{"id":5820,"date":"2020-07-15T13:39:37","date_gmt":"2020-07-15T17:39:37","guid":{"rendered":"https:\/\/cointelegraph.com\/magazine\/?p=5820"},"modified":"2020-07-15T14:50:44","modified_gmt":"2020-07-15T18:50:44","slug":"forced-creativity-bitcoin-socialist","status":"publish","type":"post","link":"https:\/\/cointelegraph.com\/magazine\/2020\/07\/15\/forced-creativity-bitcoin-socialist","title":{"rendered":"Forced Creativity: Why Bitcoin Thrives in Former Socialist States"},"content":{"rendered":"
Nestled between the Julian Alps and the Adriatic Sea, in a beautiful corner of Europe often ignored by international visitors who flock to nearby Veneto or the Dalmatian Coast, is Slovenia<\/strong> – a nation that gained independence from the former Yugoslavia in 1991.<\/span><\/p>\n As one of those travelers who was flocking to Venice, I accidentally stumbled into Slovenia several years ago only as a consequence of failing to get a train ticket to Italy. Once there, I decided to explore its impressive karst caves and the unadulterated natural beauty of Triglav National Park, before returning to its historic capital, Ljubljana, to sample the local culture.<\/span><\/p>\n While I recognized and appreciated Ljubljana\u2019s friendly people and hearty Slavic cuisine, I was completely oblivious to another vibrant side of the city at the time \u2014 its upstart Bitcoin community.<\/span><\/p>\n A former socialist state, albeit one which oscillated between hardline policies and a greater degree of economic and personal freedom than existed elsewhere in the Eastern Bloc, Slovenia is a prime example of how cryptocurrency\u2019s decentralized ethos resonates strongly with a citizenry that grew up with a strongly centralized government.<\/span><\/p>\n Today, when one talks about Slovenia and Bitcoin, the first name that comes to mind is likely to be Bitstamp \u2014 a cryptocurrency exchange formed in Ljubljana in 2011 that now has offices in London, New York, Luxembourg, and elsewhere.<\/span><\/p>\n In fact, Bitstamp is now the oldest cryptocurrency exchange still operating, having outlasted other old-school competitors such as Mt. Gox and BTC-e simply by being reliable. This longevity is quite an achievement in itself considering the extreme price volatility and lack of established business models in this nascent industry, especially prior to 2017.<\/span><\/p>\n When quizzed about regional tech prowess and fintech startups, most people will immediately speak of the bustling hubs of Silicon Valley, London, or Singapore. Small Slavic nations in Central Europe would seldom come into mind \u2014 after all, these nations were under Communist rule just three decades ago.<\/span><\/p>\n So, how is it that a company like Bitstamp was able to emerge from Ljubljana with little financial backing, compete in an industry as fiercely unpredictable as crypto, and go on to flourish for nearly a decade? Miha Gr\u010dar, Head of Business Development at Bitstamp and a veteran from the company\u2019s early days, explained how Bitcoin and Bitstamp took off in Slovenia.<\/span><\/p>\n \u201cThe early group were mostly geeks, anarchists, and cypherpunks,\u201d Gr\u010dar said. \u201cBut there was not too much economy here and there were not a lot of job prospects for young people, so when the price started going up, a lot of young people naturally started paying attention and learning about it.\u201d<\/span><\/p>\n \u201cIn terms of Bitstamp, I think being among the first definitely helped. But then again we were also lucky \u2014 you need to be lucky in this industry.”<\/span><\/p><\/blockquote>\n “But the things we could influence, I would say, we always tried to do what was best for our customers,\u201d Gr\u010dar explained, \u201cbecause trust in the early days was not something you could win easily. There were a lot of scams, and exchanges just went down and never came back. So, it was hard to do business in those days.\u201d<\/span><\/p>\n \u201cBut,\u201d he continued, \u201cbeing reliable, being available, and just doing everything to be a business that people could trust, was a big deal. And in addition to that, we always had banking here, which was a very elusive thing in the early days.\u201d<\/span><\/p>\n Gr\u010dar\u2019s comments shed light on the monumental challenges crypto exchanges had to overcome just to survive in the early days. Not only was it difficult to win consumer trust in dealing with a novel digital asset which was outside the purview of financial regulators, it was even more difficult to get banking partners \u2014 which, of course, were crucial for serving the fiat on- and off-ramps for exchanges such as Bitstamp. No mainstream European banks were remotely interested in touching a crypto business at the time, so it appears that being based in a small and nimble country with local banks who were open to business was in fact a huge boon.<\/span><\/p>\n \u201cSlovenia is a very small country with only a couple of million people, so a success story like Bitstamp gets a disproportionate amount of traction. It wouldn\u2019t have been the case in Germany or the UK for example, and definitely not in the U.S. So, when the price of Bitcoin went up a lot in 2013, <\/span>everybody<\/span><\/i> paid attention to it,\u201d concluded Gr\u010dar.<\/span><\/p>\n In a way, the success of a startup company and the budding industry it was in grew into a <\/span>national<\/span><\/i> success story, generating tremendous momentum which fed back into the industry itself. In fact, according to <\/span>Coinmap.org<\/span><\/a>, there are now more than 250 businesses accepting Bitcoin in Ljubljana today \u2014 disproportionately high for a city with a population of only 300,000 people.<\/span><\/p>\n Further north, beyond the Austrian Alpine range, lies the Czech Republic (or Czechia), a nation that reawakened following the dissolution of Communist Czechoslovakia in the early 90\u2019s. Its capital, Prague, is well known to visitors as a beautiful city replete with culture, history, and stunning well-preserved Gothic architecture.<\/span><\/p>\n The icing on the cake for crypto enthusiasts, though, is that Prague also happens to be a major hub for libertarians and Bitcoin. A <\/span>Forbes study<\/span><\/a> from 2018 showed that Prague had the highest number of Bitcoin businesses out of any city in the world.<\/span><\/p>\n Simon Dixon, Founder of BnkToTheFuture and a veteran in the Bitcoin space, shared with me an interesting anecdote on Prague\u2019s secretive early crypto scene.<\/span><\/p>\nBitstamp: a national success story<\/h4>\n
Prague\u2019s anarcho-capitalist soul<\/h4>\n