On Network States
The network state system starts from different assumptions than the nation state system (which you can review here).
Earlier we gave descriptions of the network state in one sentence, one thousand words, and one essay. We also showed what a million-person version looks like on a map (see above). Here’s that one sentence definition again:
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.
Keep in mind that this definition references the final form of a diplomatically recognized network state. But you can’t get diplomatic recognition for a made-up country right off the bat, so you can’t found a network state directly.
Instead, you found a startup society and hope to scale it into a network state that achieves diplomatic recognition from a pre-existing government, just as you don’t found a public company directly, but instead found a startup company and hope to scale it into a public company that achieves “diplomatic recognition” from a pre-existing exchange like the NASDAQ.
Moreover, to extend the analogy, the process of scaling a startup involves waypoints - like “seed startup,” “series B startup,” and “unicorn” - prior to achieving the status of a public company. So too there are at least two waypoints between startup society and network state worth noting: the network union and the network archipelago.
Turning a startup society into a network union makes it a digital community capable of collective action. Turning that network union into a network archipelago manifests that collective action in the real world, as the community crowdfunds physical properties around the world and connects them via the internet. Finally, an impressive enough network archipelago can achieve diplomatic recognition from an existing government, thereby becoming a true network state.
That’s the process of getting to a network state. Now let’s drill into each part of our proposed definition.
A social network. The people of a network state form their nation online. Social rather than geographic proximity is the core organizing principle. But this isn’t a typical social network like Facebook or Twitter; it’s what we call a 1-network where there is just one coherent community present, rather than many separate communities as on Facebook or Twitter. It’s not quite a complete graph - everyone doesn’t have to be friends with every single other node - but it’s much closer to that than a typical social network.
Admission to this social network is selective, people can lose their account privileges for bad behavior, and everyone who’s there has explicitly opted in by applying to join. That application process could involve public proof of alignment via writing, a career history that demonstrates common values, or the investment of time and energy into the society to obtain digital assets. Joining the network that underpins a network state is not a purely economic proposition, not something that can be bought with money alone. It’s a concrete version of Rousseau’s social contract as a literal smart contract, one that all sign before entering, a way to turn an abstract proposition into an actual nation.
A moral innovation. A network state grows out of a startup society that is premised on a moral innovation, where everyone within the society thinks some principle X is good that the rest of the world thinks is bad, or vice versa. This is the proposition part of a proposition nation. For example, the moral innovation could be as trivial-seeming as “sugar bad” or “24/7 internet bad”, or as heavyweight as “this traditional religion is good”. The moral innovation draws people in. It gives a reason for the society to exist, a purpose that’s distinct from the outside world, a universalist complement to the particularist sense of national consciousness, an ideological mission that others will nod their heads at even if they don’t share (“ok, I understand why someone might want a sugar-free society, or a Benedict Option community”).
The reason we put such a high priority on a moral innovation is that missionary societies outcompete mercenary ones, not just in theory but in practice. For example, the historian Paul Johnson once pointed out that the for-profit colonies in America failed but the religious ones had the cohesion and commitment to make it through the brutal winters (see 11:00 here). We discuss this at length in the chapter on the One Commandment.
A sense of national consciousness. Everyone in a network state feels like they’re part of the same community, sharing the same values and culture. They’re a nation in the sense of Renan…“to have done great things together, to want to do more.” Again, it’s much more like a complete graph than a typical social network, as almost every node is friendly with a very large fraction of other nodes.
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 propaganda or force. Hence, it’s important to have a recognized founder, one that people actually listen to and choose to follow by joining the community.
Can that founder break up the Triforce, splitting their authority into some kind of multisig? Sure, just like the founder of a startup company can choose to give up board seats. But it’s easy to give away power and hard to consolidate it, and you need that power sometimes to make hard but important non-consensus decisions.154 That’s why dual-class stock to maintain control is used by both the US establishment and their opponents.
As with giving up corporate board seats, giving up some power may be the right thing to do at some point for the network state founder. But in the event that a network state degenerates into a bureaucracy - as many mature organizations do - a key part of the network state model is that it is, like the startup model, built to always allow peaceful exit. Anyone can, at any time, leave to found a new startup society and try scaling it into a network state.
A capacity for collective action. This is tightly related to the concept of national consciousness. It’s a combination of collective purpose (which is like the mission statement of a company, but for a community) and the capacity to act on that purpose.
First, let’s understand the idea of collective purpose through some examples. The Puritans wanted to build a “City on a Hill.” The Japanese after the Meiji Restoration replaced their previous mission statement of “Revere the Emperor, Expel the Barbarians” with “Enrich the Country, Strengthen the Military,” turning their society around 180 degrees and thereby building the first non-white industrialized power. And while the process of Indian Independence and Partition was messy beyond belief, on the other side the collective purpose of independence unified the Indian nation in a way it never had been before, with hundreds of so-called “princely states” and countless ethnic groups now integrated into a single India.155
As one more example, 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 returning him safely to the Earth.” This was a collective purpose different from but allied with the also-valid zero-sum goal of defeating communism. It was perhaps the penultimate great thing the US accomplished as a unified country, with the defeat of the Soviet Union as the last.
These collective purposes helped unify their respective nations. They may be imperfect, but once there’s no collective purpose at all, people start wondering who they are. “Who are we?” That directionlessness leads to what we see in today’s US, split into two tribes whose only “collective purpose” is to win a zero-sum game against the other - a game each thinks it must win before being able to move forward to the promised land.
Next, supposing we have a collective purpose, what does collective action towards that purpose look like? This is why the process of building a network state includes a network union. From the very outset it organizes people to work together for the benefit of their chosen community through the familiar interface of their screens. This, again, is quite different from current “social” networks like Twitter, which give individual scores for likes and followers but no team dashboard, no way of setting and achieving tangible goals as a group.
An in-person level of civility. In the 90s and 2000s it was attention-getting when people were grossly incivil to each other online, as it was a funny contrast to the generally civil offline world. Now it’s just old, and not funny anymore. Moreover, internet ideologies have emerged that justify random nastiness with slogans like “civility is tone policing” or “toxicity is social defense.” Yet a society where everyone is constantly disrespectful to everyone else doesn’t seem like a progressive, public-spirited society. And the conservative US of the 1950s managed to maintain a strong level of self-defense because they were internally civil. So whether one is coming from the left or right, pulling together a high-trust society means in-person levels of civility towards community fellow members, both offline and online. High trust in turn comes from alignment towards a collective purpose and a sense of national consciousness.
An integrated cryptocurrency. This is the digital backbone of the network state. 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’s protected by encryption, it can coordinate all the functions of a state across the borders of legacy nation states.
An archipelago of crowdfunded physical territories. This is the physical footprint of the network state. Rather than buying territory in one place, or trying to negotiate sovereignty up front, you build the community in the cloud and then crowdfund physical real estate on the earth. That’s office space, yes, but also homes and shops - just spread all around the world in clusters, rather than concentrated in one place. You network these clusters together using the internet into a network archipelago, eventually using newer technologies to make them more real. For example, you can make the flag of a network state appear to anyone with augmented reality glasses and the right NFT, as per this visual. You can also make doors open on command for community members, where their ENS name is their login. The point is that a network state is not a purely digital thing. It has a substantial physical component: all the buildings around the world crowdfunded by its members.
A consensual government limited by a social smart contract. Now we get to the government. Many people make the mistake of thinking the laws (or the land) come first when starting a new state, but laws should only come after the formation of an organic people – of a network nation – not before. That’s because laws encode the implicit understanding of a people. Contra the concept that you “can’t legislate morality”, that’s all you can do: set up laws that reflect the moral consensus of a people as to what is encouraged and discouraged, acceptable and optional, mandatory and forbidden.
How is that moral consensus arrived at? It could be through a 51% democracy (where 51% of people can outvote the other 49%) or it could be via a 100% democracy (where 100% of people have migrated into a system and can migrate out at any time), or it could be via one of the zillions of techniques for satisfying preferences described in the literature.
The specifics don’t matter as much as the ethics. That is, what makes a government legitimate is not process but substance.156 Given the consent of the governed, any form of government is internally legitimate. The question is then whether it will be considered externally legitimate, whether the world at large will accept this government - but that is an empirical question more than an ethical one.
Put another way, if people can opt in to bungee jumping and skydiving, if euthanasia is legal, then experimenting with self-governmental systems that vary dramatically from the status quo should also be legal. Many of them won’t work, but many projects don’t work either; that doesn’t mean we stop people from trying.
One way of thinking about this is that the typical Ford customer doesn’t care about how Ford’s internal affairs are managed. The buyer doesn’t care whether Ford is organized by product or by function, whether they’re run top-down by the CEO or in a consultative way with the board, whether they pay market salaries or incentivize more heavily with stock. Ford could be a holocracy or a co-op. So long as everyone has consented to be governed by the Ford CEO by signing an employee agreement, and can leave if that agreement is no longer congenial, Ford’s internal arrangements are ethical.
This logic works so long as you can opt out of Ford’s ecosystem completely. Have you driven a Ford, lately? It’s trickier when it’s something like Google, which is so powerful that it’s hard for the non-Chinese portion of the planet to fully opt out of. Then you might want some kind of say in what goes on inside the Googleplex. Still, most companies aren’t Google. Setting aside the edge case of “inescapable global ubiquity” for now, the ethical case for allowing opt-in experiments in corporate governance is pretty strong, for taking a broad view of the “consent of the governed.”
