reason #19
BITCOIN allows for the creation of new countries
Bitcoin has created a world in which it is possible to create new countries. This is a rough summary of the book "The Network State: How to Start a New Country" by Balaji Srinivasan
A network state is a social network with a moral innovation, a sense of national consciousness, a recognized founder, a capacity for collective action, an in-person level of civility, an integrated cryptocurrency, a consensual government limited by a social smart contract, an archipelago of crowdfunded physical territories, a virtual capital, and an on-chain census that proves a large enough population, income, and real estate footprint to attain a measure of diplomatic recognition. Let's unpack this a little. Firstly a network state is not physically centralized like a nation state. It is geographically decentralized and connected by the internet. Secondly, you could feasibly start this from your laptop. In the same way that Facebook grew from one person's laptop, a million-person networking state that owns an archipelago of physical territory could start as a one-person start-up society. Thirdly it is important to understand how central the real-time census is to the network state, providing a way to measure the growth in people, annual income, and real estate footprint. Continued growth is a continuous plebiscite, a vote of confidence by the people inside and those outside that apply. Roughly speaking, a successful network state is one that attracts aligned immigrants while an unsuccessful network state is one that loses them.
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This does not mean that all network states will focus on the same metrics - some may focus on increasing life expectancy, others on improving income inequality. Technology has allowed us to start new companies, new communities, and new currencies. Can we now use it to create new cities or even new countries? A key concept is to go cloud-first and land last - but not land never. You want to start with an online community and then you want to materialize it into the physical world. You can get there in seven steps.
1) Found a start-up society.
This is simply an online community with aspirations of something bigger. A founder's legitimacy comes from whether people opt to follow them.
2) Organize them into a group capable of collective action.
You need to organize them into a network union. Unlike a social network, a network union has a specific purpose - it coordinates the members for their mutual benefit. Unlike a traditional union, a network union is not set up solely in opposition to a particular corporation, so it can take a variety of collective actions.
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3) Build trust offline and a crypto economy online.
You need to start holding physical meetings online of increasing scale and duration, while simultaneously building an internal economy using cryptocurrency.
4) Crowdfund physical nodes.
Once sufficient trust has been built and funds have been accumulated, start crowdfunding apartments, houses, and even towns to bring digital citizens into the physical world with real co-living communities.
5) Digitally connect physical communities.
Link these physical nodes into a network archipelago. This will range from one-person apartments to in-person communities of arbitrary size. Physical access is granted by holding a web3 crypto passport, and mixed reality is used to seamlessly link the online and offline worlds.
6) Conduct an on-chain census.
As the society scales, run a cryptographically auditable census to demonstrate the growing size of your population, income, and real estate footprint.
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7) Gain diplomatic recognition.
You would need to gain recognition from at least one pre-existing government, and from there gradually increase sovereignty, slowly becoming a true network state. We are talking about a clean slate.
So let's dig into how you can start a new country. Traditionally there are seven ways. The first is an election. By winning a majority of votes, you are able to rewrite laws and write a new constitution. The second is through a revolution and a coup de tat. The third is by war. The fourth is by way of micronations. This happens when an eccentric plant a flag on an offshore platform or a disputed patch of dirt and declared themselves as the king of nothing. While an existing country may be content to let people harmlessly set up a fake country, an actual threat to sovereignty can produce a response with real guns, as we saw with the Falkland islands. Seasteading is the fifth way. This is semi-permanent habitation on a ship in international waters. If the cost of cruise ships falls, this can become a feasible option. The sixth option is space. This is the Elon Musk approach to colonizing another planet like Mars. The seventh option is the network state. This is our preferred approach. The dashboard would show in real time the number of community members, the acreage of real estate owned by those members, and the community's on-chain income. Now we need to look at the societal definition: a new country is one that is diplomatically recognized by other countries as a legitimate polity capable of self-determination enabling it to gain accession to a group of pre-existing states like ASEAN, the OAS, the African Union, the EU or the United Nations. Think about the evolution of Bitcoin. Gandhi said first they ignore you, then they ridicule you, then they fight you and then you win. Bitcoin was initially ignored, then mocked as an obvious