Networked Functional Sovereignty
Description
Jonathan Hollis:
"Functional sovereignty scales beyond local groups via communication and coordination technologies. Bauwens describes the role that cooperative irrigation networks played in the development of the earliest Sumerian cities.[21] Ostrom has documented the ways that societies continue to use bottom-up systems of functional local and networked sovereignty to manage irrigation commons.[22] Similarly, each of the four major periods of Western civilization (Ancient, Classical, Medieval, and Modern) began with new communication and coordination technologies that allowed humans to form decentralized governance structures and evolve new types of networked cities.[23]
Now, two more communication and coordination technologies are creating a new opportunity to scale collective action via networked functional sovereignty: the internet and blockchains. These technologies are particularly effective because they are scale-independent—they can be used by groups of any size with members located anywhere in the world with minimal overhead costs. As a result, the internet and blockchains increase the capacity for functional sovereignty of both large and small groups, locally and globally.
The internet solves the cold start problem of finding other people to coordinate with. Social content can serve as a ‘bat signal’ that attracts others with an aligned vision to collaborate, share resources, learn from each other, and even colocate locally. Widespread satellite internet and mobile networks have brought the internet to extremely rural areas, enabling places with high functional sovereignty to more easily attract like-minded participants and bootstrap local economies with remote work.
Blockchains allow for a significant expansion of networked functional sovereignty. They can provide an immutable shared record of identity, a capture resistant method of self-governance without intermediaries, and the ability to create new forms of money—all with security guarantees that can’t be overcome by existing nation states.
Fundamentally, blockchains have the core purpose of keeping track of the current state of balances, transactions, and executable code. For example, “the Ethereum protocol itself exists solely for the purpose of keeping the continuous, uninterrupted, and immutable operation of this special state machine.”[24] In a typical computer, the state is managed by a Central Processing Unit (CPU). What makes blockchains ‘special state machines’ is that they are managed by a decentralized network. In other words: blockchains are, in a technical sense, ‘network states’.
If you’re Seeing Like a State[25], you can view this sort of immutable ledger of people and their records as the core way to create the legibility that enables an administrative sovereign entity. In this sense, blockchain states and nation states share a deep similarity. A nation state is only functional insofar as it has an accurate record of its citizens and how much money they are making. Without the first, the nation state doesn’t know who it let in, and without the second it can’t charge taxes to fund itself. Because these records are so crucial to a nation states’ existence, maintaining the state of the records becomes the existential responsibility of the nation state.
Blockchains also provide a new capture resistant trust model for self-governance.[26] They are the only way for large or physically decentralized groups to directly execute collective action over shared resources without any trusted intermediaries. The ability to pool resources and govern them onchain is a fundamental breakthrough in human coordination because it allows any group with an arbitrary number of agents located anywhere to practice functional sovereignty.
Blockchains can also serve as an international sovereign store of value, which makes them a compelling global reserve currency. Several states are already using bitcoin as legal tender[27] and the United States holds over $8 billion in bitcoin.[28] In this sense, bitcoin has already achieved a form of recognized sovereignty. It didn’t ask for diplomatic recognition, it just grew until nation states acquired it. Since the creation of bitcoin, countless other tokens have attempted to create self-sovereign forms of money.
Creating self-sovereign forms of shared identity, governance, and money rely on the fact that blockchains can provide a security guarantee that can’t be controlled by nation states, without needing to rely on a monopoly on violence. When nation states talk about national security, what they mean is that their sovereignty is protected by a fleet of aircraft carriers. When blockchains talk about security guarantees, they mean their sovereignty is protected by a proof of work or consensus mechanism too computationally difficult and expensive for even modern nation states to overcome.
When you put together better infrastructure for creating local functional sovereignty with the self-sovereign coordination tools enabled by the internet and blockchains, you get a rapidly improving tech stack for building new network sovereignties.[29] You can get together with others and bootstrap decentralized systems for energy, food, water, housing, education, entertainment, child care, and anything else your community needs. You can attract others who share your values, live within your own shared context, and collectively share resources without intermediaries. You can hold economic resources virtually with nation-state-proof protections against confiscation, and you can stitch together a network of other places who also share your values in case you need to physically exit.
In sum, the tools now exist to operate with a degree of functional sovereignty that leads to the question: “At what point are national governments rendered mostly irrelevant compared to the norms and rules of the groups of which we are voluntary members?”[30] In a world of global trade and nuclear weapons, we will probably always need a thin layer of traditional Leviathans to keep the peace. But the expansion of sovereignty in the 21st century won’t come primarily from asking the Leviathans for a seat at the table. New network sovereigns will earn their legitimacy through the effective practice of collective action."