Now extend that idea to non-corporate governance, with coin governance as a proof point, and network states as an endpoint. Questions arise. How could consent be given? How could others measure that consent was freely given? And what if someone wants to retract that consent, perhaps right before they’re subject to an act of governance they don’t like?
In practice, we say that a user has consented to be governed by a startup society if he has signed a social smart contract that gives a system administrator limited privileges over that user’s digital life in return for admission to the startup society. This portmanteau term combines Rousseau’s concept of the “social contract” with the blockchain concept of the “smart contract.”
Signing the social smart contract is very similar to depositing your funds with a centralized exchange, or locking them up in a smart contract with admin keys – you’re taking conscious risk with an on-chain asset in return for admission to a digital ecosystem. Now imagine using your ENS157 to “log in” to a startup society, thereby giving it limited privileges over your account in order to enter that startup society.
What does that log in entail? The simplest version of this is using your ENS to log into a startup society community. A more sophisticated version is using your ENS to enter a part of the so-called “open metaverse” governed by a startup society. But the most interesting version is using your ENS to log into offline territory owned by a startup society, as in the aforementioned example where an ENS handshake opens a smart lock, or the one where it shows a glowing sigil. You might also have to put down a deposit to physically enter a startup society managed territory.
You can extrapolate that ENS-login-to-physical-world example dramatically. As more physical territories are crowdfunded by a startup society, and more smart devices within those territories are owned by the society, it can exert consensual digital governance within those territories on all who opted in by signing the social smart contract. For example, if someone misbehaves within a given startup-society-owned jurisdiction, after a Kleros-style digital trial, their deposits could be frozen and their ENS locked out of all doors for a time period as a punishment.
This is at first blush similar to what’s already happening in both the West and China, where Canadian trucker funds are being frozen and WeChat QR codes are being used as instruments of digital control…but with one enormous difference, which is that if we can build many different startup societies to choose from, then there is much more practical consent of the governed, because there are many startup societies to choose from with explicit social smart contracts.
Essentially, the key insight is that “government” is becoming synonymous with digital government. In any US-establishment- controlled territory your Google account will soon be frozen for crossing the US establishment. In any CCP-controlled territory your WeChat account can be frozen for crossing the CCP. But in any crypto-anarchic territory there may not be much in the way of functional digital services at all. So if one wants modernity constrained by cryptography, the concept of the “social smart contract” is one way to achieve consensual, limited government – to limit what a government can do by tightly limiting its access to your digital identity and resources, much like you can control exactly how much you deposit onto a centralized exchange.
That sounds good at first. Then it sounds bad. Because if governance is limited solely to the digital realm, only to on-chain assets and smart locks, how does a startup society deal with physical criminals? The short answer is that for a long time, it doesn’t – it leaves that to the surrounding legacy society, much like a centralized crypto exchange collaborates with traditional offline law enforcement. Eventually, if and when that startup society becomes a network state – in the sense of achieving diplomatic recognition from a legacy sovereign – then it can potentially take on physical law enforcement duties.
In the meantime, physical law enforcement itself is gradually turning into something done with autonomous robots - whether they be legged robodogs, rolling cameras, or flying drones. So more law enforcement is being done from a command line. And that trend gradually converges with the concept of digital law enforcement by a network state.
To summarize: when we say that a network state has “consensual government limited by a social smart contract”, we mean that it exercises authority over a digital (and, eventually, physical) sphere constituted solely of those people who’ve opted in to its governance by signing a social smart contract with their ENS names, in much the same way they might “opt in” to the governance of a centralized exchange by depositing coins there.
A virtual capital. A network state is physically distributed, but its people still digitally assemble in one place. That cloud assembly point could initially be something as modest as a Discord channel, but will eventually be a private subnetwork of the open metaverse. That means a virtual reality (VR) environment with parts that can be seamlessly projected into the physical world with augmented reality (AR) glasses, so that you can see digital people, buildings, or objects in the real world, like this. Access to a network state’s virtual capital, like everything else in a network state, is gated by web3 login limited to citizens.
The most ambitious version of this allows community members to gather online to create virtual architectural blueprints for new physical nodes of the network state, as per this tweet. The reason this is feasible is that architecture is moving to VR. You could imagine a much higher resolution version of Minecraft that gets materialized into the physical world by a crowdfunded contractor (or by community members with construction experience themselves). Think about the scene from Fight Club where the camera swivels around the room to show price tags on everything, and now imagine that in VR, with the cost to materialize each virtual structure in the physical world hovering above it.
An on-chain census that proves a large enough population, income, and real estate footprint. A distributed society needs a distributed census. Unlike the US census, and more like Facebook’s census of its userbase, a startup society’s census can be conducted in real-time rather than every ten years. But a skeptical world won’t just take those numbers on faith, given a fledgling startup society’s incentive to overestimate them. They may trust the US government, or even Facebook (a public company) on its audited user numbers, but not some upstart startup society - not without some proof.
But how do you prove that a given startup society really has 10,000 residents and one billion dollars in annual income and 10M square meters in its real estate footprint? Each of these elements can be established via on-chain data. We already have techniques for proof-of-human, proof-of-income (via on-chain accounting) and proof-of-real-estate (via blockchain real estate). We can get into technical detail on how you solve the “crypto oracle problem” of getting off-chain data reliably onto the blockchain, but the short version is that you can use a statistical estimator to take into account the fact that individual oracles may have errors. By accumulating the censuses of all startup societies in a hypothetical
nationrealestatepop.comsite similar to
coinmarketcap.com, you could track in realtime the number of startup society members, the acreage of real estate owned by those members, and their on-chain GDP.158
Attain a measure of diplomatic recognition. Now we come to the main event: diplomatic recognition. Diplomatic recognition by a pre-existing government is what distinguishes a network state from a startup society, just as “diplomatic recognition” by an exchange like the NASDAQ distinguishes a public company from a startup.
Diplomatic recognition requires a putative state to have clout, and clout is in turn established by a publicly verifiable on-chain census of population, income, and real estate, to prove that your growing society is as large as you say it is. That’s why the aforementioned census is important.
Putting all that together, we can see that the definition of a network state culminates in attaining diplomatic recognition from a pre-existing government, which requires far more substance, leadership, physical presence, and long-term commitment than a typical online community, or even a cryptocurrency. It may be a LARP, but it’s not done on a lark.
You can start to see why we have several parts to the definition. If you subtract one part you get something that doesn’t quite match our intuition of what the next version of the nation state should be. Let’s do that, subtracting each part just to see how it breaks.
No social network. If there’s no social network, you have no digital profiles, no messaging, no community fora, no mass media, and no easy way to recruit from the internet. You’d essentially be living an Amish life, relying on pieces of paper or offline cues to determine who was part of your new state and how they interacted. This isn’t going to succeed the nation state.
No recognized founder. With no recognized leader, you have no way of making contentious decisions or setting the agenda.159 A founder is the best kind of leader, because they have the legitimacy associated with building an organization from scratch. Unlike a dictator, their authority isn’t forced upon the population, and anyone can exit at any time. And unlike a media oligarchy, a founder’s authority doesn’t arise from propagandistic bombardment but from free choice.
No sense of national consciousness. If there is no sense of national consciousness, there is no nation underpinning the network state. It’s just a bunch of random people with nothing in common.
No capacity for collective action. A group of people that lacks a capacity for collective action - like most online communities, frankly - isn’t going to get anywhere.160 Even if they have national consciousness, without the capacity to organize (which arises in part from a leader), they certainly can’t build a state.
No in-person level of civility. A group of people that constantly tears each other down won’t build an outhouse together, let alone a state. More deeply, the folks who throw around slogans like “civility is tone policing” or “kill your heroes” are actually engaged in endless status competition, because they have rejected the current hierarchy but not yet accepted a new one. In a functioning, legitimate hierarchy (see diagram here) there’s a mechanism for dispute resolution that doesn’t involve summoning a mob for every slight.
No integrated cryptocurrency. After the financial deplatforming of Western proles and foreign elites, of Canadian truckers and 145M Russians, it’s clear that digital finance is a weapon of war. So without a sovereign digital currency (and, more generally, a sovereign system of record) there is no sovereignty.161
No archipelago of crowdfunded physical territories. You can do many things online, but not everything. Without physical territory you can’t build FDA-free zones, or NRC-free areas, or the Keto Kosher community, or many kinds of substantive parallel societies. You also can’t meet, mate, mingle, and do all the other things humans do in person. And most importantly you’re not going to be taken seriously as a successor to the nation state without a large physical footprint. The approach of knitting together crowdfunded physical territory into a network archipelago addresses these issues.
No virtual capital. Network states are not city states. City states were defeated by nation states for a reason: they are physically centralized and have limited scale. So particularist city states populated by small ethnic groups get rolled up by universalist nation states (or empires) with many ethnic groups.162
That’s the reason a network state has a virtual capital rather than a physical one. Think of it as “remote-first,” but for a society. In a remote company, nothing officially exists unless it’s online, in an internal system of record like GitHub. Similarly, in a remote society, nothing officially exists unless it’s on-chain, in the blockchain system of record for that society.
Put another way: if you don’t consciously set the capital of your network state to be virtual, it’ll be physical. And if it’s physical, the capital is centralized in one place, and can get invaded by a nation state. But if it’s instead a virtual capital, with a backend that is encrypted and on-chain, then - in the fullness of time - you can host an entire subset of the metaverse there, assuming blockspace increases as bandwidth did.
