Foundations of the Network State

Properties, Principles, Polity 

Decentralization restores the consent of the governed. They can choose to remain decentralized, in a state of crypto-anarchy, or they can choose to recentralize in new orders that fix the problems of the old.

Earlier we gave one-sentence, one-page, and one-thousand word descriptions. But something of this scope is a hyperobject, a manifold that can be projected down in many ways, the proverbial elephant in the presence of the blind men, a concept which can only imperfectly be summarized by the equivalents of axial, coronal, and sagittal slices. We nevertheless slice away.

The first slice of the network state is its properties, many of which distinguish it from modern nation states. For example, the network state is a 100% democracy rather than a 51% democracy. It’s physically distributed rather than concentrated in one place. It publishes the math instead of merely “following the science.” And it defines citizenship on the basis of single sign-on.

The next slice defines conceptual principles. What are the philosophical and technical foundations of the network state? How does a network state choose leaders, handle successions, make decisions, and come to consensus? How do network states relate to each other externally, and manage checks and balances internally? Most importantly, what are the meta-principles — optimalism, voice-vs-choice, frontierism — that inform the design of the network state, and how do we justify them?

The last slice is based on the logistics of the polity. What does a software-defined government mean in the real world? How are all the details — you know, little things like roads, water, power, sewage, and other public goods — handled? How do licensing, regulation, education, immigration, and defense work? We update these for the network state, changing things only when they need to be changed — though many of them do. For example, we discuss what immigration looks like in the presence of telepresence, what deplatforming looks like after due process, how culture gets decentralized by crypto-creators, and how automation hyperdeflates prices and turns everyone into an investor.

Properties 

TODO An Archipelago of Interconnected Enclaves 

National Precedents

You can get to the network state in six steps. We know that nation states can be islands (like Japan), local networks of islands (like Indonesia), global networks of islands (like France and its overseas regions, including Reunion), and enclaves (like Lesotho). And we know that local networks of enclaves (like American Indian reservations) are considered to have a degree of sovereignty. The network state just takes this one step further, and supposes that global networks of enclaves can ultimately become peers to nation states.

In a little more detail, a nation state can be:

1. An island. Examples include Japan, the UK, Madagascar, and many more (Figure \ref{fig:islands}). Indeed, the concept of “island as nation state” is less of an artificial social construct than many other definitions. The ocean provides a natural physical border, and because it restricts migration often gives rise to a historically persistent linguistic, ethnic, and/or cultural border as well.

2. A local network of islands. Examples include Indonesia (Figure \ref{fig:local-networks-of-islands}) and Greece. This overlaps with the previous concept, as few if any island nation states are composed of exactly one island. Japan has four main islands, for example. Still, visually, there is a difference between the relative messiness of Indonesia’s territory (Figure \ref{fig:southeast-asia}) versus that of Japan. You could probably guess Japan’s borders from space, but you couldn’t really do that for Indonesia.⁴⁶ That’s why we think of the latter nation state as a local network of islands.

3. A global network of islands. Examples include France and its overseas territories (like Reunion), the UK and its territories (like the Falklands), the US and its territories (like Guam), and so on⁴⁷ (Figures \ref{fig:global-networks-of-islands-france}-\ref{fig:global-networks-of-islands-us}). In each case, though most of the population of each nation state is concentrated near the “main” island, that centralization is a consequence of history rather than a legal necessity. That is, these states do administer territories all over the world, and nothing in their legal framework prevents their populations from being more globally distributed. In the case of France and the UK, the overseas possessions represent the remainder of once powerful global empires that have gravitationally collapsed to become “mere” nation states, and where the far-flung colonies have not become independent. Note that these global networks of islands have much more distance between the individual points than the local networks of islands like Indonesia, which in turn are more distributed than essentially single island countries like Madagascar.

4. An enclave. Now we start getting interesting. The official definition of an enclave is a state that is fully landlocked, surrounded by other nation states on all sides without access to the ocean. Today there are only three enclave nation states: Lesotho, Vatican City, and San Marino (Figures \ref{fig:enclave-example}-\ref{fig:three-enclaves}), but enclaves used to be far more prevalent (Figure \ref{fig:pre-westphalian-europe}), and will become more prevalent again (Section \ref{sec:internet-improves-enclaves}).

5. A local network of enclaves. The next step in our progression is a local network of enclaves, like American Indian reservations (Figure \ref{fig:local-enclave-example}). Unlike Lesotho, these reservations are not full UN members, not considered full nation states. But they do have a degree of tribal sovereignty, despite being surrounded by a larger and more powerful state. And that degree of sovereignty is actually on the rise.

6. A global network of enclaves. With those visuals as points of departure, we can think of the network state as the next step. If it’s possible for a nation state to be an enclave, or for it to be a global network of islands, why can’t it be a global network of enclaves? Historically this has been difficult for logistical reasons as landlocked enclaves aren’t connected by the ocean, and are thus dominated by their geographical neigbhors. But the internet changes this, because it connects those enclaves together.

So that gives an argument as to why the distributed, discontiguous state shown in Figure \ref{fig:the-network-state-dashboard} might even be workable. It’s essentially taking the map of Indonesia, or France, or the UK, or even the US and asking…what if the population of those islands was more evenly scattered around the world? And what if they weren’t all islands, but enclaves separated by the internet rather than the ocean?

Commercial Precedents

We just established a progression towards the network state in a top-down fashion, beginning with existing nation states. Now let’s do the same thing in a bottom-up fashion, starting with several commercial precedents.

1. REITs. A real estate investment trust (REIT) is an investment entity that owns many different pieces of real estate and administers them as a whole. Like a network state, some REITs are international and own territory in many countries (Figure \ref{fig:reit}). Indeed, from the perspective of corporate law, a REIT may be the closest existing analog to a network state, except with a DAO at the top (perhaps incorporated in Wyoming!) rather than a traditional parent company

2. Restaurant chains. A multinational chain like Starbucks also has a global footprint. The general public can come in and buy things, and spends a fair bit of time at this “third place.” Notably, restaurant chains frequently acquire each other, giving a model for M&A between network state.

3. Tech company offices. The offices of a multinational tech company like Google (Figure \ref{fig:google-offices}) are globally distributed, networked commercial real estate gated by the common login of a corporate account.

4. Coliving communities. Coliving communities and hacker houses take people from the internet and house them in common quarters. These have been quietly growing in popularity for years. WeWork is adjacent to this market but is more similar to a REIT, because the people in a WeWork don’t generally know each other and aren’t members of a community.

5. Startup cities. There are three definitions of a startup city: a city where startups happen (like what San Francisco used to be), a city that acts like a startup (like Miami today), and a city that is a startup itself (like Culdesac, Praxis, Nkwashi, and Prospera). The last of these is relatively new, and we can think of it as a scaled up version of coliving communities.

6. Online meetups. For almost two decades, meetups have been an important component of the internet. They build physical community and trust between people who’ve previously only met online. The regular Ethereum meetups, for example, pull together a community of 1M+ people around the world.

7. Bitcoin miners. Last but not least, Bitcoin miners (and cryptocurrency miners more generally) are also globally distributed. The physical distribution around the world gives it a degree of robustness against nation state attacks, such as China’s recent mining purge or Kazakhstan’s internet shutdown.