failure and within 5 years it had attained a billion-dollar market capitalization. It was then listed alongside blue-chip stocks on Bloomberg and Reuters which was a form of societal recognition. By 2021, it had been adopted as legal tender in El Salvador. In 2022 the Central African Republic followed suit and now we are in a situation where dozens of other countries are weighing up such an adoption, including Panama. Once it had been shown that Bitcoin could not be easily counterfeited or hacked, the shares belief of millions of crypto holders was enough to get the valuation from zero to a market cap of hundreds of billions of dollars and from there a listing on every Bloomberg terminal. History is how you win the argument. It also needs to be remembered that most countries are small. There are 193 recognized sovereign states in the world of which 20 percent have a population below 1 million and more than half less than 10 million. Luxembourg has 615k, Cyprus 1.2 million, and New Zealand 4.7 million. These numbers are surprisingly small by tech standards. To build a new society, it would be helpful to have some knowledge of how countries were built in the first place and the logistics of the process. Let's start with the purpose of the community. We should be aiming to fix some moral deficit in the world. The idea is to distill this into one commandment. What is that one single moral innovation? It can be as simple as "carbs bad" which would lead to a Keto society, or could be as complex as "life extension good". The same principles we assign to start-up companies need to be assigned to start-up societies. Financing, attracting subscribers, calculating churn, doing customer support - there is a playbook for all of that. You now need to apply that to Society-as-a-Service. Why do the authorities make use of history? What techniques are they using? History is not simply a random collection of names and dates. Authorities sift through the past and distill that down into a series of narratives that they can use to further their cause. Hitler did this by focusing on the unjust treatment of Germany after World War 1 and appealing to the German sense of pride and nationalism, and the desire to make Germany great again. This narrative was repeated by Trump. History is written by the winners pretending to be acting on behalf of the losers. Trump took the side of the downtrodden and exploited American workers who over the decades had seen their jobs exported to China. What happens when there is a collision of political power with technological truth? We are seeing this play out now with Bitcoin as it challenges fiat currencies. A political truth is true if everyone believes it to be true. Things like the value of the dollar and the location of a country's border are two examples. Both those truths are dependent on the ideas that are installed in people's heads. If enough people change their minds, markets move and borders shift. Conversely, a technical truth does not have to be believed to be true. Facts in mathematics, physics, and biochemistry fall into this category. They exist independently of what can be found in people's brains. In reality, not all this can be objectively proven which means that in order for society to exist there has to be a balance. Towards this end, the Chinese have a saying: the backward will be beaten which means if you are bad at technology, you will be beaten politically. The Americans would say "you and what army?" They would say that it does not matter how strong you are technologically, the overwhelming might of the majority will prevail. In order words, if you are sufficiently unpopular, you will not have the political power to build in the physical world. So think of political power as top-down. This is the approach of might is right, history is written by the winners and centralized political power. Then you have the bottom up which is technological power, history as written to the ledger, and the power of the small man and the individual. The encounter between these two forces is Leviathan. What is the most powerful belief in the world? It is God. In the 1800s, people did not steal because they actually feared God. They saw God as an active force in the world meeting out judgment, and countries wanted God-fearing leaders who believed that eternal damnation was the fate of those who violated the religious edicts. By the late 1800s, Nietzsche wrote that God is dead which meant the mass of intelligencia no longer believed in God, and this saw the rise of the State to take God's place. Fear of God was replaced by fear of the State, and this led to the two great wars of the twentieth century where democratic capitalism was pitted against nationalism which was pitted against communism. This new faith replaced god with gov. Today we are in a position where the State is dying and that is now being replaced by the Network - the internet, the social network, and now the crypto network. The reason why you don't steal is that the network won't let you. Either the social network will mob you, or the crypto network won't let you because you don't have the private key or the networked AI will detect you. As Assange put it, no amount of violence can solve certain kinds of maths problems. So it does not matter how many nuclear weapons you have, if the property of information is secured by cryptography, the state cannot seize it without getting hold of the solution to the equation. Rubber hosing cannot be scaled. The only way that the government could get hold of your crypto is by knocking door to door and executing a rubber hose attack to get