No on-chain census that proves a large enough population, income, and real estate footprint. The US Census is in the US Constitution for a reason; you need to know something about your people to run a government. But for a network state, the challenges are different than those that faced the Founding Fathers.
The hard part isn’t how to collect the data; with modern technology it can be slurped up and dashboarded in real-time, rather than collected every ten years on millions of pieces of paper. No, the hard part is getting people to believe the data, given the huge incentives for faking the numbers.163
That means establishing a cryptographically auditable information supply chain, a transparent way of gathering the numbers for the network state census. That means showing the work so that people don’t need to trust you, and can run the computation themselves.164
Why is this important? Think again about the emergence of Bitcoin. Price was a signal, a signal of strength. Millions of trades across dozens of exchanges produced a signal that was reliable enough for companies and eventually governments to act upon. Price is why Bloomberg listed Bitcoin on a ticker in 2013. And price is why El Salvador recognized Bitcoin as a sovereign currency in 2021. We’re not talking about the short-term price here, which is and will be highly volatile, but the long-term price - the secular trend.
Similarly, if people can check for themselves that there’s a startup society that has built itself into an network archipelago with 10M square meters of land, over 10 billion dollars in annual income, and 100k people, then that starts to become a society worthy of diplomatic recognition.
No measure of diplomatic recognition. Many libertarians don’t get the concept of diplomatic recognition, just like many progressives don’t get the desirability of starting new countries, so this point is worth discussing.
What happens if you don’t have diplomatic recognition? Then you aren’t in the club of legitimate states. That means any government can invade you at will, and the others will just shrug. It also means you don’t have access to things like sovereign debt markets. You can’t ink trade or passport deals. You likely can’t buy many goods and services that corporations or states sell only to other states, because you’re not considered a legitimate government by the rest of the market. You certainly can’t write new regulations for your jurisdiction, because others do not recognize your lawful authority over that jurisdiction, and can (again) invade you at will.
Basically, without diplomatic recognition, you aren’t considered real. That’s why micronations don’t work. They have no organic community, so they have no answer to the question of “you and what army?” And even more importantly, no answer to the question of “you and what legitimacy?”
You can think of diplomatic recognition by a pre-existing state as a “non-binding commitment to not invade.” Subsequent to recognition, the startup society now gains the ability to write laws governing the physical world in their patch of territory without being invaded - at least by the recognizing state.165 This is why we require diplomatic recognition in the definition of a network state.
This gives you a sense of why each of the parts of the definition exist. A network state is at least as complex as a nation state, but the difference is that the latter already exists, so we take for granted how it works.
What’s next? Once the first diplomatic recognition comes, and the first true network state arises, more will follow. That means we need to start thinking about the network state system.
The next step is to outline the assumptions of the network state system as a whole. Read this and compare it to those of the nation state system.
Digital first. The digital network of the internet is primary.
Composition. A network state is composed of a national network (the equivalent of the nation) and a governance network (the analog of the state). Unlike a typical social network, a national network self-identifies as a nation. Unlike a typical social network company, a governance network is set up by that national network as the legitimate government of that digital people.
Terra incognita returns. The network state system assumes many pieces of the internet will become invisible to other subnetworks. In particular, small network states may adopt invisibility as a strategy; you can’t hit what you can’t see.
Terra nullius returns. The network state system further assumes that unclaimed digital territory always exists in the form of new domain names, crypto usernames, plots of land in the metaverse, social media handles, and accounts on new services.
Bottom-up migration of people. The network state system embraces the fuzzy division of the internet into different sovereign subnetworks. It is a probabilistic digital division of people rather than a deterministic physical division of land. People migrate digitally and physically between network states; the citizenry is as dynamic as the land of a nation state is static.
N networks per citizen. Unlike the nation state system, where most people have citizenship in only one state, in the network state system, every person can in principle be a member of more than one state, just as they can hold passports in more than one country, or be holders of more than one cryptocurrency, or be users of more than one social network. Of course, they can spend most of their time in one network state.
Legitimacy from physical migration and digital choice. The power of network states is constrained by consent and cryptography. First, recall that the governance network of a given network state is the analog to the state of a traditional country. This governance network only has control over those digital citizens (netizens) that have opted in, individually or collectively, to its governance, much as one explicitly signs an employment contract when joining a company or implicitly signs a social contract when stepping across a border. A given national network can choose a governance network as an administrator, thereby forming (or joining) a network state with an on-chain record of their collective decision. Or an individual can join a network state on their own. Cryptography ensures that this choice is demonstrably free and uncoerced, because no state can easily seize an individual’s private keys. Cryptography further guarantees basic rights like freedom of speech, free migration, private property, freedom of digital assembly and the like, so long as each user has exclusive access to their private keys.
Decentralized administration. The group of people that administers a network state, which we call a governance network, is composed of a founder/chief executive and their engineers. They write laws in code to specify what is mandatory, encouraged, discouraged, and forbidden. These laws are interpreted by impartial servers and enforced by cryptography. In the network state system, each social subnetwork can choose which governance network administers them, as determined both by their physical location and where their digital property lies. Over time, this means polycentric law: people in a given physical area can switch between network states (and thus governance providers) just as they switch between Uber and Lyft as taxi regulators, or Bitcoin and Ethereum as monetary regulators.
Domestic monopoly of root access. The governance network of a network state has root access to an administrative interface where law enforcement can flip digital switches as necessary to maintain or restore domestic order, just like the sysadmins of today’s tech companies. Of course, postulating the existence of such an interface presupposes a world where everything from money to messaging, doors to dwellings, farms to factories, flying drones to walking droids can be controlled from a single computer — but that world isn’t far off, and today there are few checks on the digital power of the tech companies that are bringing it into being. The network state system checks this power in two ways: by maintaining private keys (so foreign states and corporations cannot interfere in domestic affairs) and by enabling exit (so citizens can execute financial and electoral votes of no confidence if need be, both as individuals and as groups).
International sovereignty via cryptography. For a network state, sovereignty is private keys. If access to the aforementioned administrative interface is controlled by private keys rather than a username/password combination, then the same encryption techniques that make it difficult for an outsider to seize an individual’s private keys can make it difficult for a foreign rival to steal a legitimate government’s private keys. This is a completely new way of defending sovereignty, a complement and/or replacement for the military.
Digital diplomatic recognition. Network states can recognize each other bilaterally (similar to an API integration) or multilaterally (e.g., by supporting the same blockchains). When people exit to other network states, whether digitally or physically, they bring their most valuable possessions with them in the form of private keys. Some of these keys give access to property in global blockchains, others give access to physical goods like cars and houses, and still others give access to records hosted on state-run chains, like their netizen profile in the network state they just left. Diplomatic recognition is then about interoperability and compatibility: are the file formats and on-chain records used by one network state honored by another?
Chains manage cooperation and constraint. Public blockchains are the equivalent of international law in a network state system. They facilitate economic and social cooperation between network states and their netizens, but also constrain those states with cryptographically binding code.
Pax Bitcoinica. The ultimate guarantor of exit, and of the network state system at large, is Bitcoin. As cryptocurrency rises in strength, Bitcoin or something like it becomes a government of governments. It sits above every state and constrains it from printing infinite quantities of money, from lawlessly seizing the funds of its citizens, and from waging forever war. In doing so, it limits that which will never limit itself. And even if the Bitcoin protocol specifically fails, or its cryptography has a bug, the concept of cryptocurrency and the choice it represents will not disappear from this earth.
One point we touched on above, but that bears repeating, is that the network state system assumes the world has flipped to digital first: all nontrivial human-created events start in the cloud and then, if important, are “printed out” into the physical world.
Think about anything a human does today: all office work is online, as is much socialization. Courts are now online, as are politicians. So is money. So is agriculture, and manufacturing, and shipping. The phone has indeed become the remote control for the world. Many previously offline devices — cars, doors, desks, weights, coffeemakers, even toothbrushes — are coming online. Even pacemakers leave a digital trace.
The physical still exists, of course. There are still physical human beings, there are still physical plots of land, there are still physical rivers and mountains. And for some law enforcement and military functions a network state will need physical robots.
But in a network state, everything physical is downstream of lines of code and enforced by cryptography, just as in a nation state, everything physical is downstream of pieces of paper and enforced by the police and military.
A second assumption is that once every interface is digital, it can be put online. And once online, in the absence of private keys, it can be centrally controlled.
So, the network state system assumes that states like the USA and PRC will continue centralizing the power of their tech companies into one all-seeing dashboard, capable of surveilling, deplatforming, freezing, and sanctioning millions at once, or anyone at will. This digital power is currently exercised transnationally and without the consent of the governed. They have no true free choice of administrator.
The network state system assumes that we can’t fully put this genie back in the bottle, but we can constrain it. Specifically, we grant that every legitimate state will need such power to govern its subnetwork, for the same reason any centralized service needs a system administrator with root access. But we also build decentralized services that do not have any single system administrator, and tools for the physical and digital exit of citizens.
Just as in the pre-Westphalian period, where the Catholic Church exerted transnational control, the digital power wielded by the American and Chinese empires invalidates traditional notions of sovereignty. The Peace of Westphalia equivalent is a network state system that limits the digital power of states solely to those who have opted in. Just as post-Westphalian nation states were limited in control to people within their territory, post-Satoshian network states will be limited in control to people who’ve opted into their network. It is a division of the world by network rather than by land.