A network state combines aspects of each of these. Like a REIT, it has a stake in many properties worldwide, and builds up the land value over time. Like a restaurant chain, it’s built for full or partial M&A, where the signage of one network state can go up while another comes down. Like a tech company, it has global single sign-on (more on that below) such that netizens can gain digital access to the smart locks gating its property. Like a coliving community, it has people living near each other in the residential parts of the network state. Like a startup city, it’s a commercial vehicle that seeks to legally take on pieces of governance. Like a recurring meetup, it brings people together who met primarily online. And like Bitcoin mining, it is globally distributed in part as a way to gain robustness towards nation state attacks.

But the network state also differs from each of its predecessors.

• For example, while the restaurant, tech, and miner footprints are mainly focused on office and/or datacenter space, and the coliving communities are mostly residential, a network state’s footprint includes community-owned residential and commercial real estate.

• Another difference is that the people of a network state wouldn’t have a single employer like Google. There would be as many different sources of income as there were network state citizens.

• While a startup city is in one location, and thus subject to political risk in that jurisdiction, a network state is physically distributed - though it could include one or more startup cities as network nodes of the network state.

• Yet another difference is that while a typical meetup is just for fun, each network state meetup is effectively a beta test for attendees to determine whether they want to become netizens.

While we could keep enumerating these points, you get the idea by now. If the national perspective gives a theoretical, top-down vantage point, like an existence proof, the commercial precedents give a pragmatic, bottom-up perspective, like a constructive proof.

Precedents are valuable not simply as analogies but because they give us useful snippets to remix. For example, we can take visual inspiration from one precedent (like Indonesia’s map), a computational subroutine from another precedent (like Google’s global single sign-on) and a piece of legal code from yet another (like the M&A documents for a restaurant chain) to build the foundations of the network state.

By combining concepts that already work, we reduce risk. And each of these precedents help us understand why it may be feasible to build the network state as an archipelago of interconnected enclaves.

The Internet Improves Enclaves

That word - enclave - is worth underlining. As noted above, an enclave is a state that is fully landlocked, surrounded by other states on all sides without access to the ocean. The key observation is that the internet increases the value of networked enclaves, of globally distributed pieces of territory that aren’t physically contiguous.

Why? When you look at a map of all nation states, you realize that enclaves aren’t very common. The three that do exist (Lesotho, Vatican City, and San Marino) seem like curiosities for Jeopardy, artifacts from a bygone time.

That’s because they are. The rise of the modern Westphalian state made enclaves far less viable. Once cartography advanced to the point that maps were widely distributed, once territory became highly legible, once it became technologically feasible to first visualize something as abstract⁴⁸ as a national border and then to enforce it, the people within an enclave found themselves at a disadvantage. They needed to gain right of passage from the enclosing state to trade or travel to other locales. Over time, it became easier for enclaves to simply merge with their enclosing state, rather than be cut off from the world.

On this point, note that an entity like Portugal with access to the ocean is not considered an enclave, even if it appears otherwise enclosed. Why? Because the ocean was the first peer-to-peer network. Portugal can send ships to Portuguese-speaking regions like Brazil or Macau without going overland through Spain. And Spain cannot easily prevent Portugal from doing so, in part because interdicting ocean travel is much more logistically difficult than interdicting overland travel. So in a sense, Portugal is networked to other territories by the ocean.

Today we have a new form of networking - the internet - that has made enclaves viable once again. What the internet does is put a port (in the digital sense) on every device, so they can connect to each other just as the ports (in the oceanic sense) once connected territories together. This port-to-port connection can be secured by encryption. With the invention of the blockchain, it can be used to enforce a system of property rights. And as we will see, in conjunction with AR/VR/XR, it can even underpin a new kind of digital territory. This combination of technologies thus increases the value of an archipelago of interconnected enclaves. We move from traderoutes to traceroutes.

A Country You Can Start From Your Computer 

The Improbability of Starting a Currency

In 2008, if you’d walked into the office of a conventional investor and said that you wanted to found a new currency from your computer, you’d have gotten stares and guffaws.

What are you going to do, petition the IMF? The World Bank? Oh, and your imaginary internet money is going to be decentralized, and deflationary, huh? You do know that Paul Krugman proved that a deflationary currency could never work, because it’d cause liquidity traps. Moreover, even if your crazy scheme did get traction it’d be shut down by the government immediately, because fiat currency is backed by men with guns. Take a look at an Econ 101 textbook, and get out of my office.

Of course, Satoshi Nakamoto managed to create Bitcoin without any investment at all⁴⁹. But this is roughly the reaction you’d get today if you expressed a serious interest in starting a new country. And in fairness, while of course new countries have been started at various points in history, there have also been countless half-baked attempts. So rational skepticism is warranted.

A Path for Founders, and a Path for Citizens

With that in mind, let’s suspend disbelief and start from first principles. A key feature of the modern era is that you can boot up a tech company, an online community, or even a cryptocurrency from a laptop. Can we generalize this process of founding beyond companies, communities, and currencies to cities⁵⁰ and even countries?

A key concept is to start cloud first, land last - but not land never. That is, start by founding a community online and then work on materializing it in the physical world by crowdfunding territory.

Note that not everyone need be a founder of a network state. If we think about the current world, anyone can choose to become a founder of a company, community, or currency at any time, thereby taking on the immense stress and risk of trying to build something from scratch. Alternatively, they can choose to remain a “citizen” and be gainfully employed by a founder — or by a vehicle that a founder once created.⁵¹

The network state model extends these ideas. There is a path for founders of network states and a path for citizens. Anyone can switch between these paths at any time, just like you can (a) go from being a Google employee to taking on the insanity of founding a company, or (b) transition from founding a company to selling to Google, hanging up the cleats for a time, and enjoying the easy life⁵² as an employee.

In other words, between any two moments in time, all four of the following transitions are possible:

1. Citizen to Founder. You begin gathering an online community, write up a founding document, create a cryptocurrency, and declare your intent to found a network state. From today’s perspective this seems quixotic. But think again about Satoshi Nakamoto’s plan to start a new currency in 2009, and how utopian it seemed at the time. If the process of instantiating the first network state meets with success, if this zero-to-one attempt actually works, it will eventually become a template: anyone can start a country from their computer, beginning by building a following.

2. Founder to Citizen. You may not want to remain a founder forever. Heavy lies the crown! As we describe below (Section \ref{sec:territory}), unlike modern nation states, but like historical ones, network states are built for full or partial M&A. So you can actually sell some or all of a network state to another network state, much as a large REIT might sell some of its properties to another REIT. A sale of this kind would transition the logins of all your citizens to a new system. Or you can shut it down, ideally with some notice, such that your citizens/users have time to switch citizenship over to another network state.

3. Citizen to Citizen. You join a network state, and remain a citizen. Or you acquire dual citizenship, or N-th citizenship, in another network state - usually by buying and holding a sufficient amount of that network state’s coin, as well as satisfying other requirements like participation and civility. Different network states may have different reciprocity provisions, just like nation states and social networks do⁵³. For example, a US passport allows you to enter some countries, but not others. And Quora allows you to login with Facebook or Google, but not vice versa. Similarly, citizenship in one network state may give partial access to another network state.

4. Founder to Founder. You continue running the network state you founded, or you sell or shut it down and start a new one. Perhaps the first such state is focused on quantified self, while the second is on life extension. Just like Evan Williams created Blogger, then Twitter, then Medium - all iterations on a theme, each informed by the previous one - it may be possible for a suitably talented administrator to do the Plymouth Colony, then Boston, then Massachusetts all within one lifetime. It’s analogous to an ambitious politician starting as mayor of a city, then becoming governor of a state, and ultimately ascending to president of a country. Think of this as the v1, v2, and v3 of communities rather than companies. In this context, the history of mid-1800s American communes is highly relevant.