people's secret keys. But first, they would need to get hold of people's offline identity, map it to a physical location, establish they have jurisdiction, send in the special forces and do this to an endless number of people in an endless number of locations. So at the minimum, encryption increases the cost of state coercion. Seizing Bitcoin is not quite as easy as printing fiat currency. It is not something that a hostile state like Venezuela could do at the touch of a computer key. The only real way around the scalability issue would be to create a force of AI police drones, something China may ultimately be able to do, but that would be expensive and they are not quite there yet. Encryption, therefore, limits governments in a way that no legislation could. But encryption is not only there to protect property rights, but also to protect freedom of speech, association, freedom of contracts, prevention from discrimination and cancellation, individual privacy, and truly equal protection under the rule of code. So let's see how the Network stacks up against the State. Firstly there is the issue of encryption over state violence. When there is strong encryption the government cannot crack, the ability of the government to eavesdrop and intercept transactions is limited. Secondly, there is cryptocurrency versus fiat currencies. It is not easy for the state to seize, freeze, ban or print Bitcoin. It means that all manner of financial transactions, accounting, and payroll can be done on chain and out of the government's preview. Thirdly, we need to look at peer-to-peer versus state media. There are two kinds of state media: state-controlled as in China or state control media as in America's New York Times. The latter controls the state while the former is controlled by the state. Both fight freedom of speech. The antithesis of this is network-facilitated P2P communication. Fourthly there is the conflict between social and national. Your community is your social network and not necessarily the people that live close to you. This challenges the very heart of current nation-states which assumes that people living within the same national borders share the same values and laws should be based on these shared values. Fifthly there is the conflict between mobile and sessile. Mobile is making us more mobile and global. Phones help us move more freely which again runs against the notion of fixed geographic territories. Virtual reality enhances this borderless experience. The network allows you to work and communicate from anywhere. The sixth point is related to legality. The States legal system is paper based, complicated, inefficient, and expensive. It is often not transportable across borders making international contracts more complicated. Smart contracts elegantly solve many of these problems because it opens the possibility to truly international law. The blockchain is the most important development in history since the advent of writing itself because it is a cryptographically verifiable, highly replicable, unfalsifiable, and provably complete digital record of a system. Think how this has played out in the real world. Uber and Lyft are better regulators of the taxi industry than the State's paper-based medallions. Bad conduct on the part of both the driver and passenger is quickly addressed through the real-time rating system. The transparency of a peer-to-peer rating helps to maintain a minimum level of service and security for everyone. Email is superior to USPS, and Space X is out executing NASA itself with reusable rockets. Even the network census is more efficient. Instead of the State running a costly and inaccurate census every 10 years, the Network allows for a real-time survey that can be executed in seconds and minutes, at no cost. If you cast your mind back to January 2021 you can find a great example of the impotence of the US government when a sitting president was de-platformed from social media which showed that the most powerful man in the world was not even the most powerful man in his own country. The US government is constrained from restricting free speech and therefore cannot order the CEOs of media companies what to report on. The network state, however, can quickly censor treasonous content in the interest of the community. This is not to say the Network always trumps (pun intended) the State. Until 2018, tech entrepreneurs in China were celebrated by the CCP. Jack Ma and his peers were either one of the 95 million CCP members or praised by the state-controlled media. Then China pivoted. First was the massive delay in regulatory approval for the ANT Financial IPO. Then came the COVID lockdown showing the CCP was more interested in national security than trillions of dollars in lost revenues, and overnight bans of entire industries like gaming and Bitcoin mining. Another example of the State beating the Network again can be found in China. Say something the CCP does not like on Sina Weibo (a microblogging application) and your post disappears, and possibly your account and you may even receive a visit from the private security forces. The same may also happen in the West if you publish something displeasing to the powers that be on Twitter. So what do you need to start a network state? You don't need to start an entirely new religion but you do need a moral innovation of some kind. If all you offer is a higher standard of living, people may come as consumers but they won't come for the correct reasons. The consumer citizen is coming for a good time, not to sacrifice in order to make the community great. They will not understand the values