So, in short, in the world of the network state, both states and citizens alike are powered up. Network states have a root dashboard with full access to every digital aspect of the network they govern. They also have security from outside interference because access to these dashboards is gated via private keys rather than passwords.
However, this immense digital power is typically deployed nonviolently (unlike with existing states) and constrained by cryptographic and physical exit, rather than by paper laws or toothless treaties. This is what powers up citizens, who freely choose whether to enter or exit, either collectively or individually.
Thus, the legitimacy of a network state comes not from top-down declamations, but from bottom-up consent, as each netizen has opted in. A truly oppressive or incompetent network state loses them to exit, or doesn’t gain citizens in the first place. And no state is strong enough to block the ultimate exit that cryptocurrency represents.
We can unpack the term “network state” in several useful and complementary ways.
The network is the nation. The organic, voluntary, bottom-up nation that underpins the state is formed online in a network. This could be on the basis of language, culture, proposition, or some combination thereof. This represents a digital remedy to the phenomenon Putnam identified in Bowling Alone. In the year 2000, we were bowling alone but by 2020 we were posting together. COVID-19 accelerated this process — people were spread apart in the physical world but packed together online.
The network is the territory. VR isn’t yet fully mature, but when it is, we’ll identify the territory of a network state as a subnetwork of the open metaverse. We can understand this if we think about domain names, social profiles, and ENS names — digital land can be created for free, but access to that land can become very valuable (and, when deplatforming is in the cards, very contentious). The analogy to land goes very deep — to fully understand it, you need to understand graph layouts, but in short you can make maps of networks given any graph adjacency matrix. And if you use the distance metric of “number of degrees of separation in a social network,” that looks quite different from the map you get from a geographical distance matrix.
The network is the state. How does a network state create and enforce laws? Digitally. It’s Locke’s justification of the state as the protector of private property, in the form of a digital registry. And it’s Lessig’s code-is-law, but on-chain. Our entire antiquated process of adversarially writing high-stakes laws on paper at the last minute, deploying them in production to hundreds of millions of people without any testing, and then getting them interpreted in unpredictable ways by regulators and solicitors will be seen as a bizarre relic of an older time. Paper laws will go the way of powdered wigs.
The Network is the Leviathan. Here, we capitalize Network as it’s being used in the sense of God, State, Network. The Network here is a candidate for the most powerful force in the world, where the Leviathan in the Hobbesian sense is not divinity (God) or military (the State) but community and cryptography (Network). From this viewpoint, the Network State can be seen as a fusion of Leviathans, like the God/State combination of the mid-century USA, where the Marines fought for “God and Country” and where Americans pledged allegiance to the flag “under God.”
So: in a network state, the network is the lives (national network), the land (metaverse subnet), the law (governance network), and the Leviathan (Bitcoin network) all packed into one. It’s the people, the digital territory they occupy, the rules that bind them, and the power that enforces those laws.
We noted earlier that a micronation is really a microstate, and many “nation states” are actually multinational empires. These concepts generalize to networks.
We can think of a micronetwork as a startup that intends to build a social network, but has zero users. So a micronetwork is like a micronation that plants a flag, but has zero citizens. Similarly, a multinetwork like Facebook is a billion-person-scale social network with many subnetworks under one company…just like the multinational Roman Empire, where many different groups were ruled by one state. Perhaps there’s a reason Zuck admires Augustus.
But the analogy breaks down in an important way.
In a “micronetwork,” aka a startup, the startup creates the
network that it ends up managing, both in the sense of the people in
that network and the digital domain itself. Zuck came first, then
thefacebook.com; only then came the users. But in a real
nation, the people and their physical domain precede the state. For
example, the Japanese people and islands predate the current Japanese
That’s one way people went wrong with micronations. You can’t just treat them like a normal startup where you start with one person and build an impersonal product! The prospective network state founder needs to think about “nation building” from day one. That’s not just community building on steroids — ideally, that nation building process is really nation discovery. In other words, there’s an existing community out there with an unexpressed national identity at the top of their identity stack, and they want to crowdfund territory and build their decentralized Zion. The network state is then just a catalyst for this.
Of course, people have also gone wrong with the startup-to-state analogy in a different way: by thinking startups could act just like states without a legitimating process.
Suppose we try the analogy that “state is to a startup as nation is to network.” That is, just as a state manages a nation and sets its laws, a startup like early Facebook or Twitter manages a social network and sets its policy.
This worked, until it didn’t. Facebook and Twitter have succeeded beyond anyone’s expectations, yet they weren’t set up to be governments. People didn’t consciously sign a social contract to be governed by them. Facebook and Twitter grew to take over much of people’s lives, but have no concept of digital property rights. Seizures and silencing weren’t part of the bargain.
There are at least two ways to add genuine choice, and hence legitimacy, to centralized networks.
Free the backend. On a free spot of land, you can have a nation without a governing state. Similarly, if we had a free region of the cloud, we could have a network without a governing startup. That’s what Satoshi did: he reopened the frontier, gave us a cloud without corporations. He showed us how to create digital networks without any single centralized authority. One extension of that gives us decentralized social networks, the basis for an open metaverse. So that’s one way to solve the problem: build digital land that isn’t controlled by any single startup. Anyone on that land could then freely choose between governance networks.
Free the login. The other, related way out is to retrofit an existing centralized social network to enable web3 login, such that users can contact each other outside the service and their usernames are not locked into the system. Note that this is far more substantive than merely allowing users to “export their data” — it’s more like the capability to message your followers without Facebook or Twitter’s permission.
Without one or ideally both of these features (decentralized backend and decentralized login), a micronetwork might grow into a multinetwork, just like 0-person Facebook became 3 billion-person Facebook…but it wouldn’t have the legitimation of exit that enables a true network state. The millions of people on current platforms (and future ones) must be given the option to leave166 with all their digital valuables in order for their stay to be considered uncoerced.
We know that multinational empires tend to have the same failure modes as micronations: the state doesn’t actually represent a single distinct people, and thus fails on that basis.
Towards that end, it’s worth taking the overloaded term of “social networks” and disaggregating it into 0-networks, 1, networks, and N-networks, just as we did for micronations, nation states, and multinational empires.
Here’s a concrete example:
- 0-network: Facebook at inception, 1 person founder, no users
- 1-network: Facebook at Harvard, one month after founding
- N-network: Facebook today, 3+ billion users
And here’s the underlying definitions that inform that example:
- 0-network: an aspirational social network startup with no users
- 1-network: a coherent community
- N-network: a massive global network of networks
In more detail:
A 0-network is a startup with aspirations for creating a large social network, messaging app, two-sided marketplace, crypto exchange, or other digital watering hole where people interact. Note that not every online service fits this definition; some apps like Mathematica or Photoshop are pure utilities.167
An N-network is the equivalent of a multinational empire. It’s not a good base for a network state, for the simple reason that it doesn’t represent a single nation, a set of coherent people. For example, the 300M users of Twitter or the 3B+ users of Facebook are unified by nothing more than a desire for likes. Of course, some of the subnetworks of an N-network may have enough asabiyyah to form a network state.
A 1-network is the basis for a network state, something like a
focused subreddit, a moderated Facebook group, a PHP BB forum, a large
Telegram channel, or the following of a single Twitter influencer. Of
course, not all subreddits would be 1-networks, but
r/keto with its
intense dietary culture is much closer than a global forum like
r/worldnews. A 1-network typically has some basic form of moderation
(a moderator can ban you, an influencer can block you), some community
norms, and mechanisms for enforcement. It doesn’t have all the
criteria of a nation — the shared language, customs, history, and
culture — but it’s like a proto-nation.
The following of a single large YouTube or Twitter influencer is probably the best kind of 1-network out there, in the sense of a proto-nation for a network state, because it has shared context and history, as well as pointers towards a leader who can act as a dispute resolver.
We now have a few definitions in hand:
- the properties of a nation
- the idea of a network state as a combination of a national network (the people) and a governance network (the state)
- and the just-introduced concept of a 1-network as a proto-nation, an embryonic version of the national network that underpins a network state
We also earlier noted that the definition of a nation was a bit fuzzy, both in the dictionary sense and according to different thinkers. With those preliminaries, we can now give a computational answer to the question of “what is a nation?”
You can redefine a traditional nation as a densely connected subgraph in a social network. Based on some metric — such as linguistic distance, genomic distance, ideological distance, or cryptocurrency holdings — the nodes of a bona fide nation should group more tightly with each other than they do with other networks.
In mathematical terms, nations are highly connected subgraphs of a global network according to one or more network distance metrics, like
- geographic distance: great circle distance on surface of earth
- network distance: degrees of separation in a social network
- genetic distance: eg, Fst (fixation index) or another measure
- linguistic distance: eg, lexicostatistical measures
- economic distance: eg, 1 — cosine similarity
- ideological distance: degree of similarity in belief as expressed by spatial theory of voting
The advantage of this definition is that while it’s still fuzzy (how connected exactly does the subgraph have to be?), it’s now amenable to quantitative analysis. Given a network, a set of distance metrics, and some parameter choices, the subgraphs pop out. By this definition, a real nation would have more ingroup than outgroup connections, more “domestic” than “international” calls.
Here’s how you’d actually do that computation.
Begin with any large N-network like Twitter with K=300M users and N postulated subnetworks. Calculate any or all of the following distance metrics between individuals, if you have available data, using the definitions from the preceding section.