This takes much of the strain off the question of “who will lead a network state”? It’s like asking the question of who will be the CEO of a tech company. It could be you. You have the right to try taking on that immense responsibility if you want, when you want, should you want - or to politely demur, as is your wont.

An Abundance of Leaders, Not an Absence Of Them

The concept of empowering anyone to transition back and forth from network state founder to citizen as they see fit might seem obvious, but it has a number of important implications.

Among other things, it offers a pragmatic alternative to the three leading ideological positions of the day - Woke Capital (NYT), Communist Capital (CCP), and Crypto Capital (BTC) - as the network state is neither bureaucratic oligarchy nor communist autocracy nor crypto-anarchy.

1. 100% Democracy, not 51% Democracy. First, when anyone can become a network state founder or switch citizenships, that’s not an argument against democracy, it’s an argument for more of it. It’s about more individual input, more consensual government, and more international inclusiveness. Put another way, it’s a case for 100% democracy, rather than a mere 51% democracy. Because in the 100% democracy of a network state, all the citizens in a jurisdiction have freely chosen the founder by signing a social smart contract upon entry, and can leave if they so choose. By contrast, in the status quo of a 51% democracy we see the barest possible level of democratic assent, and a corresponding grudging reluctance by 49% to bend to coercion by the other 51%. It is in this sense that a network state has more legitimacy than the status quo of what is (at best) a 51% democracy (see Section \ref{sec:100pct-democracy}).

2. Legitimate Leadership, not Communist Dictatorship. Second, when anyone can become a network state founder, but must attract citizens, that’s not an argument against competent leadership. It’s an argument for legitimate leadership, leadership that citizens have freely chosen, much as they freely work for a CEO or vote for a president. It’s leadership without dictatorship: anyone can declare themselves a leader of a network state, and see whether they can build a following, just like they can declare themselves founder of a tech company and see whether they can build a product valuable enough to fund employees. The alternative is the non-consensuality of imposed direction by communist dictatorship, the CCP model, where China’s international cities and greatest entrepreneurs are being crushed in the name of making China great on the international stage.

3. Crypto-Civilization, not Crypto-Anarchy. Third, when we we actively seek founders, rather than reject them on principle, that’s not an argument against decentralization, it’s an argument for crypto-civilization over crypto-anarchy. It’s a recognition that Satoshi was a leader, Washington was a leader, Gandhi was a leader, Lee Kuan Yew was a leader, and Herzl was a leader. And that a stably decentralized world requires an abundance of leaders, not an absence of them, lest a highly organized centralized empire overwhelm a group of disorganized crypto-anarchists that reject the very concept of leadership.⁵⁴

Thus, at least conceptually, the network state embraces democracy, leadership, and decentralization while avoiding the failure modes of oligarchy, dictatorship, and anarchy. There are no royal titles either; there’s no hereditary monarchy, no newspaper nepotists, PRC princelings, or corporate feudalists at the head of things. The leader of a network state earns their way to the top, generating enough value for their digital citizens - or seeing them leave for another network state given the ease of exit. And a key to it all is that fluidity of transition: a network state is a country you can start from your computer, so anyone can go from citizen to founder.

96% of the World Can’t Become President, But 100% Can Found A Network State.

The idea that anyone can become a founder of a network state is a vision of global equality of opportunity. It is the modern version of Jefferson’s natural aristocracy; the only connection you should need is an internet connection. And it’s an improvement over America’s legitimating myth that “anyone can become president of the United States,” which isn’t really true, as only ~4% of the world⁵⁵ is American and only a subset of those satisfy the age, birth, and residency requirements to become president.

So long as the US still rules the world⁵⁶, this means that the overwhelming majority of the people the US rules cannot themselves rise to rule the US. In fact, once we realize that there have been only 46 US presidents (all of whom are American), but that there are thousands of billionaires (most of whom are now not American), we realize that it is much more realistic⁵⁷ to become a tech billionare than to become US president.

Similarly, now that Satoshi made it possible to start a new digital currency, it is much easier to found a new cryptocurrency than to become head of the Federal Reserve. The American establishment would never have picked Vitalik Buterin over Jerome Powell, but the young Canadian is on key dimensions a far more accomplished macroeconomist than the American sexagenarian. Buterin founded an economy, while Powell simply inherited one.

So, instead of the false hope of getting elected US president, a role available only to 46 people in history, or the even more difficult path of becoming Fed Chair, an opportunity for only 16 appointees, one can much more realistically found a billion dollar company or currency from one’s computer.

By extending this concept, we allow anyone in the world with an internet connection (which will soon be everyone) to become not just a tech founder, or a protocol founder, but a network state founder. Whether the next Washington is Brazilian, Indian, American, Nigerian, Israeli, Chinese, Arab, Persian, or Eastern European, this mechanism lets them rise to global leadership. It creates a positive-sum path for the politically ambitious, one which doesn’t require beating an existing leader in an election, a revolution, or a war.

But, again, it also allows anyone who doesn’t desire the stress of leadership, or just doesn’t desire it at this point in time, to simply remain a citizen and pick from their available jurisdictions.

A Group Defined By Geodesic Over Geographic Distance 

Geodesic vs Geographic

Snapchat lies on a straight line with the dissolution of the nation state. Why? Because people are sharing intimate moments with others 3000 miles away, while they often don’t know the names of the people next door in their anonymous urban apartment complex.

This undermines the underlying assumption of the Westphalian nation state: namely, that people who live near each other will share the same values and therefore agree upon laws, such that the geographically-premised mechanism of the nation state is the right entity to govern them. Instead, what we find is that people share values with people who are close to them in their social network, but not those in their physical vicinity. We cannot be a good neighbor if we do not even know the neighbors.

We can quantify this with a little math. First, take a look at the definitions for the great circle distance and the geodesic distance.

The great circle distance is the the distance besween two points on the surface of the earth. It’s the distance as the crow flies. You can do a modified version of this based on practical travel constraints, but to a first approximation this is how far apart people are in the physical world.

The graph geodesic distance, by contrast, is a completely different metric. It’s the number of degrees of separation between two nodes in a social network along the shortest path.

Importantly, the geodesic distance is just as valid a mathematical metric as the great-circle distance. That means one can generate distance matrices, and hence maps, via techniques like multidimensional scaling. In fact, there are entire conferences devoted to cloud cartography, in which research groups present maps of online social networks - mapping not nation states but states of mind.

Why is the geodesic distance important? Because the network state is enabled in nontrivial part by the fact that we are transitioning from a primarily great-circle-driven world to a graph-geodesic-driven world. And that means the fundamental division is less the visible geographic borders of the nation state, than the invisible geodesic borders of the social network. This in turn means that we need to reconceptualize the state as a primarily digital entity, a network state.

Online Primary, Offline Secondary

A network state is to a nation state as a digital currency is to a fiat currency; it exists primarily online with projections offline rather than vice versa. To understand this, think about the difference between Russia vs Ethereum.

Russia is a geographical entity that is primarily defined by territory in the physical world and the associated people, language, and culture. It switched its ideology in 1991, from communism to nationalism, but retained much of its geography. The physical geography was primary, the ideology was secondary.

Conversely, Ethereum is an ideological entity that is primarily defined by a network in the digital world and the associated people, programming languages, and emerging culture. The Ethereum community holds meetups in places like Cancun or Shenzhen, but these are just sites of assembly. The physical geography is secondary, the digital ideology is primary.