underlying the community and the community will weaken as consumers get tired of the good times and look elsewhere. You want to recruit producers and not consumers, and for that, you will need a purpose. You will need to formulate One Commandment. It could be as simple as the commandment that "sugar is bad" and seriously carrying it forward to build a keto society focusing on changing every restaurant, grocery store, and meal. This is one simple example and there are more to come. Let's look inside America's different tribes. You have the conservative reds, the progressive blues, and the libertarian grays. The grays are easy to analyze because they are part of the Network. They typically believe in neither God nor State. They do not subscribe to the notion of American exceptionalism and are happy to interact with non-Americans on an equal footing. The blues and reds are more complicated. The blues will need to make a decision in the future - whether to align themselves with the decentralized Network or remain loyal to the US establishment. Do they believe the rest of the world deserves digital self-determination or are they happy to live in a global world where the 4 percent (the Americans) rule over the 96 percent (non-Americans), inflating away the globe's savings, destroying local cultures and surveilling the world at all times? The blue tribe is the most powerful in western society and is secretly divided into 2 factions - the authoritarian lovers who worship the state and the left libertarians who are unconsciously part of the Network. The former laud democracy but avoid it in practice, through dual-class stock, tenure for their bureaucrats and professors, tax-exempt compounding for their foundations, and ideological purification of their organizations. The red tribe will also need to make a choice in the coming years. Do they believe in the founding principles as encoded in the Bill of Rights and the Constitution, or will they simply enforce all the edicts that come out of the US establishment? They are secular nationalists. They may agree that America is trending in a bad direction, but they think China is far worse. As such they are still building drones and coding surveillance. They don't believe in God but believe in the State. They believe in the United States of their youth - Top Gun would be their preferred movie as opposed to Born on the 4th of July. There is intense loyalty and patriotism but they understand the needless destruction wreaked by the US military abroad. The other group in the red tribe is the red international capitalists. They are in favour of commerce and trade networks both within and across borders. Bitcoin for them is a symbol of international freedom and prosperity that is more powerful than any state. Today's world is becoming tripolar. It is the NYT versus CCP versus BTC. That is the American establishment versus the Communist Party of China versus the Global Internet. Each has a digital economy - the dollar economy, the digital yuan, and the web3 crypto economy. Each pole is a network in its own right standing outside the state. The NYT network gives direction to the American state, the CCP leads the Chinese state, and the BTC network stands outside all states. NYT: The Moral Network Go back and look at any NYT headline and you will notice the moral undertone. The three major subtexts are free speech is bad, white people are bad and communism was good. CCP: The Martial Network There are 95 million members of the CCP which are roughly 7 percent of the population. Joining the party is no trivial matter. Prospects need to explain their reasons for joining, why they believe in the party, and areas in which they fall short of the requirement to become a member. They need to write essays on Marxism/Leninism and on current political developments. They then need to be endorsed by no fewer than eight colleagues, neighbors, and acquaintances to vouch for their reputation. They then need to take courses and pass an exam. In passing, prospects enter a 12-month probation followed by more tests. Then follows the filing of information about their parents and their political affiliations, employment history, etc. Having gone through all this, if one is accepted into the fold it is a lifelong commitment and then the hard work begins. So why is the CCP martial? China has embarked on aggressive military spending in order to reunify China (rather than police the world as the US does). It is investing heavily in AI and drones. BTC: the Money Network This is obvious and does not require any further explanation. The Possible Futures We have spoken about the three poles. A desirable future would be a fourth pole - the International Intermediate. It would include American centrists, Chinese liberals, web3 technologists, and essentially everyone from around the world that wants to avoid the American and Chinese whirlpools. This group, which makes up approximately 80 percent of the world's population, has little in common other than adversity to anarchy and tyranny. It is important to see the world through new lenses. Failure to do so runs the risk of being caught blindsided by the political equivalent of a runaway truck. Transhumanism versus anarcho-primitivism The former believes that technology is good and wants to use technology to change humanity in fundamental ways. The latter believes that technology is bad. They want to move off the grid and return to the wild. They believe that humans are polluters of the earth. Klaus Schwab and the WEF stakeholders fall into the former camp. The Unabomber is a posterchild for the latter school. How