“A currency changes with every generation”, how monetary skepticism spearheaded cryptocurrency adoption in Czechia
Czechia, a country of 10.7 million people in Central Europe, is known for its beautiful capital (Prague), rich history and good beer. Over the past decade, however, cryptocurrency adoption can now be added to this list. In fact, the Trezor wallet, the world’s first cryptocurrency hardware wallet, was invented here in 2014 and continues to grow. Its parent company, SatoshiLabs, grew by creating secure chips for electronic hardware through Tropic Square and advancing cryptocurrency education through Guest.
Moreover, the country has also spawned the world’s first Bitcoin (BTC) mining pool – Braiins (Slush Pool), with almost 1.3 million BTC mined since 2010. Then there is General Bytes, one of the largest crypto ATM chains in the world with nearly 8,000 machines installed. Additionally, the country’s largest e-commerce retailer, Alza, accepts BTC purchases and has written in-depth articles on Bitcoin and the technology over the past few years.
But what has driven this tiny nation of 10.7 million people, of all places, to create a disproportionate presence in the crypto sphere? In an exclusive interview with Cointelegraph, SatoshiLabs in-house economist Josef Tětek explains the phenomena in detail. Tětek also happens to be the brand ambassador of the Trezor Wallet, writes for Bitcoin Magazine and holds a master’s degree (equivalent) in economic policy from the University of Economics and Business in Prague. Here is what he had to say:
“In the geographic region that is today the Czech Republic, there have been seven different currencies in circulation over the past 140 years. First there was one gold backed, then two forms of silver coins [during the rule of the Austria-Hungarian Empire]. After the country’s independence in 1918, there was the gold standard Czechoslovak crown [crown].”
During the interwar period, Czechoslovakia was an industrial powerhouse run by Škoda Works, one of Europe’s largest industrial conglomerates manufacturing everything from cars and trams to airplanes and military equipment. It was also considered the only Central European country with a parliamentary democracy after 1933.
However, faith in the Czechoslovak crown and the country as a whole quickly faded with the Munich Betrayal of 1938 – where its allies Britain and France gave Germany the silent green light to annex the heavily industrialized and fortified peripheral regions to Czechoslovakia. With the country no longer having natural barriers to defend against the German war machine, it soon became a puppet state for the former, prompting another currency change.
But the restoration of the Czechoslovak crown was again short-lived. Immediately after the Allied victory in World War II in 1945, an iron curtain stretched from the Baltic to the Black Sea. The newly independent Third Czechoslovak Republic became a satellite state of the Soviet Union after only three years, with a new form of crown under Soviet control.
To further the politics of Stalinism, in 1953 the leaders of the Czechoslovak Communist Party devalued all personal savings denominated in kroner by a ratio of 50:1. As Tětek told Cointelegraph:
“A lot of people still remember [the 1953 event] to this day, like our parents and grandparents. Basically, it was grand larceny [by the state].”
Then, in 1989, the Velvet Revolution overthrew the Communist Party and gave birth to the Fifth Czechoslovak Republic. But at first, independence did not restore confidence in the new crown. (The fact that Slovakia left the union in 1993 didn’t help either). Inflation in the early 1990s in the country remained almost constantly above 10% every year.
To sum up what makes the Czech people attracted to cryptocurrencies, especially their decentralized nature, Tětek writes:
“There was basically a change of currency every generation in Czechia, so we tend to be skeptical of the official monetary regime. However, combined with a high percentage of people receiving high quality technical training, the factors led to the adoption of cryptography in the Czech Republic.
Portrait of Josef Tetek | Source: Proti Proudu Podcast