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The Nation State is Obsolete

The hundreds of hackers gathering in Prague this week will see firsthand how the city’s crypto-anarchists are building a new social order, and how their movement is growing.

by Wasse Jonkhans 4 October 2018

When I first visit Paralelni Polis, it is during a so-called Privacy Extremist Party in March this year. The dress code is “privacy extremism,” which means hiding your facial features and keeping your identity secret. With a scarf wrapped around my head, I join the people on the dance floor. Some of them have donned white Guy Fawkes masks, often associated with the hacktivist group Anonymous. The DJ wears one, too. Others hide their faces behind decorated birds’ beaks, reminding one of the Venetian carnival and the sinister Medico della Peste (plague doctor) character. Even while dancing, some enthusiasts cannot stop thinking about revolutionary digital technologies. “I’ve got a new idea for a car rental system on blockchain,” one of the masked dancers shouts in my ear, over the dark electronic dance music.


Paralelni Polis is a black, three-story building in Prague’s Holesovice district. It houses a trendy coffee shop, a co-working space, offices, a Crypto Lab, and, most importantly, the Institute of Cryptoanarchy. From 5-7 October, the institute will host its annual Hackers’ Congress, which attracts hackers and IT specialists from around the world. The institute’s aim, according to its website, is “to make available tools for unlimited dissemination of information on the Internet and encourage a parallel, decentralized economy, crypto-currencies and other conditions for the development of a free society in the 21st century.” The fight against censorship and against mass surveillance by the state are named as the Institute’s raisons d'être.


The Paralelni Polis building in Holesovice


Paralelni Polis was founded in 2014 by the Czech hacker-artist collective Ztohoven, on the initiative of Slovak hacker Pavol Luptak. Ztohoven is known in the Czech Republic for a series of controversial art projects criticizing state power. In 2016, members of the group climbed to the roof of Prague Castle to replace the presidential flag with a giant pair of red boxer shorts. They cut up the captured presidential flag into 1,152 pieces, which were then distributed to randomly chosen Bitcoin addresses around the country, symbolically decentralizing power.


The name Paralelni Polis is taken from an essay of the same name by Vaclav Benda, a Czech mathematician, philosopher, and member of the underground civic initiative Charta 77, which opposed the Czechoslovak communist regime. In his essay, Benda pondered the possibilities of creating parallel structures of education, culture, economy, and information dissemination, independent of the oppressive state structures. The founders of the Institute of Cryptoanarchy obtained the consent of Benda’s widow, and that of their son, to use the name Paralelni Polis.


The crypto-anarchy movement seems to be growing. A second Paralelni Polis has just opened its doors in Bratislava, Slovakia. Plans are being developed to set up a third branch of the institute in Bosnia’s capital, Sarajevo. “A spectre is haunting the modern world, the spectre of crypto- anarchy,” proclaims the opening line of the Crypto Anarchist Manifesto. 


“Democracy is a Light Version of Dictatorship”


Some time after the Privacy Extremist Party, I meet in Prague with two members of Paralelni Polis, Milan Pulkrabek and Radim Kozub, to talk in depth about the goals and strategies of the institute. We talk on the newly opened terrace of Bitcoin Coffee, Paralelni Polis’s own coffee house, said to be the first in the world to accept only cryptocurrency as means of payment.


Pulkrabek, 39, who introduces himself with his nickname Sodomak, is part of Paralelni Polis’s supervisory board, the organ in the otherwise hierarchy-less organization that keeps the institute on course. Sodomak is an IT specialist. He says he started programming on his first old-school computer when he was seven years old. Now, he has given up his job as a software engineer to devote all his time to Paralelni Polis (Fun fact: he also founded the official fan club of Prague’s local pride, the football/soccer club Sparta).


Kozub, 31, a man with a neatly trimmed beard and dressed in an immaculate suit, is a lawyer. After working in several law firms, he co-founded Blockchain Legal, a law firm that offers legal advice to Paralelni Polis and other companies creating technologies in sympathy with the institute’s mission.


Radim Kozub in the Institute of Cryptoanarchy


Paralelni Polis is not exactly an ideological heir of Charta 77. The link with Charta is rather “the way of doing things,” Kozub explains. Building a new social order outside of existing state structures, that is. “Charta 77 strove for democracy; we don’t believe in democracy,” he says. “People often equate democracy with freedom, but it is not the same. Democracy is a light version of dictatorship: the dictatorship of the majority over the minority. We believe in consensual decision-making. We believe in voluntarism.”


Voluntarism means having the choice to participate or not to participate, according to the two Paralelni Polis members. If you do not agree, you can choose to leave. The nation state and the current financial system do not offer that choice, they say. As the state has a monopoly on organized violence, you must play by its rules or you will be punished. In the ideal society that Paralelni Polis envisions, people can choose their own authority instead of being forced to obey the laws of the state. “I accept some authority, for example my mother, but I want to be able to choose which authority I accept,” Sodomak says.


That is Paralelni Polis’ mission in a nutshell: to provide people with the (digital) tools that will allow them to be free of forced authority, and to educate others on how to use these tools.


The red boxer shorts associated with the President Zeman incident, hanging outside Paralelni Polis.


These tools might be encryption software products that wall off their users’ private information on the internet, because freedom in the digital 21st century requires privacy, the crypto-anarchists argue.