do people identify themselves? Some affiliate with their national identity first, above their city. Then there are people who identify with their cities - like San Franciscans. They take criticism of San Fran personally. Others are patriotic about their companies. Others by their cryptocurrencies think of themselves first and foremost as Bitcoiners or Ethereans. They tend to be digital nomads and are indifferent to whether they see the sunrise in New York or New Delhi. In each case, there is typically a large economic, social or political stake in the thing with which people are identifying. The city patriot may be a homeowner, the country patriot may have signed a military contract, the company patriot may be the founder and the crypto patriot is often a sizable holder of coins. But not all people are like this. Primary identities can be related to religion, ethnicity, or profession. Often this is captured in the person's Twitter bio. Everyone is patriotic about something. The internet increases variance. In media, we have gone from 30-minute sitcoms to 30-second clips and 30-episode Netflix binges. Uber taxi rides tend to either be much shorter or much longer than traditional taxi rides. The reason for this is that the Internet connects people peer to peer. It disintermediates. It removes the middleman, the mediator and the moderator, and the mediocrity. While most people are happy to see the middleman and mediocrity removed, they are less happy with the removal of the moderator and the mediator. You have the unbundling and then the rebundling. Songs get regrouped into playlists and articles are regrouped into Twitter feeds. There are millions more playlists than albums, and millions more Twitter feeds than newspapers. As the Internet increases variance, we see more upside and more downside in everything. Technologists focus on the upside because the gains from the wins (like search engines, smartphones, social networks, and artificial intelligence) should compound while the losses tend to be one-offs. Both social media and crypto are highly volatile. On socials, you can either go viral or get canceled. In crypto, you can either go to the moon or "get rekt". And there is a parallel in history - glasnost and perestroika. Gorbachev thought he could reform Soviet society by allowing more freedom of speech (glasnost) and free markets (perestroika). He did not quite understand what he was in for, and the resultant instability helped to bring down the Soviet Union. Social media is like glasnost and crypto is like perestroika. The US, through their promotion of a free and democratic society, allowed both to emerge, and only now are they realizing that many speech and thought controls that their predecessors had set up - like stringent regulations and high capital requirements for broadcast content production- was actually key to their continued power. Now that the genie has jumped out of the box, they are trying to get it back in. Obama was essentially America's Gorbachev, as he allowed technology to grow mostly impeded from 2008 to 2016 while in the White House. Naturally physical to natively digital We now live in a world where digital is primary and physical is secondary. The digital transition happens in three phases. First, there is the physical version, then the intermediate form, and then the internet-native version. For example, think about how people meet. We started with face-to-face, then Zoom meetings, and now VR digital meetings. Newspapers are only partially digitized. Many still print the physical copy. The printed version is simply a copy of the online but there are certain things only available online like interactive graphics that are impossible to replicate in the physical form. So what is the next step in the evolution of newspapers? What does natively digital news look like? There are at least two concepts of interest here - morning dashboards replacing the morning paper and cryptographically verifiable event feeds replacing tweets of unverifiable content. Let's now look at the evolution of life. The COVID pandemic flipped the world from the physical to the digital. Not only were we introduced to remote work, but also remote life. Now it is rude to ask for an in-person meeting. Now that vaccination has brought the pendulum back, we will never go back to where we came. It used to be that the physical world was primary and the Internet was merely a mirror. This has now flipped and the physical world is the mirror. While we are still physical beings, events happen on the internet first and then materialize in the physical world later. We should be in the middle of a golden age of productivity. Computers make data management a million times easier than the days of the typewriter. You can make things happen in seconds that previously would have taken weeks. Lawyers can search for key phrases over hundreds of cases in minutes while the human could take months doing the same manually. However, this additional productivity does not seem to be manifest in the physical world. There are a few possible theses. First that we are now mega-distracted. Second productivity gains have been absorbed by compliance functions. Third the Pareto principle - the minority have harnessed the increased productivity to create unicorn companies while the majority are distracted. Finally, real productivity will only kick in with the arrival of smart robotics. From Nation states to Network states So why now, after almost 400 years of nation States do we think the status quo should change? To answer the question, we need to define what a nation-state is. It is a geographic