Balaji Srinivasan on the Network State

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“Balaji has turned his attention to the creation a Network State, in particular a polis with a transhumanist mission “which starts with a virtual university, bootstraps a digital economy, and can be forked to create new opt-in polities.” Such “cloud cities” allow their members to collectively negotiate with existing jurisdictions and crowdfund territory in the real world. With the internet as main governance mechanism, even those physical communities could be increasingly decentralized.”


Software Isn’t Done Eating the World

Software already allows you to start your own business, start your own community, and now start your own currency. What’s next? Start your own country.

Digital currency is part of a fundamental shift in human organization – from shared geography to shared ideas. Traditional nation-states organize by geography: beliefs and ideologies are secondary, constantly shifting.

The coming “network states” will organize by shared belief: geography is secondary, shifting as digitally connected citizens vote with their feet and are most likely distributed, with representatives in different polities.

The Sovereign Collective

We are already seeing the rise of decentralized collectives like the Wallstreetbets community, internet-native groups affecting markets and policy.

And we’ve seen the expansion of tools and information systems in support of location-independent digital nomads like and nomadlist.

Add in explicit leaders to organize and catalyze collective action and governance systems for allocation and employment of assets and information and where you end up is “Crowdchoice”: groups of people who get together and aggregate their preferences to facilitate collective bargaining with existing governments.

In “The Sovereign Individual” the case was laid out for technology as the driving force of history. The evolution of governance and the ebbs and flows of power are shaped by the adjacent possible made possible by the technological landscape mediating society.

We’re now moving into the era of the Sovereign Collective.

The Network as the New Leviathan

As technology evolves, the tools of society oscillate between centralized and decentralized forces. The peak centralization of the 1950s was preceded and will be followed by periods of decentralized power.

To predict how the world may change as the pendulum swings back towards decentralization, one can assess ideas for their technological feasibility and check whether institutions are technologically competitive.

“Very few institutions that predated the internet will survive the internet.”

The arc of civilization has been a story of transcendent Leviathan driving prosocial behavior. In premodern times, fear of God or gods drove this behavior and animated the affairs of men.

As religiosity faded (or as Neitzche put it: “God died”), the nation-state increasingly stepped into the role.

We saw the evolution of hybrid systems: God-State hybrids like the 1950s US, a centralized megastate driven by a Christian ethic and moral frame.

God-Network hybrids like the Jewish diaspora pre-Israel, a geographically distributed people connected primarily through communication and resource networks.

And even a God-State-Network in the case of the Islamic state, adept at reaching sympathetic revolutionaries around the globe.

Pure Networks are forming as well: Facebook behaves more and more like an online country, while the Bitcoin network and other cryptocurrencies forge distributed bonds between people with economic incentives driving cooperation.

“With social networks, the use predated the monetization. With cryptocurrencies, the monetization predated the use.”

As the large nation-states of the present continue to lose power, we’ll see the formation of true Network-States. We see just the beginning of this trend in two very different case studies: the technoauthoritarian Chinese surveillance state and the digital-forward cyberpolity of Estonia.

In short: While the God-fearing Man does not steal due to the threat of eternal punishment and the State-fearing Man does not steal due to the threat of legal action, the Networked Man does not steal because the encrypted Network won’t let him.

As networks step into their role as the new Leviathan, encryption becomes the most powerful force in the world.

Rise of the Network State

Just as Locke said that the legitimate state is that state that protects property rights, encryption forms the basis of a new system of rights that undergirds the Network State.

Encrypted communications networks allow not just for property rights on digital resource and information networks but also empower rights of speech and association: physical gathering and coordination via private communication channels, tamper-proof security systems, and provable identity.

As virtual worlds are built and mature, these cryptoeconomic systems will mature alongside them as transnational currencies. The gamification of enterprise will birth decentralized task systems and open public services.

As state systems fail to provide the services their populations need, we will see the spread of cloud communities: parallel networks of resources and services for local communities relying on each other instead of the government. These cloud communities will be transnational AND local: global information and resource sharing between pockets of locally high trust.

“This is not corporate context, it’s a social context.”

As these cloud communities mature, the cloud takes physical shape. Online relationships become offline relationships, which become neighborhoods of folks who met online and snowballs into entire cities populated by what was once an online community.

What we’ll see is a horizontal expansion: people will move from the city centers that were once being relied upon for meeting others and making connections out to areas with more space and lower costs.

To make all this possible, a core right must be established: the right to leave. As network unions or sovereign collectives form, they will increasingly vote with their feet by organizing and migrating to those states with favorable legal and financial frameworks.

This will apply the same pressures to countries as software applied to companies: every company is a software company now, and so every country (at the least those that will survive) will become software countries.

The transnational nature of Network States puts every city and country in competition with each other globally. As the mobile phone and internet connection becomes ubiquitous, the cutting of ties to the land will ramp up and all states will be in the business of competing for citizens.

Law is a function of latitude and longitude: moving to a new place is the most effective way to change the laws governing your life.

We must make the moral case not just for individual self-determination but for group self-determination. It’s easy to discount a brand new group that met online as a “people”, but when that becomes a few years of association, those ties are harder to dismiss. Proximities become intimacies.

“In many ways religion is just a cult that stood the test of time.”

How to Prepare for the Shift

Many of the conditions necessary for the Tiebout Model ( of organizing society are falling into place as these cryptoeconomic and sovereign collective tools mature.

To participate in the coming network states and prepare for the changes they will bring to the order of the world, it behooves those capable of achieving financial independence and begin to forge associations and alliances online."