A: Hola Bob, it’s been a while!
B: Hi Alice! Sheesh, last time we chatted may have been in Gödel, Escher, Bach?
A: I am still smarting that we didn’t feature in GEB! Hofstadter used Achilles and the Tortoise remember, and added Crab and Sloth later in the dialogues. But we go back way further Bob, to 1978 when Rivest, Shamir, and Adleman's cast us for the first time in "A method for obtaining digital signatures and public-key cryptosystems”1
B: You’re right of course! What’s kept you most busy recently?
A: I sort of disappeared down a rabbit hole reading up on how we can bootstrap new countries… I’ve been thinking about this for a while but Balaji’s recent book may have made this more actionable.
B: Oh you’ve gone full libertarian!
A: I personally haven’t and many of us aren’t. Better still, we may have found a way to keep ideology out of nation building. We approach it more like a startup.
B: That’s refreshing! Coz when I hear about new nations it seems it’s always about a bunch of rich white dudes who want to extricate themselves from the world’s problems the same way they’re building bunkers in New Zealand.
A: Hahaha. That could not be further from what we’re doing! I for one am not male, not white (the pic often used is not me!) and not rich. But you’re not wrong, we spend a fair bit of our time trying to dismantle people’s prejudices about this.
B: Ok pitch me!
A: Here’s the elevator version: “We’re turning violence into volition”.
B: [Dumbfounded] ??? Explain please, you’ve always been miles ahead of me.
A: [Smiles] Ok, let me preface here that what follows should - at least for most people -be entirely non-contentious, but also rather unfamiliar. And unfamiliarity often triggers hostility. So let me make sure you’re with me every step of the way, ok?
B: I am ready!
Nation ≠ State
A: Ok so let’s start with the prevailing notion of a nation state. Everybody has some sense that a nation is a group of people with a high degree of communality, for instance the happenstance of where they were born or where they happen to live, or their race, or even religious beliefs. But a nation is not the same as a state.
B: Ok I think I follow: a nation is more like a community, a state more like a political wrapper.
A: Wrapper is a great way to put it! It’s when a nation organizes itself that states get born. Essentially, a state is a coordination mechanism. Some states will seek the will of the governed i.e. rule on the basis of some form of consensus, whilst some are authoritarian, like China under the CCP or Singapore with its autocracy-lite version, where a cast of rulers seeks to self-perpetuate irrespective of the will of their people. In our analysis, all political models can be placed along this spectrum, with anarchy and autocracy at its extremes. So far so non-contentious?
B: Putting consensus models along your spectrum is useful and I should imagine few would take issue with this method.
A: Yeah, when I speak to people I don’t get major objections, though some want to justify degrees of autocracy, but that’s not the point. Key is that the analysis can be agreed upon by the broadest group of people, and that most people can agree that coordination is difficult. It is like the “Friction” slide in startup decks: “investors”need to broadly agree that the friction is there and that the startup is best placed to solve it.
B: So the slide would read something like “Today’s nation states do not have a way to quickly iterate on governance models”?
Why now?
A: Getting close, though it misses the dimension why iteration would be desirable. We think it is on the basis that there seems to be a lot wrong with the current nation state governance model, even in democracies.
B: People would probably not disagree, but doesn’t democracy seem the worst form of government except for all the others?
A: Ah, I am so happy you put it that way, or actually Churchill did :-).
B: [Blushes] Sorry, I just wanted to look smart [grin] ...
A: Clearly hahaha. Churchill at the time obviously referred to Nazi Germany, Stalinism and tyrannies generally, but the statement still holds true in that any experiments in governance that claimed to solve for the imperfections of democracy have been disastrous.
B: So why are you pitching governance experimentation?
A: Because part of any pitch is answering the “Why now?” question, and only now do we have the enabling technology, in the form of blockchains, that allows us to experiment with new governance models that seek to improve on how we coordinate people’s preferences.
B: [Cynical grin] Blockchains as in that distributed ledger technology that is still in search of a use case?