Another way of thinking about it is the difference between the expansion of Russia versus that of Ethereum. Modulo the periodic invasion⁵⁸ of its neighbors, Russia’s borders are relatively static, while Ethereum’s borders are highly fluid. It’s true that Russia’s borders have changed since 1991; its predecessor state, the USSR, extended farther out into Eastern Europe and Central Asia. But the mass of Russian people have been near the Baltics, the Turks, the Eastern Europeans, and so on for generations. Geography doesn’t vary much⁵⁹, and Russia’s adjacent “competitors” for citizens and land have mostly stayed the same.

By contrast, Ethereum’s neighbors change quickly and dramatically. For example, Solana is a new digital currency that suddenly popped up on Ethereum’s boundary and taken a good chunk of “citizens” from it, as reflected in the ETH/SOL exchange rate, just as Ethereum itself rose in BTC terms since its inception. This is also similar to how early Facebook arose out of nowhere and took many “citizens” from Gmail, before Google “closed the borders.”

Of course, unlike territorial disputes, competitions over digital citizens are not strictly zero-sum. For at least a while, the space of cryptocurrency and internet users will keep expanding; even after that point, a rival still needs to build a better service to attract a competitor’s digital citizens.

Digital Dynamic Geography

It is the geodesic distance that enables fluid switching between network states⁶⁰. The great-circle-distance-driven physical world requires individuals to actually move around the map to enter a new territory, while the geodesic-distance-griven digital world just requires a user to hit a new key. This becomes more obvious when you have a VR headset on; hit a button and you are transported between worlds. Another button, another world.

And this applies not just to individuals, but to whole groups, to entire networks, which are expensive to move in the physical world but much easier to relocate near another network in digital space. Just do an Oauth-style integration and voila, your citizens can cross the border into another network state.

Legacy nation states cannot do this. They cannot just move around the map at will. As we noted, the Russian state is mostly stuck with its neighbors like Japan and Turkey in a way that individual Russians, or the Telegram and Ethereum networks (both founded by people of Russian descent), are not.

But there is a historical precedent: nomadic peoples, especially those that existed far before nation states. These small nomadic tribes, without fixed location, moved around the world as hunter-gatherers and could thus change their neighbors. In some senses, the Etherean digital nomads are more similar to these mobile tribes than the sessile farmers and soldiers of the nation state. Not only are they highly mobile in the physical world, they can essentially teleport around in the digital world.⁶¹

We can term this concept digital dynamic geography, after a term Patri Friedman introduced. He used it in the context of seasteading, to argue for homes like cruise ships that could dock and undock in congenial states at will, but it will be easier to accomplish first in the digital world. The reason is that geographic proximity is mostly constant, but geodesic proximity is easily varied.

So for a group organized by geodesic distance, they can choose to change their network neighbors in a way no nation state can. This gives a new meaning to ’digital nomad’, namely a nomadic tribe that shifts its borders in digital space, becoming instantly adjacent to some nodes and far away from others. Collective migration in the cloud becomes as easy as pressing a key.

A City-State In The Cloud 

Founding a Physical City

The network state is built cloud first, land last - but not land never. Relatively early in a network state’s existence, it should start building its first physical city in virtual reality. Wait, how does that work?

I outlined a process for how to start a new city in a tweet. Here we’re going to discuss five specific stages:

1. Why materializing the cloud in person is important
2. How to architect individual buildings of a city in VR
3. How to materialize those buildings in the physical world
4. How to lay them out on a larger scale, as a city plan, by going horizontal
5. Why doing this is far better than reforming existing cities

Many of these concepts are applicable to much smaller constructs than cities. And indeed one of our contributions is the idea of how one might found a startup city from a small community, just like one can build a network state from a single person.

Cloud First, Land Last, but Not Land Never

There are two frequent misconceptions about the network state:

• it’s purely digital, and that’s good, we have flexibility in the digital world
• it’s purely digital, and that’s bad, we are physical beings

Both of these are incorrect. The network state does begin online, and its primary form is digital, but it’s crucial to be able to materialize pieces in the physical world. For one thing, there are certain human functions that can still only be done offline, from recreation to reproduction! For another, we’re not wired to properly perceive the scale of the virtual world.

To understand this, imagine standing on the roof of a skyscraper in New York City, looking down on this panorama, and asking yourself how many of those windows had a Facebook user⁶² behind them. To first order, the right answer would be “all of them.” But we don’t see a Facebook flag in each window.

Had that happened as Facebook grew, people would have perceived it differently. It would have been more tangible. The scale of Facebook would have been obvious earlier on. The backlash would have been stronger, but so would the project’s perceived strength, particularly if all the flags had been focused in a single geographic area.

It would have just been a different thing. An identity formation process would have ensued. It wouldn’t have been a mere ’social utility’, it would have been a true community. And that’s the difference between a social network and a network state. There’s something about peripheral vision that activates the human sense of scale in a way mere numbers on screen doesn’t. Seeing the number “100,000” is very different from seeing a stadium of 100,000 people (Figure \ref{fig:michigan-stadium}).

There’s one caveat, though. The distinction here isn’t exactly digital-vs-physical, because that sense of scale through peripheral vision can be delivered in virtual reality. That’s why even if existing social networks are primarily experienced in 2D, the network state’s online presence should be built around 3D. Because we want to use virtual reality to design physical reality, starting with designs for communities and cities.

Architect in Virtual Reality

You might not have been monitoring it, but architecture has been gradually moving into virtual reality. If you look at tools like Autodesk Revit (Figure \ref{fig:autodesk-revit}-ref{fig:autodesk-revit-2}), one can create detailed schematics of entire buildings in the cloud.

The next step is to start thinking about collections of buildings, like an entire real estate development visualized in virtual reality. And from there we can imagine a visual like the Ikea scene from Fight Club (Figure \ref{fig:fight-club-ikea}), where we pan our gaze around in virtual reality to see the price tags on every building. These price tags are variables, quotes from real estate contractors around the world.

The idea is that by getting bids from many contractors we learn how much it would cost a given firm to materialize the virtual buildings in a specified locale, over a given period. Because we’re mostly neutral on where the real estate actually gets built, with the location itself just a parameter, we may see enormous price variation.

Materialize in Physical Reality

In a real sense, we’re talking about printing out a set of buildings from the cloud, much as we’d print a document. Chinese construction firms (Figure \ref{fig:china-construction}) show just how quickly this can happen if we combine modern pre-fab technology with modern (rather than antiquated) building regulations.

Note that the West was once able to build quickly in the physical world. This is even more astonishing when we realize that all this was done before computers⁶³, using drafting boards. Today, at the state level the West lacks the risk-tolerance and alignment to build quickly and inexpensively in the physical world. We can see this with every 300 million dollar bus lane and billion dollar military boondoggle.

However, there are promising signs at the level of individuals and small groups, like tiny homes, nap pods, van life, container housing, and the like. These quick-build modules could be represented in VR, then assembled on-site in the physical world.

Going Horizontal > Going Vertical

What might the cities of the network state look like when we zoom out?

One answer is: neither NIMBY, nor YIMBY⁶⁴, but HIMBY: horizontal sprawl in my backyard. That is, rather than fighting construction entirely (NIMBY), or slowly building vertically in dense urban cities (YIMBY), we should quickly build horizontally in uninhabited areas (HIMBY) and embrace the concept of sprawl.

