The Network State in One Essay

The Network State in One Essay

Narrated by Balaji AI.

A proposition is not a nation, though it can become one. Here we describe a peaceful, reproducible process for turning an online community premised on a proposition into a physical state with a virtual capital: a network state, the sequel to the nation state.

We want to be able to peacefully start a new state for the same reason we want a bare plot of earth, a blank sheet of paper, an empty text buffer, a fresh startup, or a clean slate. Because we want to build something new without historical constraint.

The financial demand for a clean slate is clear. People buy millions of acres of vacant land and incorporate hundreds of thousands of new companies each year, spending billions just to get that fresh start. And now that it is possible to start not just new companies but new communities and even new currencies, we see people flocking to create those as well.

The societal value of a clean slate is also clear. In the technology sector alone, the ability to form new companies has created trillions of dollars in wealth over the past few decades. Indeed, if we imagine a world where you couldn’t just obtain a blank sheet of paper but had to erase an older one, where you couldn’t just acquire bare land but had to knock down a standing building, where you couldn’t just create a new company but had to reform an existing firm, we imagine endless conflict over scarce resources.

Perhaps we don’t have to think too hard to imagine this world. It resembles our own. In the distant past people could only write on clay tablets, in the recent past they were executed for contemplating entrepreneurship, and in the immediate present they are arguing over replacing an ancient gas station. In these times and places, making a fresh start has been technologically infeasible, politically impossible, or judicially punishable.

And that’s where we are today with countries, cities, nations, governments, institutions, and much of the physical world. Because the brand new is unthinkable, we fight over the old.

But perhaps we can change that.

How to Start a New Country 

There are at least six ways to start a new country; three are conventional and three are unconventional. We will introduce them only to deprioritize them all in favor of a seventh.

1. Election 

The most conventional way to start a new country involves winning sufficient power in an election to either (a) rewrite the laws of an existing state or (b) carve out a new one from scratch with the recognition of the international community. This is the most widely discussed path, and by far the most crowded — perhaps too crowded.

2. Revolution 

The second obvious way is a political revolution. We don’t advise attempting this. Particularly momentous elections are sometimes referred to as revolutions, though a revolution frequently involves bloodshed. Revolutions are infrequent, but everyone knows that they mean a new government.

3. War 

The third conventional way to form a new state is to win a war. We don’t advise attempting this either. A war is, of course, not independent from the other two. Indeed, both elections and revolutions can lead to wars that end up carving out new polities. Like a revolution, a war is infrequent and undesirable, but is a means by which to redraw state borders.

4. Micronations 

Now we get to the unconventional. The most obvious of the unconventional approaches – and the one most people think of when they hear the concept of “starting a new country” – occurs when an eccentric plants a flag on an offshore platform or disputed patch of dirt and declares themselves king of nothing. If the issue with elections is that too many people care about them, the issue with these so-called micronations is that too few people care. Because a state (like a currency) is an inherently social affair, a few people in the middle of nowhere won’t be able to organize a military, enforce laws, or be recognized by other countries. Moreover, while an existing state may be content to let people harmlessly5 LARP a fake country in their backyard, an actual threat to sovereignty typically produces a response with real guns, whether that be the Falklands or Sakhalin.

5. Seasteading 

Here is where things start to get interesting. Conceived by Patri Friedman and backed by Peter Thiel, seasteading essentially starts with the observation that cruise ships exist, and asks whether we could move from a few weeks on the water at a time to semi-permanent habitation in international waters (with frequent docking, of course). If the cost of cruise ships falls, this approach becomes more feasible. But while there are individuals who live on cruise ships year-round, we haven’t yet seen a scaled example.6

6. Space 

Perhaps the most prestigious of the start-a-new-country paths is the idea of colonizing other planets. Unlike seasteading or micronations, space exploration started at the government level and has been glamorized in many movies and TV shows, so it enjoys a higher degree of social acceptability. This path is typically received as temporarily technically infeasible, rather than outright crazy. Elon Musk’s SpaceX is one entity seriously contemplating the logistics of starting a new state on Mars.

7. Network States 

And finally we arrive at our preferred method: the network state. Our idea is to proceed cloud first, land last. Rather than starting with the physical territory, we start with the digital community. We create a startup society, organize it into a network union, crowdfund the physical nodes of a network archipelago, and — in the fullness of time — eventually negotiate for diplomatic recognition to become a true network state. We build the embryonic state as an open-source project, we organize our internal economy around remote work, we cultivate in-person levels of civility, we simulate architecture in VR, and we create art and literature that reflects our values.

When we crowdfund territory in the real world, it’s not necessarily contiguous territory. Because an under-appreciated fact is that the internet allows us to network enclaves. Put another way, a network archipelago need not acquire all its territory in one place at one time. It can connect a thousand apartments, a hundred houses, and a dozen cul-de-sacs in different cities into a new kind of fractal polity with its capital in the cloud. Community members migrate between these enclaves and crowdfund territory nearby, with every individual dwelling and group house presenting an independent opportunity for expansion. And with a thousand such enclaves, rather than four directions to expand (north, east, south, and west), there are more like four thousand.