Suppose we have six such metrics. Calculate them on K people, to form a K×K×6 tensor of distances.
Also collect a training set of labeled edges, where two people are marked as being part of the same 1-network or not, designated by Y=1. For example, you might put two English-speaking Bitcoin holders who own guns, subscribe to
r/keto, and follow each other on Twitter in the same 1-network.
Now use any machine learning technique to estimate P(Y=1∣d1..6). Something like Naive Bayes can work, or something more sophisticated.
Finally, set a threshold of say P(Y=1∣d1..6)>0.50. All the densely connected subgraphs that pop out of that process are the 1-networks.
In other words, given a set of postulated measures of national similarity, a bit of training data, and a parameter choice, we can cluster a large network into subgraphs. Applied to continental scale social networks like Facebook and Twitter, we’d be able to see different kinds of clusters pop out for different parameter choices, much like you do with the lasso.
Assuming you could get access to a global dataset like Facebook or Twitter’s network (or scrape it), you could turn all philosophical disputes about what a nation is into simply a set of parameter choices. That means a nation is a subnetwork in a global social graph.
The first thing is to specify which map we mean: a map of the physical world, or of the digital world?
In physical space, a network state looks like an archipelago of interconnected enclaves. As the dashboard above shows, netizens crowdfund territory around the world, link those pieces together digitally, and then use technologies like web3 logins and mixed reality to seamlessly link the online and offline.
Each such node of the network state represents a group of digital citizens who have chosen to live together in the physical world. As shown in the dashboard, the network state’s population, income, and real estate is summed over all netizens across all network nodes. As the state grows, these numbers can, over time, become comparable to the footprint of legacy nation states, including the real estate footprint.
So, a network state is a physically distributed state, a bit like Indonesia, but with its pieces of land separated by internet rather than ocean.
In digital space, a network state looks like a densely connected subgraph of a large social network. In our terminology, it’s a 1-network, not an N-network. To gain some intuition for digital space, realize that it is very different from physical space:
Dimensionality. You don’t have just the two dimensions of latitude and longitude, in a complex social network, you might need N dimensions to properly represent the graph structure.
Plasticity. Imagine one day, South Africa suddenly appeared near NYC, with a footbridge to connect the two. That’s like Spotify doing a deal with Uber; suddenly, two huge networks get bridged and people can start walking across. This will become much more obvious as metaverse subnetworks are connected and disconnected by management on the basis of diplomatic relations between network states.
Speed. Take a look at the full global footprint of the British Empire at its zenith, and now realize that Facebook achieved greater global penetration than that in just a few years.
Elasticity. It’s hard to create more land (Dubai has done some work in the area, and cruise ships arguably count), but it’s easy to create more digital land — albeit hard to make it valuable. The value of land is based on location, location, location, but for digital real estate it’s connection, connection, connection.
Invisibility. We take for granted that we can see the Franco/German border, that we know who is on either side. But no one can really see the Facebook/Twitter border, the set of users that have accounts on both services but use them both for roughly 50% of their time online. Borders between nation states are by default highly visible, borders between networks are by default invisible.
This last point is truly deep: we’re going back to terra incognita, to terra nullius, to the time of secret societies, to the time of “Here Be Dragons.” The open web is already dark to all but Google, the social web is already dark to all but Facebook and Twitter et al., and while the third web will have some parts that are globally transparent, much of it will be intentionally private and encrypted.
This is not a bad thing; in many ways, what we did over the last few decades was upload the entire world in unencrypted form online. Never before has it been possible for so many to stalk anyone. The re-encryption of the world has started with a tactical retreat from public social networks towards Signal groups, but it will go much further.
We may have hit peak map. Cartography becomes harder in a digital space that’s darker and more dynamic than the well-lit physical world. Continents, once discovered, don’t tend to move on you, but the internet brings us back to the time of Pangaea — millions of nodes can disconnect and reconnect elsewhere all at once should they see fit, and new supercontinents of 100M+ connected users like TikTok can just arise out of nowhere.
In short, our intuitions for digital space are just completely different from physical space. We’ll return to this topic, but recognize that it really is a fundamental difference: while the nation state is based on a deterministic physical division of land into states, the network state is based on probabilistic digital division of people into subnetworks.
Take a look at this tweet. It shows that in physical space, the red and blue areas of the United States are cheek-by-jowl, but in digital space they are wholly disjoint. Thus, the US is not really a “nation” state. It’s at least a binational state, what we’d call a 2-network, with two strongly connected subgraphs at each other’s throats. These two nations are packed into the same physical environment, but are far apart mentally.
A network state makes the opposite tradeoff. It’s a group of people spread out in physical space, but highly aligned in digital space. It’s a 1-network, not an N-network.
We just talked about the need for a 1-network to be the basis of a network state, unlike an N-network. A 1-network is a focused, moderated community like Ethereum Research, while an N-network is something like Facebook in the early 2020s, with N communities under its multibillion-person banner (where N is very large).
But there’s another constraint for network state creation beside the 1-network, and that’s the constraint of reality. Saying “I’m founding a network state” is a little like saying “I’m founding a billion-dollar public company.” It’s not an impossible goal168, but it’s difficult, and we want to avoid terminological dilution and encourage realistic ambition.
If we think about the startup community, we have a few definitions that allow us to talk about stages. We have startup companies and tech companies. We have seed, VC, and growth investors. We have bootstrapped companies and we have venture-backed companies. We have early stage vehicles, billion-dollar unicorns, and trillion-dollar tech giants.
Along the same lines, let’s introduce a few definitions that help us establish the path to the network state.
As umbrella terms, we’ll use the concepts of startup societies and parallel societies, which are roughly analogous to startups and tech companies respectively. Like a startup (and unlike a small business), a startup society is a small group with ambitions of doing big things. Like a tech company (and unlike a legacy entity), a parallel society is a small-to-large group of people with at least one proposed major innovation relative to how things were done before.
As sequential terms, we’ll talk about network unions, network archipelagos, and network states. These are roughly analogous to seed, Series B, and public companies respectively in terms of how much effort it takes to build them. A network union is fully digital but is a real organization with money and a purpose, like a seed startup that no longer merely exists on paper but has daily todos and folks doing things. A network archipelago has built up enough money to crowdfund physical territory, like a Series B company that has earned enough money to be taken more seriously. And a network state has achieved diplomatic recognition from at least one legacy state, like a public company that has jumped through all the necessary hoops to be recognized by the NASDAQ.
Those are rough definitions. Let’s get a bit more precise.
You’re founding a startup society, not a network state.
A startup society is a new community built internet-first, usually for the purpose of solving a specific social problem in an opt-in way. The implication is that this society is still pretty small in population.
A parallel society is roughly equivalent to a startup society, but can be much larger in scale. This is an umbrella term for a network union, network archipelago, or network state.
And now we have a way to talk about origins in a realistic way. You’re founding a startup society. You begin as a network union, maybe crowdfund territory to become a network archipelago, and could someday grow into a network state. All of these are types of parallel societies.
This communicates the point that there are different paths to a network state, and different (and completely valid) intermediate end points — just like you can run a small business, a lifestyle business, do a merger/acquisition, or found a “mere” unicorn rather than going public and achieving a trillion dollar valuation in the public markets.
I’d roughly calibrate the difficulty of founding a 1M person network state that achieves diplomatic recognition from at least one city, state, or country at about the level of founding a 10M person social network or a billion dollar company. Why? Because small countries like Tuvalu, El Salvador, and the like have already signed business development deals with startups, so it’s no longer unheard of — just difficult.
However, even if your ultimate goal is a unicorn, you don’t start out by saying “I’m founding a unicorn.” You say you’re founding a startup.
By analogy, what do you say, rather than “I’m founding a network state”? The closest thing out there was once “I’m starting a decentralized autonomous organization” (a DAO). That’s better than “I’m starting a social network,” because a DAO at least has an implicit concept of national identity, in the form of common coin-holding. A social network does not have this, because most social networks, by dint of being social utilities, fly past 1-networks and become N-networks if they are successful. However, DAOs also are bedeviled by the downsides of markets and politics respectively: fly-by-night speculators and bureaucratic boondoggles abound.
So, if you want to eventually build a network state, you should instead start by saying “I’m founding a startup society.”
We also use the term parallel society. This is roughly equivalent to a startup society, but can be much larger in scale. It’s an umbrella term for a network union, network archipelago, or network state. It emphasizes that you have a possibly huge society running in parallel to legacy society, with at least one big piece that is wildly different from the existing world.
We discussed parallel societies in Chapter 2.
A network union is a social graph organized in a tree-like structure with a leader, a purpose, a crypto-based financial and messaging system, and a daily call-to-action. It’s the underpinning of the new nation behind a network state. It forms dense peer-to-peer connections, not simply leader-to-follower. And it acclimatizes its members to working together as a society towards a common purpose.
That purpose makes it different from a social network like Twitter, a subreddit, or even a DAO. The purpose isn’t to waste time, or aimlessly speculate on a token. It’s to advance the collective interests of its members through daily actions, organized by a network union leader.
That common purpose creates a culture, and gradually turns a group of people into a 1-network, a network with national consciousness, into the foundation of a network state. Think about it: if people won’t even show up to vote online, they don’t care about the community. Conversely, if they’ve managed to do great things together as part of a network union, they’ll be able to do more.
And that is in fact Renan’s definition of a nation:
To have done great things together, to want to do more, such are the essential conditions to form a people…Man is not a slave to his race, or his tongue, or his religion.