Wait, sprawl?!? Isn’t that what every urban planner hates? Perhaps. But first, take a look of this photo of a San Francisco gathering before COVID:

This outdoor park is:

• managed by a CEO, so one person can greenlight large-scale physical modification
• private property, ringed by a fence, so it can keep out syringes and feces
• dynamic and configurable, with buildings and chairs that can be moved around
• friendly and inviting, as there are families casually hanging out
• mobile, as everything can be put on a truck (or is literally a truck) and can be moved elsewhere on fairly short notice

So, somehow a few wood chairs and awnings turned what might otherwise be a collection of exhaust-emitting trucks and off-gassing asphalt into a fun community hangout. Now compare it to the tall, gleaming, vertical building in the background. That building houses many more people, but is far more expensive to build and has zero mobility or configurability. So by instead going horizontal, by building at the ground level in a dynamic and modular way, we gain more speed and flexibility than going vertical.

Now, let’s compare that to Burning Man:

This is essentially a scaled out version of the horizontal food park. Here are the advantages of a Burning-Man-like horizontal approach to building a new city:

1. Speed. By going horizontal, you get X units in Y days. Compare that to SF, which is building A units in B days.
2. Cost. The cost of N trailers or pods, even including water, electricity, sewage, and the like is far less than the comparable cost of a skyscraper.
3. Flexibility. Someone can literally drive up and add their housing unit to Burning Man. If they don’t like their neighbors, they can also move to another site. This is dynamic geography in the physical world.
4. Regulatory Innovation. Burning Man’s location is in part chosen on the basis of permissive (or even non-existent) building codes. This could be replicated for other startup cities.
5. Alignment. Everyone at Burning Man has chosen to be there and is aligned around a similar set of beliefs. This is very different from a polarized, low-trust city like SF that can’t agree on anything, let alone what to build.
6. Modularity. Any or all of the construction innovations discussed in the previous section could be applied, from pre-fab to modular.
7. Risk Tolerance. One person’s building can literally collapse without affecting the neighbor’s, so long as they are at a safe enough distance, so physical risk tolerance increases.

Now, for a semi-permanent startup city we’d want to make many changes to Burning Man:

1. Start Small. For a network state state city we wouldn’t want to start with 70,000 people. Start with a simple network node with (say) 10 people in the middle of nowhere, with space to expand, and then scale out from there.
2. Basic Infrastructure. While Burning Man is known for gritty sandstorms and port-a-potties, nothing says that it can’t be put in a more hospitable locale. Basic roads, sanitation, and electricity are not cutting edge technology and there are logistics firms that make this easy to set up.
3. Commerce. Burning Man of course famously doesn’t include commerce as part of the experience. We’d allow that.
4. Permitting. Moving your parking spot in Burning Man does require permission from the organizers, but you could represent the physical real estate of a city as a grid and trade parking spots as NFTs, or via traditional mechanisms for real estate transactions.
5. CEO. We’d want a clear CEO for the startup city to handle dispute resolution, as opposed to the ’weak mayor’ or ’board of supervisor’ structure that has resulted in the failed city of San Francisco.

Moreover, as the city scaled horizontally and then became more permanent, it would take on some characteristics of a traditional city. For example, people will may want to create things like an HOA to make the architecture consistent in a given neighborhood. Or if they stay in place long enough, they’ll want to start building vertically, especially in the city center. And in general the horizontal buildout may evolve over time to go more vertical once the horizontal expansion reaches the city limits.

But this is fine. It’s just like how a startup begins with no bureaucracy and eventually adds HR and middle management and the like to manage scale. Yes, the libertarian founder rebuilds the state - but not exactly the same as before. Often with some innovation. And gaining the ability to (a) found a city, (b) scale it and thereby (c) innovate in urban planning without (d) futilely trying to simultaneously win every necessary political office is itself a meta-innovation, an innovation in how to found.

City on a Hill, City in the Cloud

Like John Winthrop talked about a ’city on the hill’ as an ambition for the Puritans, we think about a ’city in the cloud’ as a vision that brings our eyes heavenwards. A key innovation is that this city can actually be fully designed in the cloud, and materialized on a bare piece of land, without the territorial conflict that characterized the early Americas.

One of the reasons this is technologically feasible is that cloud formations have been growing in scale and duration (Figure \ref{fig:cloud-formations}). The internet has made it possible to bring arbitrary numbers of people together online, and to then assemble them offline.

But it’s worth asking why this is more feasible than the alternative. Why not simply reform an existing city? Like, say, San Francisco?

Win or Die…or Lose

It was easier to start a new currency than to reform the Fed, and it will be easier to start a new city than to reform San Francisco.

Why focus on SF itself? First, the SF model of syringes, feces, homeless encampments, rampant crime, and the like has been successfully exported to many other American cities like Seattle, Los Angeles, and the like. Second, many people in technology know about SF, they know about its fall, and some are invested in an attempted turnaround.⁶⁵

However, it’s unlikely that turnaround will be successful. The short version is that it’s win-or-die for the wokes that run San Francisco, but it’s not win-or-die for the technologists that seek to reform it (Figure \ref{fig:win-or-die}).

Put another way, tech has options. It has other cities like Miami. And as we’ve just discussed it can even build new cities. But SF’s wokes have no such options. If they lose political control, they lose their gravy train. As such wokes will fight harder, and given their incumbency advantages, they will win.

Table 1: Win or die incentives

	Lose	Win	Note
Woke	0	$1000	If wokes lose the political battle, they lose everything
Tech	$900	$1000	If tech loses, they pay the cost of moving

Remember that San Francisco’s wokes have invested a lifetime in mastering (and manipulating) the bizarre bylaws of the city. It’s like loving code and knowing a company’s codebase in and out. These people are political obsessives, and they are dug in.⁶⁶ It’s not a quick thing to remove them, it’s a multi-year prolonged effort, and tech won’t have the energy or persistence because it’s simply not win-or-die. Ultimately, it has better things to do with its time. But if the wokes lose control of the government, they lose their jobs and their gravy train. It’s their life.

This doesn’t mean wokes always win. By contrast, when it comes to BTC vs USD, the shoe is on the other foot. A bitcoin holder is win-or-die on BTC. If it goes to zero, they lose, whereas if it moons they win. By contrast, a USD holder is simply not that incentivized to fight BTC. Indeed, by the time the USD begins plummeting in value vs Bitcoin, many former dollar partisans will defect to the Bitcoin side to escape inflation.

So, the lesson is: win-or-die, or you lose.

And this concept applies to a new city as well. If it’s set up from scratch on bare land, wokes won’t initially be attracted because there is nothing to loot. If there is a clear CEO, then there is empowered management that can, in theory, fend off a thousand claimants to power. And if the city’s growth depends on its economics, that focuses the leader on making sure it attracts emigrants rather than repelling them.

In other words, building a new city embraces what tech is strong at. The tech model doesn’t really work for reform. It requires a clean slate, empowered management, and venture returns.

Given this, it can build very popular alternatives to existing institutions, taking away their customers and reforming them indirectly. And because we can now apply that playbook to cities, we’ll find it is easier to build a virtual city and materialize it in person than to reform San Francisco.

A Territory One Can Acquire but Not Conquer 

Easy to Acquire

Once we visualize a network state as a combination of (a) a digital social network with an integrated cryptocurrency and (b) a physical network of distributed enclaves, we realize that it is much easier to acquire than to conquer.

First, why is it easy to acquire? For the digital portion of a network state, when the founder sells it to an acquirer, it’s like selling Instagram to Facebook. The digital logins of the two services are integrated and citizens in each network state now have access to the other’s apps and physical territory. This is a modern analog to the Louisiana Purchase or the purchase of Alaska. It’s also feasible to sell not the entire network, but simply a subnetwork - perhaps all those in a defined geographical location,or all those who have expressed a collective interest in changing citizenship. This is similar to Singapore becoming independent from Malaysia. Finally, it is also feasible to spin off a subnetwork into its own network, like the UK exiting from the EU.