A: Now you’re being borderline obnoxious @$#*!. But you have a point, lots of blockchain projects have been crypto-incestuous pumps. However in the context of contracts and governance, blockchains have a way of technologically enforcing adherence to an agreed set of rules that does not involve violence, but is based on free will. This is novel and opens up a whole new way of engineering consensus.
B: Your “From violence to volition” from earlier?
A: You got it! Let’s go back to our pitch: to get buy-in from the broadest possible group of people, we need to show that now, we can build an alternative to nation state coercion as a way of enforcing collective rules. For this, it is important to recognize that even democracies enforce their laws by monopolizing violence. By violence I mean coercive force, beyond fines, that seeks to retribute for alleged unlawful behavior, typically by restricting people’s ability to freely move around.
B: You mean prison.
A: In most countries yes, though the death penalty is still applied in a number of places that call themselves democratic! Taking one’s life away surely is the most manifest form of a state’s monopoly on violence.
B: Because we think a system in which citizens mete out punishment amongst themselves would not be a very peaceful society…
A: It would be rather Mad Maxian yes. Nonetheless, people who do not have trust in the way their government applies violence - or more generally disagree with its laws and fear that disobedience could ultimately lead to imprisonment - will seek to exit if they feel they cannot influence change. In the realverse, exit means emigration.
B: Which not everybody can.
A: This is where a lot of libertarian projects have been going off the rails, building enclaves for wealthy people to extract themselves from realverse laws by sub-leasing patches of land from poor nation states or building habitable pods in the ocean.
I believe the right to exit should be universal, and the fact that it is not available to every human being on the planet is arguably one of the gravest injustices.
B: It is true that people endure incredible hardships and are willing to give up everything to escape tyranny. If I look at how Russian youth leave everything behind trying to reach Europe to escape Putin’s military draft, or Hong Kongers leaving for the West, or the story of North Korea’s Jihyun Park which I just read about in this weekend’s FT.2 Or the escape from Nazism by European Jews. But for every emigrant who makes it, how many are left behind?
Sovereign AR
A: You are not wrong that, within the logic of physical borders and territory, emigration is not an option for most. But what if we would be able to provide a digital shield, some sort of cryptographically enforced safe passage similar to what diplomats currently enjoy, for members of an open and sovereign digital realm? Think of it as Augmented Sovereignty superimposed on legacy jurisdictions.
B: I think I may have lost you again…Go slow on me Alice.
A: Hahaha ok. It is important I get this across and that I am actually seen to be building castles in the sky, because that is exactly what we plan to do: Build castles in the sky!
B: Should we have a break? My brain feels overloaded.
A: Bear with me, I am just giving you a hard time. I am so happy you hear me out because I am still rehearsing this for myself and you’ve been very patient so far Bob!
B: A pleasure. I am quite good acting like a noob…
A. Oscar material! [smiles benignly]. Let’s break this down in digestible bits. We agreed that nation states ultimately rely on coercion to enforce their laws.
B: Yes, and that their monopoly on violence is probably a good thing.
A: We don’t have to pronounce on this for the purpose of our analysis here but yes, must people would probably agree.
We then observed the sacrifices people have historically made - and still make every day - to escape countries where they feel they cannot longer live in freedom.
B: Again yes. And we saw great injustice in the fact that emigration is not an option for many if not most, and escape hatches for the rich somehow offend our sense of equity.
A: Correct. However now there is a technology that could potentially provide protection for people who seek an exit, and that technology is by its very nature censorship-resistant and hence accessible to all.
B: All who are tech savvy?
A: All who have a mobile phone, which on recent estimates is 6.648 billion people, or 83.40% of the world’s population. Admittedly, lots of tech still needs to mature and crypto as a community will need to crack challenges like how to easily access wallets, but we can already conceptualize how such digital realms of sovereignty could look like, we’re just figuring out how to get there, hence our startup approach.
B: I’ve been involved with a fair number of startups since our early days in crypto and built a number of companies myself, but the start-up approach is novel in this field, can you explain that to me?
Sequencing
A: Here I took a lot away from Balaji’s book I referenced earlier. If you want, skip the middle part of the book even though I think it is a rather magisterial analysis of mega-political trends - but I am sure some will (mis)read it as a right-wing rant. Vitalik’s review of the book also adds interesting perspectives, asking the crucial question why people would want to join a network state, which I don’t want to skip so remind me to come back to this.
