Daily Balajisms – Network State
A digitally-native form of nation building
Balaji Srinivasan explains why today starting new countries is possible, preferable and profitable. We started new currencies; can we start new countries? He asks.
Balaji wrote a book, The Network State, available online for free, where he lays out reasons why previous attempts at creating new countries, like micronations or seasteading, so far didn’t materialize, and why his approach of “cloud-first, land-last, but not land never” is different and has a better chance to succeed. The book was also on a WSJ bestseller list the week it came out on Amazon.
This is Balaji’s definition of a network state:
“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.”
In the book, Balaji lays out a gradualist bottom-up approach of starting new digitally-first countries, that can be launched by anyone with a laptop. The founder of a startup society needs to have a moral innovation in the form of The One Commandment like “longevity is good”. The next step is to create a network union, a highly-aligned community capable of collective action.
If the moral innovation requires interaction in the physical world, the network union crowdfunds properties distributed around the world and forms a network archipelago. Once the parallel society is able to prove a sufficient traction through on-chain census of its population, wealth and real-estate footprint, it can achieve diplomatic recognition and become a network state.
Most countries are small countries, and there are 12 countries with less population than 100,000, says Balaji. Many social networks and SaaS companies have more users than that. Not scale, but affinity is the main challenge. Crypto (passport) might solve that.
Marc Andreesen says that most startup ideas were right, they were just too early, during the dotcom era. Balaji also recognizes that we stand on the shoulders of giants. Without social media, we couldn’t criticize regulators, or the downstream media, and reduce the Gell-Mann Amnesia effect - which is created by the hub-and-spoke topology of legacy media, says Balaji.
Bitcoin is digital gold, while protocols like Ethereum, Solana and others brought us first versions of DeFi and DeSci. Soon we will see a proliferation of decentralized social networks, and thus many other domains will be transformed by cryptohistory – a cryptographically verifiable macro history.
You can vote with your wallet, ballot and feet on a daily basis in a crypto country. It’s like Uber, tracking drivers each second, versus a taxi medallion inspection once a year. But community-first, driven by a moral innovation, decentralized and on-chain.
Web3 is like the internet in early 2000s. We got the iPhone only in 2007. A Nokia moment followed soon after. This decade, we might get a new convergence device in the form of AR glasses, says Balaji. Mobile phones disrupted the car industry indirectly, with progress in batteries. Crypto and AR glasses might disrupt the legacy (fiat) countries, with progress in cryptohistory and physical social networks.