If we visualize the physical portion of a network state as like a network of Google offices, or a string of restaurant chains, or the real estate footprint of a REIT, we see how we can handle the physical component of network state M&A as well. In the simplest version, after one network state consummates the acquisition of the other, all citizens from one network state can enter the territory of the other. The smart locks just get a software update and now open all the doors and gates. The branding changes too, to be consistent with the new unified entity, much like a large hotel chain putting up new signage when it acquires a small one. Various kinds of reciprocity relationships with other network states and third parties may need to be renegotiated, just like many corporate contracts have change-of-control provisions, but this is straightforward so long as it is anticipated.

In theory, all of this can be done with current technical and legal infrastructure. It’s just like one multinational acquiring the digital, physical, and human resources of another, except it extends to people’s residences rather than simply their offices, and except that the acquired people become not just remote employees of the combined entity but digital citizens - though they can always leave for any new network state that admits them.

Over time, however, the technolegal infrastructure for each network state should live on a blockchain rather than a melange of paper contracts and cloud services. The reason is that a blockchain gives citizen accounts and balances, allows the recording of all real estate transactions, the maintenance of all citizen records, and the management of private keys in a globally consistent way across legacy nation state jurisdictions. The problem of post-acquisition integration then reduces to porting over the records from one chain to another.

In summary, this is a way to extend the corporate concept of change-of-control to polities. It’s a recipe for nonviolent competition between countries, where peace treaties between would-be rebels and current incumbents are turned into M&A deals.

Hard to Conquer

The network state reduces violence on another dimension: thanks to their geographical decentralization and physical invisiblity, network states are hard to conquer.

1. Network States are Geographically Decentralized

   First, geographical decentralization. If you look at a map of France that includes its islands in the South Pacific, you realize that it’s difficult to nuke or attack the whole thing at once. It’s too globally distributed. So the geographical distribution of the network state itself is a deterrent to physical force. Just like cryptocurrency, the decentralization deters violence.

   Put another way, invading a network state is like invading every Bitcoin mine or Ethereum node in the world at once. Are you really going to be able to get right-of-way for your troops from every surrounding territory? Won’t the collateral damage piss off the neighbors? And how will you even locate all the nodes in the first place? Because the list isn’t public.

2. Network States are Physically Invisible

   This brings us to the second way that network states deter violence: physical invisibility. It’s a bit more subtle. Right now, you can see the physical border between France & Germany on a map. But you can’t visualize the border between Twitter & Facebook. That is, which people are on the “border” of Twitter and Facebook, in the sense that they have accounts on both sites?

   This might seem like a trivial concept, but isn’t. The Twitter and Facebook networks are each bigger than France or Germany - combined. However, social network membership is invisible to all but the network operators. There’s no public list of all Facebook and Twitter members. Only Facebook can generate a map like this.

   The invisibility of network membership has immense implications. You couldn’t have nationalism itself without maps of physical space. For example, think about 54° 40’ or Fight, which made literal reference to latitude. You couldn’t have that kind of border dispute without being able to visualize a border. People had to see the map to be able to fight over it.

   So, because citizenship in a network state is invisible to a satellite, at least without the consent of the network state operator, these imagined communities are invisible countries. It’s the return of secret societies, at scale, as secret states. Network states thus reduce violence by encrypting the map itself; you can’t hit what you can’t see.

   This is particularly interesting when it comes to the threat of invasions, and the use of nuclear weapons. If a network state of ten million people was spread around the globe, with a partially private user list (like Twitter and Facebook) and a physically decentralized footprint (like Bitcoin miners and Google offices), it’d be difficult to nuke it, or invade it, even if you could find it. You’d impose a lot of collateral damage on the people nearby in unaffiliated network states, you’d spend a lot of money, and the remaining 90-95% of citizens of the network state would likely seek some form of retaliation.

   That’s not to say that network states are invulnerable. The types of attacks that could hit the entirety of a rival network state would be a cyberattack of some kind on their blockchain backbone, or perhaps a drone swarm (or perhaps SEAL team) that could be coordinated around the world given the GPS coordinates of every citizen.

   But that’s a different battlefield than the one today’s militaries are prepared for. Special forces and cyber notwithstanding, they are still for the most part organized around tanks, planes, and aircraft carriers. But if the map goes dark, the network state itself becomes invisible, the nuclear weapons and invasions of the 20th century are less applicable, and cyberwar and drone strikes become fundamental, then the cloud becomes the primary theater of war - not air, sea, or land.

TODO A Union of Sovereign Collectives 

TODO The Community Founder

First, some definitions.

A network state community founder organizes a recurring meetup, that gets organized into a formal network union, that eventually crowdfunds a network node, that becomes a branch of the network state.

As per the initial figure, a network state exists online as N netizens and in the physical world as K network nodes. Node k has nk​ people, such that ∑k=1K​nk​=N.

In general, we want to preserve a digital-to-physical mapping such that network nodes (offline) correspond to network unions (online).

Community founders set up network nodes, which are pieces of the network state. Each network node has a local network union, which folds up into the broader network union that underpins the network state. Just like Teamsters local #1234, we have local geographies that build energy and carry out actions autonomously, but also in combination with an international framework.

Thesis, antithesis, synthesis. Anti-technology unions, plus anti-union technology, to get pro-technology unions.

Not the sovereign individual, it’s the sovereign collective (paste in thread on the individual sovereign and the autonomous robot)

• network union concept
• randian and marxian failure modes
• one way to think of left/right
• sovereign individual
• sovereign collective
• bankless crypto civilization podcast

TODO The Recurring Meetup

TODO The Network Union

The digital version of the network union least common ancestor
thenetworkstate.com/network-union

TODO The Network Node

The physical manifestation of a network union An in-person collective

TODO The Functions of a Sovereign Collective

Here are the kinds of things a community founder has to do.

• daily activities
• community founders have (literally) access controls to the network union
  • their permission level increases
• membership
  • recruit
  • create
  • read
  • update
  • delete
• for the network node itself
  • join (if you have an existing coliving community)
  • leave (if you want to go independent)
  • franchise (if you have a group and want to attach to us to create your own)
  • merge (with another nearby network node)
  • split (with another nearby network node)
  • sell (to another nearby network node, or another
  • reposition (change spot in hierarchy)
  • acquire (buy another network node)

Kind of like the Union of Soviet Socialist Republics, except this would be a voluntary Union of Satoshiite Sovereign Collectives.

TODO A Commonwealth Aligned Around Cryptographic Consensus 

TODO On-Chain Community

tweet on this

Democracy and capitalism are dispute resolution mechanisms. They are in a sense last resorts; you want the community to resolve first.

With that said, the blockchain allows on-chain voting and markets. It revolutionizes both democracy and capitalism. Truly free speech, proof-of-human, one-person-one-vote. And truly free markets, proof-of-stake, one-btc-one-vote. All via truly universal truth, via proof-of-work, one-hash-one-vote.

Let’s do the community part first

• DAOs
• NFTs
• ENS login for smart locks
• Freemasons and secret societies
• AR sigils
• Bowling alone, but posting together
• Continuous, pseudonymous, partial membership vs discrete, card-carrying, full membership
• Combination of nationalism and socialism - 20th century states set about breaking any subnational identities that are loyalties outside the state. Soviet Union did it, Catholic Church, Timur, Chinese, and the late century US. Not quite articulated as such but every subpopulation should be a well-mixed batter.