See also this earlier piece on network unions, before we tightened up some of the definitions.
Public Displays of Alignment
A network union doesn’t just do private actions for the collective benefit of its members. It also does public actions which show the world at large how organized, aligned, self-sacrificing, and mutually cooperating the members of the network union are. Call these public displays of alignment, a decorous riff on the American concept of PDA.
As motivation, think about the many movies that center the tango in a campy-yet-serious way. Dramatic music plays as man and woman lock eyes across the room before beginning a series of complicated pirouettes. The dance floor clears a circle as everyone pauses to watch. The whole room is now paying rapt attention to this couple, even if they didn’t know them before.
That’s an example of positive-sum attention: because these two paid attention to each other in a public and synchronized way, others paid respectful attention to them. That couple must love each other very much — or at least must practice very much — and their coordination demands admiration. Even the onlooker who doesn’t much care for dancing must give a grudging nod.
Other examples of positive-sum attention like this include orchestras, parades, the good kind of flash mobs, basketball games, and the types of gymnastic enterprises common to college football halftime shows wherein cheerleaders form tall human pyramids that require complete trust in the people at the base.
All of these are examples of public multi-party coordination where people are creating art together in a high-trust society. The coordination is pleasing to the eye. But it also indicates to the audience that the people involved have practiced before, that they’re aligned, that they aren’t all playing whatever notes they want at whatever time, that there is some pre-arranged give and take. Public displays of positive-sum attention show that two or more people can work together as a team.
The opposite also exists: negative-sum attention. When two people who are supposed to be aligned fight in public, when a corporation like the Washington Post melts down on Twitter, or when a whole country broadcasts its endless internal conflict to the globe each day, bystanders have a different reaction. It’s not one of admiration and respect for the tight coordination. It’s the opposite. The conflict causes a diminution of status for all parties involved. The phrase “team of rivals” draws our attention because rivals can’t really make up a team. A organization characterized by public infighting isn’t an organization, it’s an occasion for popcorn or pity.
Two notes before we move to the main point.
First, the kind of public conflict seen in a hard-fought NBA game or an Oxford-style debate is different, because a viewer could come away with respect for both winner and loser. Why? That kind of conflict is between clearly delineated parties, within certain rules that both entertain and constrain. It’s ritualized conflict, it’s expected. The loser often gets paid for showing up. So it’s not a lose/lose fight, not a cartoonish bar brawl.
Second, it’s impossible to run any organization of sufficient scale without some degree of internal misalignment. You don’t get to 500 million friends without making a few enemies. There’s always someone with hard feelings — the envious, the disgruntled, the fired. They might start a fight to gain what they could not by other means. The consequent loss of status that accompanies a public fight is like the loss of money that accompanies a bad earnings report. It’s not desirable, but it’s absolutely survivable.
To make up for the loss of money, you work harder next time. But to make up for the loss of status, you take a beat and figure out how to reunify your organization and show a united front to the world. In a phrase, you need some PDA: a public display of alignment.
Politicians do public displays of alignment all the time. They trash each other during the primaries and then raise each others’ hands in the general election. They’re putting their differences behind them to build a united front. Countries do this too — that’s what peace treaties, mutual defense pacts, joint military exercises, and international organizations are all about. The visual of flags flying together shows others that they’re one unit.
And that brings us to the concept of public displays of alignment for a network union. It’s important to start by organizing the network union to do private tasks that the group as a whole benefits from. But eventually you want to show the external world that your network union can do impressive public things as a group.
So, what’s the digital version of a parade, or of a group singing in unison like the Estonian Singing Revolution? It might be something like a crypto-Wikipedia, or some kind of collectively authored art in virtual reality, perhaps like Minecraft or Reddit’s r/place. It may need to involve proof-of-human so onlookers know that this piece of digital art involved real people.
But whatever it is, public displays of alignment are a way for a network union to not just quietly deliver value for its members (as it should), but to also publicly demonstrate to the world that it’s a tightly coordinated unit — and worthy of being treated as such. Proving to the world that your network union can coordinate like an organic nation is a first step in the long process towards eventual diplomatic recognition.
In the 2000s, most technologists didn’t care that much about how national currencies were run. The parameter choices of a currency were things only central bankers cared about. What’s the interest rate? Is it a deflationary, inflationary, or even demurrage currency? Which actors have root access to the system and under what circumstances can they be deplatformed? And so on.
But all those details and more became important for people founding new currencies. Thus, the concept known as “tokenomics” arose: setting up the financial and social incentives of a new cryptoeconomic community in a user- and organization-aligned way.
Similarly, all previously obscure details of how nations and states formed are newly relevant to network union founders. There’s an idea maze for nation formation just as there is for cryptoeconomics. The first question any network union founder needs to be able to answer is: what is your nation formation strategy?
We can now define a path to the network state:
- Network union. A wholly digital entity, organized in a social tree structure, that engages in collective action on behalf of its members. The collective action is key for building organizational muscle.
- Network archipelago. A network union that begins acquiring and networking properties in the physical world. The physical interaction is key for building trust.
- Network state. A network archipelago that gains diplomatic recognition from at least one legacy state. The diplomatic recognition is key for attaining sovereignty.
Of course, the delineation between these categories is fuzzy. For example, a network archipelago with 100k+ people, billions in annual collective income, and a large physical footprint around the world could be deemed a shadow network state. It would have more organization than most stateless nations, as it would actually have a state and land, just not all in one place. All it would lack is recognition.
Slight fuzziness notwithstanding, this is a realistic path from a single network union founder to something big.
We call the first government to recognize a network state a bootstrap recognizer, named after the computer science concept of a “bootstrap” system that boots up another.
The bootstrap recognizer is to a network state what El Salvador was to Bitcoin: the formal acceptance of the new system by the old to form something stronger than either of them individually.
Each network archipelago that wants to become a network state should have a thesis on who its bootstrap recognizer is. It will likely be an existing state with many “binationals” that have formal legal citizenship with their existing nation state but have mentally migrated to become dual citizens of their new network state. The historical analog is those who identified as Israelis or Indians even before their states became formally independent.
Note that while a bootstrap recognizer will initially have to be a nation state, once there are many network states of significant scale, network states could bootstrap the recognition of other network states.
Network unions, network societies, and other forms of digital civil society are valuable endpoints in themselves.
For example, a serious open source project could have an associated network union that advances the collective interest of (say) a guild of ReactJS programmers, without any need to buy land.
Or a fitness influencer could turn their online community into a network archipelago, replete with gyms around the world, organizing people to get discounted keto-friendly food.
You can probably come up with other kinds of structures. The overall idea is to build digital civil society, all those community organizations that aren’t either the state above or the isolated individual below, the kind of non-political voluntary associations that once built America, according to Tocqueville:
I do not wish to speak of those political associations…Here it is a question only of the associations that are formed in civil life and which have an object that is in no way political… Americans of all ages, all conditions, all minds constantly unite. Not only do they have commercial and industrial associations in which all take part, but they also have a thousand other kinds: religious, moral, grave, futile, very general and very particular, immense and very small; Americans use associations to give fêtes, to found seminaries, to build inns, to raise churches, to distribute books, to send missionaries to the antipodes; in this manner they create hospitals, prisons, schools. Finally, if it is a question of bringing to light a truth or developing a sentiment with the support of a great example, they associate. Everywhere that, at the head of a new undertaking, you see the government in France and a great lord in England, count on it that you will perceive an association in the United States.
These had vanished by the year 2000, according to Putnam:
Putnam draws on evidence including nearly 500,000 interviews over the last quarter century to show that we sign fewer petitions, belong to fewer organizations that meet, know our neighbors less, meet with friends less frequently, and even socialize with our families less often. We’re even bowling alone.
The network union and network archipelago are ends in themselves. They give us a roadmap for rebuilding digital civil society, to start doing things together with purpose and substance online, to move away from the distracting entropy of social media and the news towards communities of conscious intent. And from these network unions and network societies, we will form network states.
We just described why network states need more than community, and even more than economic alignment — they need a sense of national consciousness, of collective purpose, as provided by a network union. Now let’s discuss why we need recognition.
A fun one liner is that crypto made progressives more libertarian and libertarians more progressive. Progressives discovered that you can build stateless money. Libertarians discovered that you then need to rebuild something much like a state: identity, reputation, anti-fraud, custody, trust, community, and the like.
We think network states will have a similar dynamic. If they work, they’ll show progressives a different path to political innovation — rather than grinding through a thankless legacy system, they can use their organizing skills to help start a new one.
But libertarian founders of network unions will similarly need to take a page from the progressive playbook. While libertarians are drawn to network states for the same reason they’re interested in competitive government, seasteading, and micronations, libertarian literature underemphasizes the necessity of diplomatic recognition.
Diplomatic recognition is as essential to a network state as exchange listing and wallet support is to a cryptocurrency. There are technical aspects to money, but it is also an inherently social phenomenon. Contrast this to an airplane, which will fly regardless of what anyone thinks.
Similarly, while a network union can get started with one person, and even buy land and become a network archipelago, to cross the chasm it needs a plan for gaining diplomatic recognition — to go from “unpopular but feasible” to “popular and important.”
Lack of recognition limits sovereignty. In a sense, diplomatic recognition is a partial, non-binding, but still meaningful commitment from a legacy state to respect the internal sovereignty of the new network state, to admit it to the family of nations, to open up a number of different avenues for trade and institutional innovation.