region of the world ruled by a group of humans we call a government. The nation-state is defined by the following rules. Rule 1: a country is a territory defined by a border mutually agreed upon by all countries. Rule 2: a country must have a state that controls (or at least seeks to control) the legitimate use of force within its territory. Rule 3: Every spot in the earth's land mass must be occupied by a country. Rule 4: Every person on the earth needs to be a citizen of at least one country. Rule 5: on paper, every country has the same legal standing regardless of its size. Rule 6: Consent of the people within the country is preferred albeit not required. Tyranny or de facto anarchy is not grounds for the loss of club membership. Rule 7: under some circumstances, one country may invade the territory of another, but not eliminate its countryhood or redraw its borders. Rule 8: the currently existing set of countries likes to maintain the status quo - in other words, the club does not like to admit new members. These rules are the work of Joshua Keating in his book Invisible Countries. He goes on to note that the rules of this club are backed by the institutions of the United Nations and the military force of the US and that the agreement of billions of people through their governments is what preserves this "cartographic status". Let's look at this from another angle. First, a nation-state is physical first. Second, there is no unclaimed land. Third, its borders are clearly demarcated. Fourth, people are typically citizens of only one state. Fifth there is a centralized administration where laws are interpreted by a judiciary and enforced by men with guns. Sixth, each state keeps order through a police force. Seventh, international sovereignty is maintained through the military. Eighth, states may sign bilateral agreements with one another. Treaties manage cooperation and constraint where states respect the sovereignty of others. It is further implicitly agreed that the US through the United Nations is the arbiter of world peace. They provide global leadership and champion a rule-based global order.
So what exactly is a nation? The Oxford dictionary defines it as a large body of people United by common descent, history, culture, or language, inhabiting a particular country or territory. The group had to be large. United means being part of the same group. Common descent means shared genetics. History means a shared past having lived near each other for a length of time. Culture means shared dress, food, mannerisms, religion, and or customs. Language is a shared tongue while the territory is pretty obvious. This is a very whishy-washy definition. What exactly do they mean by large? How do you measure if a group is united? Can the group be nomadic? Then it is not very specific about the rest as denoted by the OR near the end.
What did the philosophers say? Rousseau's said that if a group voluntarily consents to be bound by the same governing authority, they are a nation. Marx said that a nation is a group to lead to acquiring political supremacy and a boundary to transcend to unite the proletariat. Locke said that if two groups lay claim to the same territory, the more rational and industrious should be considered a nation. Hegel said a nation is formed by its institutions imbuing a sense of shared ethics.
What is a State? It is a clearly defined territory, containing a population, and a central government is recognized by other states and has a domestic monopoly on violence. The philosophers came from a different angle. Plato said that a state should make possible the conditions under which everyone can provide for themselves and seek the Good. Locke said that a state is legitimate if it enforces contracts and acts as the guarantor of private property. Carlyle said that a state should be run by a hero that provides order. Samuelson said the state is meant to provide public goods that private actors would not be able to do.
What is not a nation-state? Multi-ethnic empires like the Soviet Union were not traditional nation-states because they have more than one nationality within their borders. Stateless nations like the Kurds are not nation-states because they lack a formally recognized territory and government. Transnational movements like the Catholic Church because the set of all believers is not contained within a territorial state that it administers. Nomadic tribes like the Masai are not nation-states because they migrate between countries.
Let's now dig deeper into the Network State.
1) A social network. People from a network state form their nation online. Social rather than geographic proximity is the core organizing principle. But this is not a typical social network like Facebook or Twitter. It is a 1-network where there is only one coherent community present, rather than many different communities like Facebook. Admission to the network is selective which means people can lose their privileges for bad behaviour. The application process could involve a public proof of alignment bias writing, a career history that demonstrates common values, or the investment of time and energy into society to obtain digital assets. It has to be noted that it is not simply an economic proposition.
2) Moral innovation. Everyone in society thinks that some principle X is good that the rest of the world thinks is bad, or vice versa. This could be as trivial as "24/7 internet is bad" or as heavyweight as "this traditional religion is good". Moral innovation brings people in. It gives reason for the society to exist, a purpose that is distinct from the outside world.