A Crypto-Tool Creation Hub


Nick Zebra, a mathematician and programmer who recently became a member of Paralelni Polis, is currently planning an email encryption workshop, to teach participants how to keep their private communication truly private.


Other tools include peer-to-peer services: applications that do not rely on a central authority but on a decentralized network of users. Cryptocurrencies are an important example of such tools, and play a key role in crypto-anarchist thinking. They facilitate a parallel, decentralized economy. With cryptocurrency, users can freely transfer money between their accounts, without the interference of banks or governments. Central authorities cannot block the transactions. Some cryptocurrencies even make it virtually impossible to trace the source of a transaction, or its destination. Theoretically, cryptocurrencies can allow for complete freedom and anonymity of financial interaction. Very much like cash, but digital.


Paralelni Polis promotes the creation of an environment for programmers, hackers, and businesses to work on such tools. To that end, the building in Holesovice houses the Paper Hub and the Crypto Lab. The Paper Hub is a co-working space where individuals can rent a desk and work on their own projects related to decentralization, privacy, internet freedom, and cryptotechnology. The Crypto Lab is a hackerspace where tools are created “that a free society needs for its emancipation from forced authorities,” according to its website. The Crypto Lab also organizes programming workshops and competitions and hackathons.


Bitcoin accepted here. Sign in the Bitcoin Coffee shop located inside the Paralelni Polis building.


One tool that Paralelni Polis is currently working on is invoice software that will help web shops accept cryptocurrencies. Another tool that has just been launched is a TOR exit node, which is a server through which people making use of a TOR browser can access the internet anonymously and circumvent censorship.


I ask Zebra, who is involved in setting up the TOR exit node, what he thinks about the objections that are often raised against such technologies. Most counter-arguments stem from the old debate of (state) security versus the privacy of individual citizens. Governments around the world argue that surveillance is necessary to prevent crime and terrorism, even if this includes collecting the data of innocent people. However, critics of state surveillance contend that privacy is a fundamental human right and a precondition for freedom, including freedom of speech. Zebra casts doubt on the security argument, though, saying that “jeopardizing the privacy of your citizens will allow corporations and foreign intelligence [agencies] to snoop on them more easily.” When I ask Zebra if cybercriminals will not also make use of the tools that Paralelni Polis is facilitating, he says: “Cybercriminals most often already have the tools, already know how to stay anonymous on the internet. Moreover, I believe that most people do not want to do any harm with these technologies. There are factories that produce knives, of course. They can be used to do bad things, but most people use them for what they should be used for.”


The Funding Model


Also assisting Paralelni Polis in its mission is Blockchain Legal, the law firm co-founded by Kozub, which offers legal advice to companies that create tools like the ones discussed above, and, if need be, defends them against the state or claims from other companies. Blockchain Legal also offers its services to Paralelni Polis itself. “Even a parallel society needs some rules, [and] with our legal know-how, we can help design them,” Kozub says. “And we can help resolve disputes that may arise within the Polis.”


Paralelni Polis regularly organizes workshops, events, and congresses to teach others, and learn itself, about new ideas related to privacy, decentralization, internet freedom, and cryptotechnology. This year’s Hackers’ Congress was sold out within 16 days. Some 600 people are expected to attend the event.


DJs at the Privacy Extremist Party in March 2018. Photo via Facebook/Paralelni Polis.


In order to stay truly independent, Paralelni Polis accepts no public funding. The institute is almost able to financially sustain itself, according to Sodomak. Income is derived from membership fees, as well as from rent for the Paper Hub, and ticket sales for the congresses and other events. Bitcoin Coffee also brings in some cryptomoney. However, Paralelni Polis still relies on donations to completely cover all its costs. Several Czech billionaires – including Karel Janecek and Vaclav Dejcmar, who made their fortunes playing the derivatives market – support the institute. “Some other names I cannot give you, but these guys would only be proud if you would mention them,” Sodomak says. The institute requires all its donors to pay the same amount of CZK 15,000 ($672) per month, so that no single one of them can claim decision-making power. The goal is to become fully self-sufficient soon, so that donations can be invested in the development of new freedom-enhancing digital tools.


Sodomak acknowledges that the institute is compelled to sponsor the state by paying taxes on its income. It does so, if reluctantly. “We would like not to pay but we need to survive, and the state still has the power to shut down our physical place,” Sodomak says.


Eventually, Paralelni Polis envisions a society based on the principles of crypto-anarchy. It wants to help create the full infrastructure needed for such a society to exist. To have the infrastructure ready, when the nation state finally disintegrates, is what Sodomak and Kozub describe as the institute’s long-term mission. “We do not aim to destroy the state,” Sodomak emphasizes. “We are a parallel polis, not a contra polis.” Nor does Sodomak see the need to destroy the state, as he says it is already rapidly losing its meaning, largely because of the internet and its newest applications. “Sometimes I feel closer to someone on the other side of the world than to my neighbours,” he says.


Or, as Kozub concludes: “The nation state is obsolete.”

Wasse Jonkhans recently finished five months as an editorial intern at TOL. He studied Russian and Eurasian Studies at the European University in St. Petersburg until the Russian authorities shut down the institution. He is currently working at the International Institute of Social History in Amsterdam.

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