But as a guide how to bootstrap startup nations, read the first and last parts of the book. The way to go about it is to correctly sequence the new nation building process, from a startup society - basically a community - to a “network union” which is a community capable of collective action, which then crowdfunds physical nodes into “network archipelagos” that ultimately seek diplomatic recognition.
B: A bit like how a startup stages it growth, seeking capital in seed, A, B etc. rounds to ultimately go public.
A: Yeah that’s precisely one of the analogies used. What’s important to recognize is that you can’t one day wake up and decide to start a new nation: it’s a staged process and it’s hard work - not every project will make it and not every project needs to per se make it, just like some startups remain lifestyle businesses and never go public.
B: What do you think is the key factor for success?
A: A very VC-like question! Let me answer this by listing what I think is not necessary for a startup nation’s success. I don’t think a visible founder is necessary, though Balaji sees great importance in that.
I also personally do not think that a network state needs physical nodes, though the author makes a strong case why network archipelagos will greatly improve chances of ultimately gaining recognition, and perhaps they will, time will tell.
I am perhaps more excited about digital sovereign realms in the metaverse but I can imagine some hybrid transition phase consisting of realverse spaces with “Augmented Reality Rights”, i.e. a physical space where rights held by members of an online community are recognized by legacy countries and could even be visualized, like a Pokemon-type pop-up that reveals what online community you belong to.
But we’ll need to develop all this in lockstep with progress on VR wearables and powerful blockchain metaverse rails with realtime synchronicity etc. So don’t hold your breath. But if ever there was a legacy project, network states are it!
Deterrence vs. purpose
B: [Digesting] Powerful stuff and so much to unpack here! But you wanted me to remind you about Vitalik’s question why people would want to join a network state in the first place?
A: Thanks. In a recent podcast on Bankless, Ameen Soleimani who i.a. worked on MolochDAO makes the observation that the main reason people want to belong to a nation state is because nation states are “assassination ponzis”: essentially, they are protection rackets, a bit like the Mafia, promising to come down on anybody who harms their citizens.
But physical deterrence is difficult to replicate in the digital realm, though one can envisage a “Defense Network State” that pools resources for digital defense such as malware protections and anti-hacker software as a public good for its members.
I like to think that new nations would emerge around a more positive purpose. However, if we allow for experimentation, we cannot exclude that network states emerge that for instance offer protection by crowdfunding killer drone armadas that are being dispatched whenever any of its citizens are in danger!
Be it as it may, the motivation for participating in a startup society has to be bigger than just joining an online community. Perhaps it’s more akin to volunteering for a Foundation, or I hesitate to say joining a sect. There’s evidence that the more a community demands from its members, the more it thrives. So a purpose - it could be a single purpose - is going to have to be very well articulated and communally shared.
Why people would want to commit is harder to say. It can’t be primarily monetary rewards, though I can see how the coins of the more popular communities go up in value as more people join. But if people look for a rich quick schemes, a startup society should not be it.
B: At the same time, it can’t be some leisurely House of Lords where post-money crypto aristocrats debate the issues of the day?
A: Hahaha indeed. It will need a strong enough moral appeal for which people are even willing to make monetary sacrifices.
B: Lots of idealism there!
A: Idealism is a bit like love: It would be nice to think it’s all we need, until one goes hungry…!
But idealism can be a large part of what transforms your community into a network state. If you read for instance Nation3’s manifesto, it is difficult to believe that its citizens would be in it only in the expectation of the $NATION token going up in value.
Ultimately, as we learned from Gödel, any system rests on premises outside of itself. We can’t pretend that we will have governance systems that derive their legitimacy entirely from their internal technological efficiency. Morality will creep in.
Deterrence vs. purpose
Key however is that you’ll always be able to leave if the project takes you in a direction you don’t want to go: on blockchain, exit rights are guaranteed because you can just sell the project’s token. Don’t like our commonly agreed rules? Rage quit!