TODO On-Chain Democracy

• proof of human (faceid, worldcoin)
• on-chain governance
• auditable voting
• action records (actions > words)
• innovation in voting schemes
• free exit in the event of gerrymandering

TODO On-Chain Capitalism

• Accounting
• Transactions
• Board of directors
• Capital formation
• Incorporation
• M&A

TODO A State That Recruits Like a Startup 

TODO Immigration and Emigration: Moral Foundations

Populations change by birth, death, immigration, and emigration. We’ll talk about birth and death later in the context of social life. Also autonomous agents and robots. But for now let’s talk about immigration and emigration.

• UN Declaration of Human Rights

• The right to exit (vs open borders)

• Freedom of association (vs non-discrimination)

• These can be selectively suspended or applied, in which case they are simply who/whom. Power as a double standard, Russell Conjugation.

• We are not arguing for a change to voting

• Vote how you want, then move where you like

• We are strictly increasing choice, not trying to change the voting mechanisms of the existing system

• It was easier for Google to build YouTube than to get a TV license

• Tech’s model is to build parallel systems, layer on top

• Doesn’t directly reform existing systems, it does build massively popular alternatives to them

TODO The Political Vantage Point

Conservative - cultural argument. Borders, language, culture. The nation, religion, military

Libertarian - corporate argument. Free trade between people. The market.

Progressive - political argument. They’re against gentrification, and “tech bros”, but they were for Hispanic immigration…till they are now against it, quietly. They are for immigration that increases their political power, as they worship the state.

Technologist - feasibility argument. Cryptography is a form of digital borders. The technology.

Pragmatist - all of these, in varying mixes. Right now the progressives are by far the strongest, but that is because Gov > God. However, BTC > Gov, so their era is ending and the cryptographic era is beginning.

• thesis, antithesis, synthesis on immigration

• we want a highly selective immigration policy

• this is what nyt and harvard actually do

• they have two immigration policies: bring democrats in, keep republicans out

• great example: stanford fake student

• another example: harvard as a school for the 99%

• democrats shifting on migration

  • vaccine passports
  • hispanics now voting for the right
  • anti asian quotas at harvard
  • biden deportations - nothing on cages, etc
  • judis and texeira promulgated the thesis, and are now reversing on it
  • asians voting against dems
  • applying disparate impact doctrine, we have prima facie evidence of disc

• ethnic groups forming

  • people would rather marry outside race than party
  • this is, actually, ethnic group forming behavior
  • like hutus and tutsis over time
  • low intermarriage = new groups forming
  • doesn’t need to be persistent forever
  • but dem-vs-rep is at a minimum on the level of protestant/catholic
  • (which was pretty fierce!)
  • people: rebundle: don’t get citizens out of nowhere, boosting dashboard

TODO The Corporate Vantage Point

• Jobs: A players hire A players, B players hire C players (bozo explosion)
• Chesky: corporate culture
• Many different writers on culture
• NYT on hiring, Harvard on hiring, during their heyday
• ’Prestigious’ is the opposite of ’egalitarian’ and closer to privileged
• Skilled, limited, highly selective immigration
• In a sense, every hire is a defeat

— communication overhead, they need to pay for themselves

• Google et alia ruined by hiring too many parasites, totally different culture than it used to be.
• Compare the Lake Wobegon Google to today’s Google.
• Do it with as few people as possible, as few as is needed to maintain sovereignty and accomplish your goals.
• The counterargument is: scale = power, and perhaps it is, but it’s also internal conflict
• scale causes disalignment
• There are many possible immigration and emigration policies

TODO A Review of Migration Policies

• The skilled and limited immigration policy
  • Singapore, Canada, Australia, etc
  • Even this can have its downsides. If you bring in high skill people and they aren’t aligned enough with the local population, you’ll see a populist backlash. Within a country or a company, people can envy those brought in. See Amy Chua’s book, World on Fire, for what can happen when a market dominant minority wins in capitalism and loses in democracy.
• Let anyone leave
  • The difference between a dictator and a leader is whether they let you leave with your property
• Don’t let anyone in, keep future Democrats out (Republican)
• Let more Democrats in, keep most Republicans out (Democrat)
• Keep everyone in, don’t let anyone out (Soviet)
  • Kill people who are leaving: Berlin Wall policy
  • Rob people who are leaving: Soviet and Nazi policy
• Drive your enemies out
  • Kill people unless they leave (Idi Amin, ethnic cleansing)
• Invade everyone
  • Genghis’ policy
  • …but also the policy of many religions, which expel non-believers and justify aggressive moves towards them

Understand that rising nationalism/socialism and the remote economy has created a global competition for talent.

• skilled, limited immigration

• not the US policy

• not the USSR or Nazi Germany either

• is the policy of Canada, Singapore, … [not exactly hellholes]

• like a top tech company

• your immigration policy is your hiring policy

• note that people who are ostensibly open borders people will often grow very territorial when you ask why everyone shouldn’t get a harvard degree or work for nyt

• that’s the border they care about

• a players hire a players, b players hire c players

• borders, hiring, privacy — it’s all about forming a semi-permeable membrane around something

• note that the words they use to push people out are the same words they use to send people in

• singapore, canada, etc

• immigration decline to use

Mechanically, anyone can apply online to try out a network state digitally. You can demonstrate value online, then either pay to migrate there physically or get financial aid to do so. We envision people applying to countries at the age of 18, much as they apply to colleges today at the age of 18, and for many of the same reasons. Over time we can apply technology to reducing the barrier to exit, and thereby reducing the need for financial aid. In this fashion, the network state is a state that recruits like a startup, or like a competitive college.

TODO A Body Based On Math Rather Than “Science” 

The Ledger of Record

Today’s nation states are typically either internally disaligned, like the US, or forcibly internally aligned, like China. In the first case, the citizens are arguably free, but strongly disagree. In the second case, the citizens are in key respects less free, and thus do not openly disagree.

The ideal is a third way, to build a community which is consensually internally aligned, where the citizens have made a free choice to agree, and have working mechanisms to come to consensus in the event they disagree⁶⁷.

That last bit is the hard part. In the US, polarization (or decentralization) has been increasing since the mid-century peak centralization, and was accelerated by social media. The establishment attempted a counter-decentralization to try to censor and deplatform people from social media, but this is unsystematic and, after an initial surge, halfhearted. It’s an amateurish retrofit of speech and thought controls upon a previously free society, and it increasingly seems like it’s not going to stick, particularly with the emergence of semi-decentralized platforms like Substack, fully decentralized tools like Bitcoin, and censorship-resistant web3 tools like Mirror, IPFS, and the like. America’s model is no consensus and constant dissent.

In China, unification (or centralization) has arguably been increasing since mid-century, when there was the nadir of the Chinese Civil War, when many of the most talented Chinese people sought their fortunes abroad, and when the most successful ethnically Chinese states were the islands outside mainland China: Hong Kong, Taiwan, and Singapore. Over the last several decades, like an ultra-aggressive sheepdog, the Chinese government has ensured that any burgeoning dissent is stifled, whether that be Tiananmen Square, the Great Firewall, Falun Gong, Bo Xilai, the Hong Kong National Security Law, the Xinjiang crackdown, US-supported democracy activists, Chinese tech founders, or Bitcoin miners. China’s model is to attain consensus by suppressing dissent.

What’s the better model? A combination of old-fashioned ideas like trust and communication, plus newer ideas like the cryptographic consensus that the blockchain permits.

