional fiat money, bitcoin can be used to make secure, verifiable payments for goods and services, without the need for intermediaries, such as Visa or Mastercard, which impose transaction fees that, over time, can add up. As such, these peer-to-peer exchanges can also be carried out somewhat anonymously, allowing for a degree of privacy that’s unprecedented in the heavily-tracked realm of electronic payments.

“Freedom for us is to be as independent of the state system as much as possible, so in this sense, we’re using new technologies to gain access to freedom,” Žílka explained. “And to maintain the ability to trade freely, act independently, without any reliance or interference from the state, central banks and other third parties, we’ve decided to make it a closed system.”

As Zelka had alluded to, paying with bitcoin is fairly quick and efficient. To prove his point, he had me run a transaction for a cup of coffee I had ordered earlier.

Ease and convenience aside, backers of bitcoin technology have yet to account for a number serious flaws. There were, of course, the relentless cyber attacks on now-defunct Mt. Gox, the world’s first bitcoin exchange, that led to the declared loss of some 850,000 bitcoins, many of which have yet unaccounted for.

More worrisome, though, is that the value of bitcoin still hasn’t stabilized. That means, for instance, on any given day, earnings from the sale of coffee can surpass totals from the previous day, even if less coffee was sold.

“It’s kind of quirky like that,” Navrátil admits.

Still, steadfast supporters sees bitcoin’s propensity to fluctuate as a mark of a young currency still coming into its own. The expectation, then, is that as more people discover Bitcoin and use it to make transactions on a regular basis, the degree in which it spikes and falls in value will start to subside over time, eventually leveling off.

Earlier this year, Vox’s Timothy B. Lee charted the cryptocurrency’s wild swings over the past three years and found signs that this may very well be the case. For many economists, the underlying issue ultimately is whether consumers, tax-levying governments and other institutions can trust a medium of exchange that isn’t, and likely will never be, legal tender.

“The fact that there’s a hard cap on how many bitcoins can be created means that it’s, by design, deflationary,” says Mark T. Williams, an economist at Boston University. “The problem with that is that the instruments used to counter the broader effects that stem from the ebb and flow of the economy, such as lowering interests rates or printing money, just aren’t there.”

He also warns that the deflationary nature of bitcoin, which encourages people to hoard their supply, will become more problematic during a deep recession.

“Stimulating the economy,” he adds,”requires spending.”

Steve Horowitz, an economics professor at St. Lawrence University and self-described “bleeding-heart libertarian,” doesn’t ascribe to the notion that regulations and other interventions are necessary to support a healthy economy. He even goes so far as making the case that economies would generally be better off absent any outside involvement.

”The monopoly central banks and governments have over money essentially means they can print as much as money as they want. And with that, you have a tendency to push for more inflation since it also reduces the real cost of government debt,” he argues. “While bitcoin does have some inherent problems, what’s great about it is that it helps people realize that their are alternatives.”

For the time being, Paralelní Polis, like the cryptocurrency economy it relies on, is little more than a living experiment. Sure, there’s some talk of expanding to other parts of the city, possibly other countries, though the main focus currently is to break even. The cafe has not yet been profitable. If anything, though, visitors to the space will get a slight reprieve from the persistent intrusiveness of advertisers tracking their every click and the heavy hand of corporations that have become essentially the de facto facilitators for many of our day-to day needs.

“You can think of us as a platform for people who want to be free and live free,” Žílka says. “kind of like a freedom think tank.”

Related: My experience of what it’s like to buy a cup of coffee with bitcoin, in photos