How to start a new country: Network States
We've started new currencies. Now The Network State shows us how to start new cities and new countries. — Vitalik Buterin, cofounder of Ethereum
A small disclaimer; this concept has lots of depth and one article will not clarify everything. Feel free to use additional sources mentioned at the end of this article.
Monday (October 30th) Amsterdam is hosting The Network State Conference. For passersby this may sound strange; what does it entail? Well, essentially it will be a conference on how to start your own country. This article will dive deeper into the concept of Network States.
In the summer of 2022, former CTO at Coinbase and former partner at Andreessen Horowitz, Balaji Srinivasan (
), published a book called ‘The Network State’. The essence of that book? Starting new countries.What is a Network State?
Let’s set the stage first. What is a Network State? In one sentence it is:
A network state is a highly aligned online community with a capacity for collective action that crowdfunds territory around the world and eventually gains diplomatic recognition from pre-existing states.
I have been studying this concept for a while now, and even though to some it may still sound abstract, let me try to clarify. A Network State is not a physical territory with borders persé. It is a digital community on a global level with a capacity for collective actions based on the values that this community carries with it. It has a founder, uses a certain Cryptocurrency, has a consensual government in the form of a smart contract, and has the ability to crowdfund physical territory. Personally I don’t think it needs a founder. Everything from an organization perspective can be linked to a smart contract and the whole community can work on the vision. A founder brings unnecessary centralization in my opinion.
Now I hear you think; Is this not just a sophisticated Reddit page or Discord channel?
No. Because those do not have -for an example- diplomatic recognition. Neither are they intrinsically motivated to leverage funding to create real world environments for it’s community.
This is Libertarianism at it’s finest. The idea is somewhat built upon a book that was written in the 1990’s called The Sovereign Individual, which predicted the rise of the internet and the information age. It had a sharp critique on the flaws of nation states and Balaji seems to have built on the ideas in that book at least partially. It would be good to have non-libertarians also contribute to this movement from an intellectual viewpoint because libertarian generated ideas will only attract libertarian people. To truly generate traction, more people from different perspectives should help translate this vision.
How to build a Network State
A Network State is built in seven steps.
Found a startup society: An online community with aspirations to organize themselves into something greater than just that.
Organize it into a group capable of collective actions: How do you coordinate the members of your online community for their mutual benefit? How do you jointly define the vision?
Build trust offline and a cryptoeconomy online: Holding in person meetups is a great way to begin fostering a long term relationship, which will also create a tighter vision. Supported with the utilization of an internal economy using cryptocurrency.
Crowdfund physical nodes: Apartment buildings, towns and/or parts of a city can be jointly (crowd) funded to support physical communities.
Digitally connect physical communities: Connect the physical world with the digital world using mixed reality and a Web3 cryptopassport.
Conduct an on-chain census: As the community is growing, run a census to demonstrate its traction and growth, with a focus on size of the population, income, and real-estate footprint. This way skeptics get the necessary data and information to help them understand it’s purpose.
Gain diplomatic recognition: Lastly, negotiations for diplomatic recognition should be conducted with at least one pre-existing government, with the goal of building sovereignty and slowly maturing into a real Network State.
Why build a Network State?
Software is eating the world. -
First, a small digression on the internet:
The internet has transformed the world forever. In the 1980’s an office was filled with notebooks, calendars, clocks, planners and so on. Now, it just has a Macbook sitting there. Code is everywhere and is multipurpose. It can be harnessed to create abundance, or weaponized to facilitate conflict and war.
Where the initial Web 1.0 brought us ‘read only’, Web 2.0 brought us ‘read and write’; Web 3.0 is bringing us ‘read, write and own’. Think of owning and using Cryptocurrencies, NFT’s, Tokens of real world products, and ofcourse owning your own data.
Web 3.0 is an answer to the errors and hick-ups caused by the companies that surfed the Web 2.0 wave. Twitter, Instagram and Facebook brought great innovations, but did so at the cost of ever growing centralization, data exploitation, lack of privacy and security and fake account usage. Web 3.0 changes this because data is decentralized using Blockchains, your online privacy and security is controlled by you because it is secured cryptographically, and your assets are owned by you using a Wallet.
But why start a Network State? There are only long answers to this one, but lots is wrong with the current global socio-political order:
Authoritarianism is on the rise, with some countries using digital surveillance to control their citizens from every aspect, creating an Orwellian dystopia.
Economic policies from central banks around the world that are leaving citizens financially crippled more and more with high inflation and high interest rates. Some even banning the use of alternatives like Cryptocurrencies.
Free speech is under attack globally. Students, professors, journalists and public intellectuals on both the left and right side of the political spectrum cannot even speak freely in the West because of cancel culture.
Besides those three mentioned issues, legacy states are in need of an update. Most of the institutions built like governments, central banks and universities were built 100+ years ago, for a (slow moving) analog world. Their adaptability is slow if present at all, and the paradigms they carry do not facilitate the exponential changes that are happening on a global level regarding technology.
On top of that, societies tend to be value driven on a macro scale and not a micro scale. It is either liberal democracy or communism. Capitalism or quasi marxism. Religious or secular. It leaves little room for anything in the middle or even outside of that spectrum. And looking at the fact that groups of people online are organizing themselves into micro communities such as -for an example- the digital nomads, crypto libertarians, new age spirituality seekers etc. means that less and less people will ultimately resonate with large nation states and will be drawn more and more to their own ecosystem. Why not also facilitate a local (digital) economy, governance structure, crowdfunding tactics to build physical communities and ultimately gain diplomatic recognition?
On top, this article by CoinMarketCap argues the following:
Blockchain innovation allows us to experiment with political, technological and societal innovation like new forms of government and economic collaboration.
Blockchain and specifically the Bitcoin network can be used as an undisputable record of truth. Bitcoin is the most decentralized and lindy crypto (lindy = the longer it’s been around, the higher the chance it will stay around). You can back up information to its blockchain, meaning it beats all centralized ledgers of information.
Although society is more decentralized than ever (remote work, people moving out of urban areas), power and truth-keeping are also more centralized than ever, both within the U.S. and internationally.
People need a Leviathan, that is, something to believe in. It used to be religion, then it was the state. In the future, it will be networks.
U.S. society is divided, China is challenging its hegemony, and people don’t want either solution but a “new center.”
Conclusion: since societies are increasingly polarized, the emergence of this new technology makes its application in the envisioned way inevitable.
People have built startups, invented new currencies, and now have the chance to create new countries. How that will ultimately look like, is not clear yet. This movement is rather new and might take multiple generations to realize it’s goals. In the end, I do believe traditional nation states will have many challenges in order to keep up with the pace of technology’s exponentiality.
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