B: Which universalizes the right to emigrate, be it digitally, provided there are competing or at least overlapping onchain realms.
A: Yes, overlapping, complementary and occasionally competing jurisdictional multiverses should be the end state.
B: Help me envisage one such digital realm, what’s the one you have in mind?
A: I am working on an idea myself and also closely follow experiments with startup societies, such as Proof of Humanity that have Universal Basic Income at their core.
By way of thought experiment, let’s imagine how one such UBI permutation could work:
First you’d create a community forum, probably on Telegram or Discord, where ideas get exchanged and the tech is being specced.
We make it very clear that our society is going to pool members’ crypto and enforce the redistribution via smart contract of a % of their funds amongst all its members. Essentially, we implement some form of mutualism that periodically adjust people’s holdings of the project’s native token in their wallet, with the idea to support “non-economic” activity - what an awful term! - for instance independent investigative journalists.
The deal is that those who stake the project’s token above a minimum can see periodical adjustments of their wallet’s balances which are them being sent to those who cannot stake or have much less to stake.
There are a lot of game-theoretic considerations here and people quickly raise objections that the scheme would be easy to abuse - everybody could claim to be poor so that they receive token top-ups. But intellectually it is very attractive and technologically it is relatively trivial to implement.
B: I can see huge merit in this however I still fail to see why such community would need sovereign recognition?
A: There’s a dashboard of current projects maintained by the Network State site. I see some use cases that may eventually want to seek statehood.
Educational archipelagos
As a general principle, you could have a scheme that issues a digital ID using soulbound NFTs which grants members of the scheme specific and recognized rights when accessing physical property located in legacy countries.
The idea I am working on which I referred to earlier relates to eduction. I see an incompatibility between digital nomadism and children education. Parents who want a roaming life have difficulty in finding ways to educate their children in the traditional school system.
Arguably, education as it is currently served up needs wholesale reform and no doubt technology will play a major role in this. For instance, I am thinking about a way in which teachers need to crowdfund their lectures: class would only be held if teachers raised a successful campaign. But before this or any innovation in education happens, parents face real issues and feel stuck in an anachronistic system.
The way this could be solved for is that an online community gathers around the idea of creating new schools for their kids dotted around the world, based on a common curriculum.
Using the Network State as a guide, they go from chat group to community union and start crowdfunding dedicated properties in specific locations around the world.
Parents who remotely work from say the US or Northern Europe in Spring find locations where their kids can go to school for the lent term, and then join fall term in for instance Southern Europe or Israel, and spend the winter term in Argentina or Chile.
The choice is theirs but every school is in full sync so kids can seamlessly insert themselves in classes, irrespective of where they are being taught.
Now, you could seek approval to open a new school in each of these locations, but that would subject each local “chapter” to local regulations and possibly interference with the curriculum.
I don’t think it would be too much of a leap to see a country recognize the inviolability of a local school property, the same ways countries recognize the inviolability of embassy grounds.
Pupils and staff would gain entry to school properties by scanning a QR code of the wallet that holds the token to the scheme. One could even imagine communally supported bursaries and grants to make sure admissions are open to everybody.
What’s attractive about the scheme is that we would only need one country to recognize the sovereignty of the archipelagos it hosts to establish a chapter there.
B: Fascinating! I myself feel this constraint as I can work from anywhere but my kids are chained to their local school.
Also, you got me thinking: From here, it should not be too difficult to imagine pure digital sovereign realms once the metaverse matures?!
A: We think alike! Territorial chapters such as the one I described may become ensnared in a mesh of rules, as there will always be a risk of some regulatory residue from the laws of the host country.
By contrast, in the metaverse, one can truly rewrite one’s own rules starting with a blank sheet. It would be greenfield nation building!
What’s more, your citizen ID could be entirely parallel from your realverse ID, resulting in multiverses in which you can participate with the NFT avatar of your choice.
B: Alice this has been great. Send me an invite to your school project, hopefully I can contribute!
A: Thanks Bob I will!
> If you’d like to ideate further on the decentralized schooling idea, we created a “Decentralized Education" Telegram group. Let’s make this happen!
