Behind the black doors, a test kitchen for bitcoin

PRAGUE—If there ever were a test kitchen for bitcoin, it would be the three-story headquarters of Paralelní Polis—which translates as “parallel system”—here at Dělnická 43.

Paralelní Polis, a nonprofit organization that has seven volunteer board members and 10 to 15 paid employees, is an architectural manifestation of a different way to the World Wide Web. A lifeblood for Dark Web transactions, it marries cryptocurrencies like bitcoin to espresso, and anarchist ideals like an unregulated Internet to co-working.

The building’s ink-black exterior stands out against its cream, tan, and beige neighbors like a nail crying for a hammer. Block-white lettering above the door proclaims the organization’s alliterative name. Above it, more letters spell “Institute of Cryptoanarchy.”

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The building’s facade might prompt passersby to scratch their heads: An institute of anarchist cryptographers? Cryptographic anarchists? Those who dare to step inside will find themselves in a trendy-looking coffee shop with a hackerish sense of humor.

Bitcoin Coffee has high ceilings and daylight streaming in through large windows. It has large and small tables, chairs, and couches. Its chalkboard menu, which includes baked goods, might proclaim that the soup of the day is “espresso,” as it did the day I visited. Its patrons dress mostly in black. And although prices are listed in Czech krona, it accepts only cryptocurrencies.

“Prices are in Czech krona because bitcoin is too volatile,” says Paralelní Polis board member and cryptocurrency enthusiast Pavel Ševčík. An espresso costs 45 Krc, about $2, or less than 0.0003 BTC at today’s rates.

In addition to Bitcoin Coffee and the Institute of Cryptoanarchy, Paralelní Polis hosts a co-working business, a hacker space, and a nascent annual hacker conference that focuses on financial and economic freedom. The last ticket for the event, most recently held in October, was auctioned off for 1 bitcoin: almost $4,400. A maker lab recently moved out for bigger digs.

Neatly tucked into a corner just as you enter the cafe is a touch-screen ATM that exchanges Czech crowns for one of two cryptocurrencies: bitcoin, the most famous of them all, and litecoin, a cheaper, newer variant. QR codes posted on the wall next to the machine allow you to download wallet apps to manage your cryptocurrency.

You also can ask for a free paper wallet designed by Ševčík that doubles as a Bitcoin Coffee loyalty card. (You get a free coffee with your seventh purchase.) One side of the card has a QR code to scan when you want to pay somebody with litecoin; the other has a QR code to scan when you want to add lightcoin to your wallet.

Bitcoin Coffee also accepts payments via near-field communication chips implanted in customers’ bodies, a trend in the transhumanist movement that Paralelní Polis also supports.

As Ševčík shows me the spot on his thumb where his NFC chip is conveniently implanted, he points out that the wallet he designed, along with other paper devices for cryptocurrency transactions, are incredibly—and intentionally—insecure.

The Bitcoin Coffee paper wallet, for people who “just want to have coffee,” has none of the security mechanisms found in more common but harder-to-use digital wallets, Ševčík explains. Because it hosts a private decryption key alongside a public encryption key, “anyone can scan it,” he says, “but it’s easy to use.”

Due to their lack of security, Ševčík advises customers to store just enough on their paper wallets to cover their daily caffeine fix. But because they’re so easy to use, he sees paper wallets as a clear gateway to broader cryptocurrency adoption.

The notion that ease of use competes with security is a common industry conundrum. Do you build security to be usable, or do you build it to be as secure as possible? Sometimes the goals are in agreement; often they’re not.

“It’s a problem for cryptocurrencies,” Ševčík says. “It’s really hard to build usable and secure products for the basic user,” he adds, citing the struggle to use Pretty Good Privacy, the encryption protocol developed by Phil Zimmermann in the 1990s, to secure email.

In April, Zimmermann told The Parallax that if—and only if—“you’re very careful about using PGP, you can use email for secure communications.” Internet pioneer Paul Vixie added that there is “no way” to get PGP into wide use because using it requires a “Rube Goldberg contraption of a workflow.”

Paralelní Polis thus far has focused more on the usability side of the equation. Since opening three years ago, it’s had to figure out how to get people in the door and drinking its brew. Ševčík says it’s learned the hard way that sociopolitical-economic collectives, no matter what’s written in their manifestos, need to be tended like any other business.

“It’s a problem for cryptocurrencies. It’s really hard to build usable and secure products for the basic user.”—Pavel Ševčík, board member, Paralelní Polis

Despite its clear challenges, cryptocurrencies exemplified by bitcoin, and its underlying blockchain technology, are among the hottest topics in cybersecurity today. Like weeds, companies intent on enhancing computer security with blockchains are sprouting in seemingly every industry corner.

Leveraging Bitcoin’s system of recording and verifying all transactions on a public ledger is a trendy antifraud practice across transaction-based businesses. And its “mining” process, through which it compensates those who perform cryptographic calculations to verify transactions with newly minted coins, has become a de facto security practice for cryptocurrencies.

Paralelní Polis is the most noticeable of more than 100 establishments that accept an alternative currency in this centuries-old city. The continuing proliferation of cryptocurrency usage in Prague, Ševčík believes, is a direct response to decades of Communist oversight. Cryptocurrencies, he believes, are at the tip of the spear for privacy endeavors in the 21st century.

“People understand that somebody is always watching,” he says, which is why they continue to gravitate toward technologies that incorporate advanced privacy and security features. He points to the recent rise of email services with built-in PGP, lower-cost VPN services to obfuscate your Internet activity, messaging services with end-to-end encryption, and cryptocurrencies more secure than bitcoin.

Now that these tools exist, he says, it’s important to make them more appealing, which means making them easier to use.

“In order to use cryptocurrency easily, for the basic user,” Ševčík says, “you have to sacrifice some security, because security is always against usability.”