Why Berlin is the Capital of Crypto

By Michael Knip on ALTCOIN MAGAZINE

Tourists from all over the world visit Berlin to witness first hand the leftover remnants of die Mauer (the wall) that once divided the city. In addition to the leftover bits that are curated for tourism, other entire sections of the wall are only now being rediscovered — for the first time nearly 30 years after the fall of the wall — a sure testament, no doubt, of a still fractured Berlin. Other reminders of a Berlin that is still not totally whole: If one had the means to view Berlin from space they would see the different hues to the street lights, reflecting the distinct lighting preferences of the two sides. Take a ride on Berlin’s tram network and one is limited in scope to the former East, another reminder of the wall which once split the city (West Berliners preferred buses over trams).

An article published in the Economist entitled poor and sexy (a play on the words of a former mayor who championed Berlin as poor but sexy) says that Berlin on average makes Germany 0.2% poorer. This is unlike any other European capital! For instance, removing London from the UK or Paris from France would respectively result in an 11.1% and 14.8% lower per capita GDP across these two countries. Berlin’s relative poorness is primarily due to the major structural changes that ensued after the city was cut in half. But there is also a long-standing and historic anti-capitalist sentiment in the city that acts as kryptonite to big capital. Okay, okay, at this point you might be asking, what does all of this have to do with Berlin and its crypto-scene?

Berlin: Crypto-utopia

It is precisely out of this fractured and seemingly fervent, anti-capitalist milieu that a flourishing Berlin startup scene is doing business in Distributed Ledger Technology (DLT). A primary factor here is the affordability of Berlin’s comparatively cheap office space, at least relative to other major European cities. As the above-mentioned Economist article points out, many of Berlin’s firms and factories left the city after it had been carved up by the allies following the end of the second World War. However the heyday of cheap office space in Berlin seems to be over, as recently compiled in a report by international real estate firm JLL (PDF) and reported on by Reuters.

A second factor is found in Berlin’s long standing anti-capitalist sentiment which offers a pretty good place to call home for the cypherfunk activists who are credited with being the originators of DLT. A 2013 article published in the Guardian, that dubbed Berlin as the Bitcoin capital of Europe, highlights the rebellious streets of Kreuzberg, a borough in Berlin, as the place to go to spend Bitcoin. Impressively, Room 77, a bar in this district, is recognized as the first brick-and-mortar business in the world to accept Bitcoin. Fast forward five years and a follow up article published in thelocal.de points to an even more widespread acceptance of cryptocurrencies in Berlin, including the possibility to purchase an education at the European School of Management and Technology (ESMT) with cryptocurrency.

However, despite the seemingly wide acceptance of Bitcoin in Berlin, www.coinmap.org (which maps Bitcoin accepting retailers — though its ‘updatedness’ needs to be taken with a grain of salt), suggests that Berlin is far from the most “Bitcoin-accepted-here” cities. In fact Prague takes the top spot, which is only a leisurely train ride away for Berlin’s Bitcoin holders anyway. Oddly for Berlin (and for all of Germany in fact) there is not a single Bitcoin or other cryptocurrency ATM in the entire country, as revealed by www.coinatmradar.com. This total void of cryptocurrency ATMs is due to a BaFin law (Germany’s Federal Financial Supervisory Authority) which stipulates that a banking license is required to install and run cryptocurrency machines in Germany. This license costs hundreds of thousands of Euros, which is prohibitively expensive for any company, let alone a startup. However, this licensing issue has not deterred Cointed, an Austrian cryptocurrency ATM company, which says it is poised to take over Germany after applying for a BaFin license.

Berlin’s DLT Ecosystem

Bitcoin acceptance aside, other major inroads are being built into the DLT ecosystem in this rapidly evolving European capital. The possibility of attending a DLT related meetup or event on almost any given day is indicative of this, and it also serves to push the technology’s advancement further. It should be no surprise then that this city is home to or at least has the offices of some of the world’s largest crypto-companies by market cap (read: Ethereum, IOTA, Lisk) as well as many other small-and-medium sized businesses and organizations working in DLT. It is not necessary that I model Berlin’s crypto-scene in detail, as the individuals at the Innogy Innovation Hub are already doing a pretty good job of that.

I have worked in the DLT industry in Berlin for about a year, and in that time I have come across a multitude of interesting companies either through work, event attendance or independent research. There is also Berlin’s not-for-profit Blockchain Hub, founded in 2015. The Hub was created to advocate and communicate the blockchain and other decentralized solutions to “non-techies” through workshops and the publishing of very comprehensive and free articles such as Blockchain: A Beginners Guide (PDF).

Lastly, among Berlin’s oldest blockchain projects is Electrum, a long standing (since 2011), highly regarded and heavily used Bitcoin wallet (currently handling 10% of all BTC transactions worldwide). Electrum is completely open source, reflecting the ethos of the crypto-community. There are of course many more interesting crypto-projects in Berlin and surely many more to come.

Conclusion

Dubbed in 2013 by various news agencies as the Bitcoin capital of Europe, Berlin has certainly cemented its reputation as one of a handful of jurisdictions on the cutting edge of DLT. The city was historically well-positioned given a recent high-availability of affordable office space which allowed for a flood of startups to set up shop. Berlin’s historic anti-capitalist streak provided an added catalyst towards the development of a now formidable DLT ecosystem. Berlin’s continuing prowess in DLT is further evidenced through the numerous crypto-enterprises headquartered in the city as well as providing the possibility of attending a DLT event on pretty much any given day of the week.

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The purpose of ALTCOIN MAGAZINE is to educate the world on crypto and to bring it to the hands and the minds of the masses. This article was written and composed by Michael Knip on ALTCOIN MAGAZINE.