Getting there means the founders of a network union that wants to become a network state can’t be misanthropic, or even isolationist in mentality. A live and let live mentality won’t be enough; you’ll need to recruit people who win and help win. Because unlike an empire, the end goal of a network state is not world domination; it’s world recognition.
But why? Why do we need the ability to found a network state? Why can’t we reform one of the perfectly good countries on the planet?
First, these countries are not perfectly good. Just as it was easier to start a new digital currency than to reform the Fed, it may be easier to start a new country than to reform yours.
Second, we want new countries for the same reason we want blank sheets of paper, fresh plots of land, or new startups: to begin anew without baggage from the old.
And third, for certain kinds of technologies – particularly transformative biotech like life extension – we need new jurisdictions with fundamentally different levels of risk-tolerance, and clear-eyed consent by all who opt in.
There’s something in it for both engineers and activists, for both the technological innovator and the political progressive.
Why should technologists care about politics?
The scientific innovation. Fred Ehrsam wrote that peaceful innovation in governance is more important for innovation than we realize. After all, the Catholic Church burned proponents of heliocentrism at the stake; it wouldn’t have invented space shuttles. And the Soviet Union banned photocopiers; it wouldn’t have allowed the internet. Today, we see that San Francisco is banning everything from scooters to straws, but what we don’t see is what didn’t even make it out of the garage.
The physical world. The state controls the physical world. With sufficient consent, any law can be changed, and any regulation can be sunset, or reinvented. This is how “bits” unlock innovation in “atoms”: we form opt-in communities online to unlock innovation offline.
The economics. Money isn’t everything, but it’s crucial to making something sustainable. we know that antiquated taxi regulations held back one hundred billion dollars in the form of Uber/Lyft/Grab/Didi, that financial regulations held back one trillion dollars in the form of Bitcoin/Ethereum, and communism held back the Chinese people to the tune of ten trillion dollars (namely the entire Chinese economy).
The data. Technologists can think of new opt-in states as experiments. Just as the ability to start new currencies moved us from observational to empirical macroeconomics, the ability to start new countries takes us from the realm of political science — the study of what is — to political technology, the engineering of what can be.
The platform. We can think of the state as our most important platform, more important even than Apple or Amazon, the place where much of our data and lives are hosted. Right now, we can’t upgrade the state. What if we could?
The ethics. Just as many kinds of things become easier to build in the presence of a cooperative centralized server, many more things become easier in the presence of a cooperative centralized state. A network state builds a society where everyone has broad support for technological innovation. You want a country where people cheer Mission Control, not boo Musk and Bezos, and now we can build one.
Of course, network states aren’t for every technologist. If you care mainly about compilers or programming languages, you can get by under the current dispensation. And if all you want is a steady paycheck at Big Tech, a network state is not for you. But if you care about accelerating innovation in the physical world, we finally have an answer.
Why should political progressives want to start new cities and countries?
- If you’re a young politician, perhaps you don’t want to wait till you’re 70 years old to pay your dues and make your mark.
- If you’re a community organizer, network unions give you a digital community to organize, sometimes against states and corporations, but also for the benefit of individual members’ open source projects, businesses, and consulting gigs.
- If you’re an advocate for a stateless nation like the Catalonians or the Kurds, network unions and eventually network states give a new path to recognition.
- If you’re a policy wonk, network states allow you to run ethical experiments on policy, with opt-in participants that are as interested in governance innovation as you are. You can experiment with digital democracy, new forms of government, or anything you think interesting.
- If you’re an idealist, network states bring back the voluntary communes of the mid-1800s America, where people could opt-in to build their own vision of utopia.
- If you’re an anarchist, network unions offer a vision of horizontal collaboration in the absence of traditional governance and without coercion.
- If you’re an urban planner, network societies allow you to build support and amass funding to crowdfund your vision of the good.
In short, whether you want to experiment with reforms or entirely new forms of government, there’s likely something in the concept of network unions, network societies, and network states that will suit you.
Moreover, these structures are far more democratic than the coercive governance structures of the legacy system, because they’re all opt-in. 100% of members of a network union or network state have chosen to be there, rather than 51% imposing their will on a reluctant 49%. Network states are models for 100% democracy, not merely 51% democracy.
With that said, the concept of a network state isn’t a panacea. Many political progressives will be attracted to existing governments for one very simple reason: they already exist, and already have socioeconomic power. You don’t need to build everything from scratch.
But for the idealists and the ambitious who are excited about the possibility of doing exactly that, there’s nothing more politically interesting than a new state.
Network states give a wholly new way for states to expand. They can grow peacefully in the digital world rather than violently in the physical world. The network state formation process can begin with a single founding influencer and scale to a million person physical community.
We can break out the underlying vectors of growth as follows:
Demographically. Most obviously, a network state (or a predecessor entity like a network union or network archipelago) can grow its userbase through recruitment and reproduction. For the latter, the growing state will need some policy to recognize the new family members as netizens, such as jus sanguinis.
Geographically. As the citizenry of a network state grows, it can start crowdfunding more territory in the physical world. This is a peaceful mechanism for territorial expansion. Note that these purchases need not be from sovereign states, though they may ultimately be.
Digitally. A complement to geographical growth is digital growth: more domain names, crypto usernames, and social media handles under ownership of netizens and the network state.
Economically. The people of a network state will earn income and invest on chain. Those numbers, or an aggregate thereof, can be made public to the world via crypto oracles, thereby showing cryptographically provable growth in GDP and net worth.
Ideologically. Because a network state is fundamentally a proposition nation, it’s constantly evangelizing its beliefs. But unlike a traditional nation state’s soft power, which is not directly tied to immigration policy, here the evangelism is explicitly connected to recruiting.
Technologically. Why call this point out separately? Technological progress is a defining feature of a network state to an even greater degree than its nation state predecessor. A network state understands that in the absence of innovation, its at-will citizens will leave for more advanced jurisdictions in the same way people left Blockbuster for Netflix. But because technological innovation is non-zero sum, the relentless competitive pressure for mobile citizens means the network state system is positive-sum, which is very unlike the nation state system’s zero-sum struggle for territory.
The network state system is not about the battle for borders, but for backlinks (in a generalized sense). Many of the things that states traditionally fought over can now be abstracted and turned into an economic game. This is a step forward, for the same reason that it was a huge advance whenever nations resorted to trade rather than conquest to gain access to each others’ natural resources.
What underpins the new dynamic of network states is the intrinsic lack of scarcity of digital territory, the return of unclaimed land and terra nullius, the reopened frontier. As we discuss later on, it was this frontier, this room for experimentation, that built America in the first place. Voice was important, but so was choice.
Thus, just like a tech company or a social network, a network state provides a smooth path from a single person with a computer and no other resources to a million person global network. Constant, nonviolent growth is now possible — not by conquest or coercion, but through volition and innovation.
As with nation states, it’s useful to give examples that are adjacent to network states, but don’t quite fit. First, we’ll go over conceptually far away examples; then, a number of structures that are much closer, which can become network unions, network societies, and network states.
First, let’s discuss some things that are actually quite far away from network states, but that are often discussed in the same breath. Each has some important similarities (a social network, a global physical footprint) but lacks a key dimension.
Your startup. As discussed earlier, don’t go around saying that you’re starting a network state. Say that you’re starting a network union, and build up a community that’s capable of doing collective actions online. Then crowdfund territory and turn your online community into a network archipelago with physical presence. Finally, if all the stars align, gain diplomatic recognition and then declare your society a network state. I know this might seem a bit like the Marxist insistence on the difference between socialism and communism, but the counterpoint is that nations have acquired land and gained diplomatic recognition before — and we note that it’s important when they do. They just haven’t done it in quite this way, with this progression. That’s why we want separate terms for network union, network archipelago, and network state.
Twitter, the social network. Twitter is a babble of competing and hostile clans, many of whom don’t speak the same language or (even more importantly) share the same values. In our terminology, it is very much an N-network, not a 1-network. I’m not sure how many true national networks there are within Twitter (it’d depend on the parameters of our computational algorithm for national distillation), but for the US alone it’s at least two — arguably much more.
WeWork, the coworking space. WeWork’s woes notwithstanding, they built a useful product. But it was more like a utility than a true community, more like a Starbucks than a small town. Think about it: in a coworking space, the couch might be leather and the coffee might be decent, but you don’t leave your laptop out of sight because you don’t know anyone there. You need to get a conference room to speak freely, you need to use a privacy screen; in general, it’s not a high-trust zone. That’s not a true community.
Google, the company. Google the company has a large global physical footprint and an even larger digital footprint, with millions of square meters and billions of users around the world. It also makes many digital governance decisions per day. But its users aren’t a community, and they don’t really think of Google as a legitimate government. Conversely, while its employees do call themselves Googlers, they think of their employer as a company rather than a country in embryo. And they aren’t really at the stage where they want to work hard on building a new nation.
Bitcoin, the crypto protocol. There are hundreds of millions of holders of Bitcoin worldwide, and the ideas of Satoshi are core to modern thinking on digital governance. Nevertheless, Bitcoin does only one thing: facilitate uncensorable transactions in Bitcoin. It can be thought of as a meta-government, because it constrains network and nation states alike, but it is silent on the 1000 other things that even a minarchist agrees a government should do. Moreover, while there is some commonality of feeling between Bitcoin holders, there also strong differences — Maximalists are only a subset of the community. Overall, the similarity between Bitcoin holders is probably more at the level of English-language speakers than, say, Japanese-language speakers. They can understand each other, or at least understand each others’ premises, but they don’t all have the same vision of the good. In short, a digital currency is a prerequisite for a digital country, but they are not equivalent.