3) A sense of national consciousness. Everyone feels they are part of the same community, sharing the same values and culture.
4) A recognized founder. A state, like a company, needs a leader, especially early on. But truly strong leadership comes from consent and buy-in, not from propaganda or force. Hence it is important to have a recognized founder, one that people actually listen to and choose to follow by joining the community. You need that power to sometimes make hard but important non-consensus decisions.
5) A capacity for collective action. This is related to the concept of national consciousness. JFK once focused the US on the common purpose of "achieving the goal, before this decade is out, of landing a man on the moon and bringing him safely back to earth." This was a collective purpose and allied with the purpose of defeating communism. It was possibly the second to last great thing achieved by the US as a unified country with the last being the defeat of the Soviet Union. Once this collective purpose has been found, what does the collective work toward that purpose look like? It organizes people to work together for the benefit of their chosen community through the familiar interface of their screens.
6) An in-person level of civility. It is easier to be mean online than offline. It is therefore necessary to put together a high-trust society that comes from alignment toward a collective purpose and a sense of national consciousness.
7) An integrated cryptocurrency. This is the digital backbone of the network state because it manages the internal digital assets, the smart contracts, the web3 citizen logins, the birth and marriage certificates, the property registries, the public national statistics, and essentially every other bureaucratic process that a nation-state manages via pieces of paper. Because it is protected by encryption, it can coordinate all the functions of a state across the borders of legacy nation-states.
8) An archipelago of crowdfunded territories. This is the physical footprint of the network state. Rather than buying territory in a single location, you build the community in the cloud and then crowdfund physical real estate on earth. That includes office space, homes, and shops. You network these clusters together using the Internet into a network archipelago. For example, you can make the flag of the state to anyone with the right augmented reality glasses and the right NFT.
9) A consensual government limited by a social smart contract. The laws don't come first - they only come after the formation of an organic people because they encode the specific understanding of the people. This moral consensus could be established by a simple 51 percent majority or by an absolute 100 percent. What makes the government legitimate is not the process but the substance. Given the consent of the governed, any form of government is internally legitimate- the bigger question is whether it will be considered legitimate by those outside the network. Consent is given through the signing of a social smart contract that gives the systems administrator limited privileges over the user's digital life in return for admission to the start-up society.
10) Virtual capital. This assembly point could be as simple as a Discord channel, but eventually will be a sub-network of the open metaverse through virtual and augmented reality.
11) An online census that proves a large enough population, income, and real estate footprint. This census can be conducted in real-time and not every 10 years as is the case in the US. But how do you make the outside world trust the veracity of this census? How do you prove that the start-up society really has 10,000 residents and one billion dollars in annual income and 10 million square meters in real estate? All of these elements can be established via on-chain data.
12) Attain a measure of diplomatic recognition. This is the big one to get right. Diplomatic recognition by a pre-existing government is what distinguishes a network state from a start-up society in the same way that a listing on a stock exchange like the NYSE distinguishes a public company from a private company.
So, what technological developments enable network States? Naturally the Internet enables all of this because you can think of the Internet as a cloud continent. Someone who spends say 8 hours a day online is doing the equivalent of flying up to this cloud from their earthly location for business or pleasure and then flying back down. While there they see new people and see new things. This is not dissimilar to what the settlers did when they came to the Americas from 1492 to 1890 but there are two important differences. Firstly the cloud has no preexisting people like the Incas, Mayas or Aztecs. Second, unlike the finite landmass of America, no such limitations exist in the cloud. The Internet is to the USA as the Americas were to the UK - a wide-open territory that ultimately gave birth to new states and ways of thinking. Secondly, Bitcoin is the next most important prerequisite for the network state. As a government of governments, it guarantees the sovereignty of both the individual citizen and the network state. Neither can have their funds stolen by the other, or by a hostile third party. Thirdly, web3 enables new chains, decentralized identities, and censorship-resistant communities. Fourthly mobile makes us more mobile. Fifthly VR builds a capital in the cloud and AR mirrors it on land.