What we’ve described thus far is much like an ethnic diaspora, in which emigrants are internationally dispersed but connected by communication channels with each other and the motherland. The twist is that our version is a reverse diaspora: a community that forms first on the internet, builds a culture online, and only then comes together in-person to build dwellings and structures. In a sense, you can think of each physical outpost of this digital community as a cloud embassy, similar to the grassroots Bitcoin embassies that have arisen around the world to help people better understand Bitcoin. New recruits can visit either the virtual or physical parts of a network state, beta test it, and decide to leave or stay.

Now, with all this talk of embassies and countries one might well contend that network states, like the aforementioned micronations, are also just a LARP. Unlike micronations, however, they are set up to be a scaled LARP, a feat of imagination practiced by large numbers of people at the same time. And the experience of cryptocurrencies over the last decade shows us just how powerful such a shared LARP can be.

Minimum Necessary Innovation 

Let’s pause and summarize for a second. The main difference between the seventh method (network states) and the previous six (election, revolution, war, micronations, seasteading, and space) is that the seventh straddles the boundary between practicality and impracticality.

It is now feasible to build million-person online communities, start billion-dollar digital currencies, and architect buildings in VR to then crowdfund into reality. The network state concept stacks together many existing technologies, rather than requiring the invention of new ones — like Mars-capable rockets, or permanent-habitation seasteads. At the same time, it avoids the obvious pathways of election, revolution, and war – all of which turn ugly, and none of which provide much venue for individual initiative.

In other words, the network state takes the most robust existing tech stack we have – namely, the suite of technologies built around the internet – and uses it to route around political roadblocks, without waiting for future physical innovation.

What Counts as a New Country? 

Having outlined these seven methods, the careful reader will notice that we have played a bit fast and loose with the definition of what a “new country” is.

First, what do we mean by a new country? One definition is that starting a new country means settling a wholly new territory, like colonizing Mars. Another definition is that simply changing the form of government actually changes the country, like France moving from the Second French Republic to the Second French Empire. Rather than using either these strict or loose definitions, we will use both numerical and societal definitions of a new country.

The numerical definition begins with visualizing a hypothetical nationrealestatepop.com site similar to coinmarketcap.com, which aggregates the cryptographically audited censuses of startup societies aspiring to become network states. This dashboard would show in realtime the number of community members, the acreage of real estate owned by those members, and the community’s on-chain income. A startup society with five million people worldwide, thousands of square miles of (discontiguous) community-owned land, and billions in annual income would have indisputable numerical significance.

This in turn leads us to the societal definition: a new country is one that is diplomatically recognized by other countries as a legitimate polity capable of self-determination. A state with enough such bilateral relationships would have the societal significance to gain accession to a group of pre-existing states like ASEAN, the OAS, the African Union, the EU, or the United Nations.

This combination of numerical and societal metrics matches the emergence of cryptocurrency. Initially ignored, then mocked as an obvious failure, within five years after its invention Bitcoin attained a billion-dollar market capitalization (a numerical success) and was subsequently listed on CNBC and Bloomberg alongside blue-chip stocks (a form of societal recognition). At each step Bitcoin could keep ascending numerically on its own, with greater societal recognition following in its wake. By 2020 it had changed the trajectory of the People’s Bank of China, the IMF, Goldman Sachs, JP Morgan, and the World Bank. By 2021, Bitcoin became legal tender in El Salvador, a sovereign state. And by mid-2022 the Central African Republic had followed, with dozens more considering Bitcoin as legal tender, including Panama.

Most Countries are Small Countries 

Cryptocurrency could achieve these heights because money has both numerical and societal aspects.7 The numbers could be piled up before the societal accolades followed. Once Bitcoin had proven that it couldn’t be easily counterfeited or hacked, the shared belief of the millions of cryptocurrency holders worldwide was enough to get BTC from a value of zero to a market cap of billions, and from there to a listing on every Bloomberg Terminal and exchange. Societal traction of this kind paved the way for more numerical traction, and a virtuous cycle followed.

Could a startup society follow a similar path? Yes. A cryptographically auditable census could prove that a growing startup society had 1-10M committed digital citizens, large cryptocurrency reserves, years of continuous existence, and physical holdings all over the earth. That numerical traction could then be used to achieve the societal traction of diplomatic recognition.

Why? Because most countries are small countries. A new state with a population of 1-10M would actually be comparable to most existing states. That’s because of the 193 UN-recognized sovereign states, 20% have a population of less than 1M and 55% have a population of less than 10M. This includes many countries typically thought of as legitimate, such as Luxembourg (615k), Cyprus (1.2M), Estonia (1.3M), New Zealand (4.7M), Ireland (4.8M), and Singapore (5.8M). These “user counts” are surprisingly small by tech standards!

Country Population Histogram

Of course, mere quantity is not everything. The strength of affiliation to our hypothetical network state matters, as does the time on the property, the percentage of net worth stored in the currency, and the fraction of contacts found in the community.

Still, once we remember that Facebook has 3B+ users, Twitter has 300M+, and many individual influencers have 1M+ followers, it starts to be not too crazy to imagine we can build a 1-10M person startup society with a genuine sense of national consciousness, an integrated cryptocurrency, and a plan to crowdfund many pieces of territory around the world. With the internet, we can digitally sew these disjoint enclaves together into a new kind of polity that achieves diplomatic recognition: a network state.

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