Next, let’s go through some things which are close to a network state, in the sense that they can be converted to an (all-digital) network union or a (digital + physical) network archipelago, but are not quite there.
A political party. A political party is close. It has a shared community, it has a sense of self and non-self, it has a vision for governance should it gain power, and so on. What it doesn’t have is a “shadow” structure where it can administrate the lives of its members even when it is outside of the formal government. It also typically doesn’t own property, or formally facilitate the mingling and migration of party members. But all that can be done 24/7 without needing to win the vote in a general election, and network unionization may become an interesting route for any minority party.
A network of hacker houses. If all the people in this network know each other well enough to leave their laptop on a couch with the confidence that no one will steal it, then it’s a high-enough trust community to be a proto network archipelago. It may need to layer on governance.
r/keto. A subreddit for diet, like
r/keto, has a community, a governance structure via moderators, and a shared purpose. Don’t laugh — strict dietary rules have been important for religious practice for centuries, and they are an excellent shibboleth for group membership. To build a network union, the members of
r/ketowould need some kind of collective action that members do together (like bulk purchases of keto food or reviews of keto books). To turn it into a network archipelago, they might need to start keto clubs and restaurants and link them together (networked physical territory). Their vision might stop at a cohesive society, instead of an all-encompassing state; their network archipelago might be part of a network state that rejected not just the USDA Food Pyramid, but also the US Fed pyramid schemes.
An influencer or CEO’s following. A popular content creator or CEO is a good candidate for pulling together a network union. There’s alignment, there’s an existing group, and there’s leadership. But they’d need to figure out a purpose for their community (if an influencer) or a purpose beyond the merely commercial (if a CEO). That’ll be easier for activists and technologists, and harder for entertainers and pure salesmen.
DAOs and NFT communities. As noted earlier, these are also quite close to being network unions, but they need to ensure they have members who are there for the long-term cause rather than for the short-term pump. If so, they can start pulling together communities of purpose towards collective action.
A city state. This bears mentioning too: a city state is not a network state. Why? Because a city state is concentrated in one location, and can be invaded by a stronger power, while a network state is geographically decentralized and encrypted. It can’t easily be physically invaded without going after all of its territories (many of which may be unlisted, or literal single person apartments), which would be a politically fraught multi-jurisdiction campaign. And it can’t be digitally invaded without breaking the encryption that protects its constituent blockchain. So a network state can be thought of as a v3 of the state, that combines aspects of the scaled nation states of the 20th century with the nimble city states that preceded them. It has the potential massive scale and defensibility of a billion person nation state, while preserving the innovation and consent of a small opt-in community. It’s similar to how Bitcoin combines aspects of gold (v1) with Fedwire (v2) to produce a v3 system.
In short, you need a strong community to even have a chance of building a network state. Twitter at large is not it, Google Inc is not it, Bitcoin is not it — these lack either a single self-conscious nation, a functional state, or both.
A political party is closer. A very tight-knit NFT community or influencer/CEO following is even closer. To get on the path to network states, they would first build digital strength via the network union, then add physical territory via the network archipelago, and then gain diplomatic recognition in a true network state.
Venture capitalists are fond of asking the “why now” question to entrepreneurs. Why now? Why can we contemplate founding network states today, and not 5 or 10 or 20 years ago? What’s changed in the world?
Well, a lot has changed. Here are some of the key enablers of the network state:
The Internet is to the USA as the Americas were to the UK. Of course, the internet enables the whole thing. But the manner in which it enables the network state is worth discussing. Think of the internet as a cloud continent, a sort of digital Atlantis that came down from the heavens sometime around 1991 and has parked itself over the middle of the Pacific Ocean. Every day, everyone who spends (say) 8 hours online is doing the equivalent of flying up to this cloud from Menlo Park or Tokyo for business or pleasure, and then flying back down. While there, they see new things, meet new people, and sometimes fight them. So far, what we’ve described is much like the settling of the Americas from 1492-1890, but there are at least two key differences. First, of course, the cloud had no pre-existing people. Second, unlike the vast-but-finite soil of America, you can create new digital land ad infinitum in the cloud. As we discuss later on, that reopening of the frontier changes everything. It means that 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.
Bitcoin constrains legacy states. 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 itself. Neither can have their funds stolen by each other, or by a hostile third party. Bitcoin has also created new fortunes outside the fiat system, demonstrated that institutions as powerful as the Fed can be replaced in a few decades, and pioneered an entirely new way of designing web services in a decentralized manner.
Web3 enables new chains, decentralized identities, and censorship-resistant communities. With web3, we can set up a blockchain as the backbone of each network state. This is the community chain that the state-appointed leadership has root over, as a complement to a public chain like Bitcoin or Ethereum that serves as an external check and balance. We can create decentralized identities similar to ENS and SNS to serve as digital passports for the network state, defining citizenship on the basis of single sign-on access to network state services. And we can allow not just censorship-resistant communication, but censorship-resistant communities, voluntary gatherings of people that can exist outside the interference or surveillance of legacy states.
Remote and Starlink open up the map. The moment something is put on the internet, it becomes remote friendly. And everything is going on the internet. Moreover, remote doesn’t just mean around the corner, it means around the world. Starlink, and satellite broadband more generally, powers up remote further, by making huge swaths of the map newly economically feasible. Nothing now prevents a sufficiently motivated digital community from setting up their own Burning Man equivalent in the middle of nowhere, except this time for permanent habitation, and with an eye towards incorporating formal towns and and cities. This complements our earlier point: through the internet, we’re reopening the frontier, and making previously godforsaken areas of the map much more attractive. Unlike past eras, you don’t no longer need to be near a port or mine to build a city; you just need to be near an internet connection.
Mobile makes us more mobile. Law is a function of latitude and longitude, so if you can easily change your latitude and longitude, you can change the law under which you live. That’s why the most important long-term consequence of the smartphone is Tiebout sorting. That is, all of the assumptions in Charles Tiebout’s famous paper from the 50s become feasible with sufficiently advanced phones. With digital nomad search engines like `teleport.org` and `nomadlist.com`, some people can choose who they want, while others move where they like.
VR builds a capital in the cloud, AR mirrors it on the land. Virtual reality (and more generally the open metaverse) are yet another way in which the obligate ties to the land are being cut. We can now build full castles in the sky, and then with augmented reality project them onto the earth. For a network archipelago or network state, that’s a powerful way to link distributed physical territories together into a coherent whole.
Social disintermediated the media. Again, this one is almost too obvious, but social media allowed anyone to build a massive following online, it disintermediated the legacy media, and (in combination with messaging apps and related tools) it made one’s contacts infinitely pportable.
GAFAM showed us what’s possible, startup/VC showed us how. None of the web3 world would be possible without the web2 and web1 worlds. Google showed us what could be done from a garage. Facebook showed us what could be built from a dorm room. The entire startup industry has shown us that big things can be done on a shoestring. Without the trillion dollar companies and billion user networks, we wouldn’t feel like we could build million person network states. In particular, as Gilles Babinet observed, once you see partial transfers of sovereignty in the digital world, you know more may come. From the postal service to Gmail, from taxi medallions to Uber and Lyft, from the banks to Bitcoin, from the maps to Google Maps, from the FCC to WhatsApp, from the courts to moderators, legacy states control less and digital networks control more. Of course, the former lack technical competence and the latter lack democratic legitimacy, which is exactly the problem the network state solves.
Next, here are a few things that will be helpful to network states, but are not essential for their construction:
Land becomes elastic. As Will Rogers once said, “buy land, they ain’t making any more of it.” Or are they? Seasteaders and the artificial islands built in Dubai show that land supply is perhaps more elastic than we think. We also know you can build cruise ships. So it’s possible that we could start reopening the frontier physically as well, not just digitally. This isn’t incompatible with Georgism, which argues that the inelastic supply of land means there should be only one tax, a land tax; it just means the supply is not perfectly inelastic. If you combine the two concepts, if more value creation goes online and away from the physical world, you get the idea of being able to (a) print more land, and (b) partially commoditize existing nation states as providers of land and natural resources.
Telepresence changes the nature of immigration. The next step after simply projecting in an AR avatar is to dial up a robot on the other side of the world and start walking around. This should in theory be feasible by combining (a) Boston Dynamics’ legged robots, (b) DoubleRobotics’ telepresent iPads on wheels, (c) an Oculus Quest headset, and (d) an omnidirectional treadmill. That combination of devices could furnish immersive control of a humanoid robot anywhere on the globe.
Bits reopen innovation in atoms. Innovation in areas like biomedicine, robotics, and energy is not upstream of the network state, it’s downstream of it. The network state solves the problem posed by Thiel, Cowen, and J Storrs Hall. We’re using bits to reopen innovation in atoms, because innovation in atoms has been blocked by regulations, which are in turn created by the US establishment and exported all over the world through harmonization. The network state uses digital technology to gain sufficient consent in the cloud to build a community, crowdfund territory, and eventually gain recognition as a sovereign polity. Once we do so, we can return innovation to the physical world.
The nation state was enabled by maps of the world, tools to communicate laws, and the guns to enforce them. The network state is enabled by the creation of a new world (the internet), the software to code and communicate policies, and the cryptography to enforce them.