After all, we should recognize that an Israeli and a Palestinian, a Chinese person and a Japanese person, a Democrat and a Republican, all agree on the state of the Bitcoin blockchain. Regardless of their political views, or geography, people agree on how much Bitcoin someone has globally. This is an incredible triumph, because a trillion dollars is the kind of thing people will fight over. For wealth on the scale of a trillion dollars, people will invade countries, forge histories, do crazy things. Indeed, a “mere” million dollars is the kind of thing people will fight over. Yet there’s essentially no dispute on who owns what BTC.

The same consensus algorithms that can get people to agree on what Bitcoin someone had at what time can be extended to get people to agree on what digital property somebody had at what time. That’s stocks and bonds, but also things like art and video game items, and the digital keys to real world homes and vehicles.

Finally, and less obviously, these consensus algorithms can be extended not simply to recording property, but to arbitrary kinds of timestamped information. What device recorded this temperature in Kansas on this date? What hospital uploaded this medical record to the blockchain at this time? What was the price of this house that was sold in this area? What crime was reported by this victim or this police officer in this area?

All of these feeds of data did not really exist two decades ago. They mostly do exist today, but in corporate silos. The next step is to put them on-chain and integrate them into what we call the ledger of record, which is a global feed of cryptographically timestamped, undeletable history.

If you think about how people use Twitter, they use it as a reference to prove that something happened, that someone said something at a given time. Twitter is in this sense a timestamped feed of events, one where we trust Twitter to tell us what happened. But this is imperfect for many reasons, not least of which that Twitter deplatforms many people, and has been hacked in ways that allow impersonation of users.

If a Twitter-style feed was on-chain, no one can man-in-the-middle attack or deplatform the users. They could steal the keys, but that would mean stealing property too. So it becomes harder to falsify history. The feed of what happened becomes harder to corrupt. And this is the transition from centralized truth, from the corporate “truth” of the American press and the official “truth” of the Chinese state to decentralized cryptographic truth, on-chain truth, truth you can verify for yourself.

This kind of truth is already used by crypto oracles like Chainlink to manage feeds of information that are the input to smart contracts handling billions of dollars. While price feeds may seem like a highly specific area to begin, they are ideal from one vantage point: if you can corrupt even one byte, you can hack a lot of money. So if you can create a defensible, hack-proof history there, you can extend it to protect many other kinds of history.

This is how we get to a community aligned around cryptographic consensus.

TODO A Cryptoeconomic Macroeconomy 

Let’s talk about the economy of the network state.

It is premised on the following beliefs:

• all value becomes digital, as everything physical is reducing to printing out via robotics.

• this means that in the 21st century, the 99% becomes capital and the 1% becomes labor

• Everyone becomes an angel investor or venture capitalist, with a few founders

• status positioning moves from the offline (rolls royces) to the online (NFTs)

• just like everyone can get a basic iphone but the gold version fully uncouples the status signaling from the basic product

• the economy is set up from the beginning for remote work, for crypto, for the replacement of jobs

• universal meritocracy and economic competition

• from farming, to manufacturing, to investing

• a cryptoeconomic macroeconomy

• an economy built around the internet

• remote

• built around the cryptoeconomy

• digital first, physical primary

• print everything out

TODO An Organization of Optimalists 

• opposite of douthat’s decadence
• restore the arrow of progress
• all must become excellent essay
• not fundamentalism
• optimalism
• proposition nation expresses as set of metrics and an objective function
• city on the hill, drive to it with OKRs :)

TODO An Asymptotically Automated Administration 

• harari clip on dataism

• can’t integrate and view

• looker book on data-driven

• can’t just collect, need to have it part of the kill or build chain

• great example: measuring turnaround time in a lab

• Visual from idiocracy of the buildings falling on top of each other

• What if you never needed to enter the same data into a government form twice?

• What if you knew exactly how your data was being used, and by what government agency?

• Why are subways so expensive? Can we pull the info on the full supply chain?

• Why don’t we have rapid COVID tests?

• Why are these subs crashing?

• Why don’t we know where a trillion in government expenditure has gone?

• What if the US government was capable of doing things like shipping a list of COVID sites?

  • failure: healthcare.gov, needed USDS
  • failure: Afghanistan intelligence
  • failure: many military equipment software failures
  • failure: COVID-19 early intelligence from CDC and FDA
  • failure: early inflation intelligence from the Fed
  • failure: early supply chain issues from the Transportation Department

• there’s a common refrain that “the government gave birth to tech,” but the direction of influence has reversed direction. It was the military and state steering the internet, now it is the internet and tech that has begun steering the military and state

• similar to an earlier theme, which is that the Internet is to the USA as the Americas were to the UK

• The Kill Chain talks about this problem, but the entire system has the issue. The data collected isn’t put through the right process to get to the result, because it’s a retrofit on a paper-based system

— The US government should not be collecting data that it cannot secure. Or even analyze.

• When Marc Andreessen wrote that software is eating the world, what did he mean?

  • He meant that every CEO would have to become a software CEO, or lose all their customers
  • That prophecy has played out over the last decade
  • We’ve seen software CEOs enter and disrupt hotels, taxis, automobiles, finance, education, and even spaceships
  • But that’s not really the end of it
  • Software can go after the regulatory state and the state department, the military and the permanent bureaucracy
  • It starts by thinking about the ingest process

• How does the modern American bureaucracy work? Because this is the model for most of the world (outside the Chinese state, which we’ll come back to later)

  • It has these paper forms

  • Here’s an example from immigration with $10k threshold

  • We can visualize this as a simple bit of pseudocode, a step function:

  • And it has these paper rules

  • Here’s an example for the speed limit between 40mph and 55mph

  • We can visualize this rule as a permissible set between 40 and 55, a step function like this:

  • The most sophisticated rule the government has may pertain to marginal tax rates

  • Here’s how that looks, as a series of step functions

  • Almost every government rule is like this.

  • Fundamentally a series of step functions

  • Does this look familiar? If you know a bit of machine learning, you might recognize this as the perceptron

  • There are known limits to what a perceptron can learn…

  • …limits that more complex functions don’t have

  • From seeing like a state to learning like a machine

  • Rather than what James Scott mentioned in his book, we could imagine much more sophisticated algorithms once we move beyond the constraints of digitizing functions whose closed form expression must be specified in legalese

  • That means

    • digital ingestion of data
    • recording in a database where you can join everything together
    • making the decision from that database
    • returning the result to the client

  • Joining the data together is not easy to do when it comes from many different databases

  • Companies like Palantir attempt to put Humpty Dumpty back together again

  • But at a very fundamental level, it’s hard to do these kinds of joins even with a company

  • Any Looker analyst knows what I’m talking about.

    • Here’s an example SQL query for a useful Looker table

  • What this means is that the government is dependent on external metrics

  • Thiel and levchin learned this years ago when they saw that the fraud detection software they had built for PayPal was ahead of where the US government was. This led them to found Palantir

  • Unlike the movies, the government to first order has no proprietary data whatsoever

  • Notice that politicians just react to Twitter

  • Biden and Blinken thought Afghanistan wouldn’t fall in a few days, and gave assurances to that effect

  • We can only guess at exactly what has happened

    • maybe they were always dummies and it was all hollywood
    • or, maybe, the same kinds of mind viruses that have made it impossible to speak the truth in public are even more noxious when everything is political, so perhaps some know the truth but the military or their superiors give happy talk till it’s too late
    • here’s Maxims for Thinking Analytically, which says “long division is a key skill”
    • or, maybe they just aren’t quantitative. look at the bloomberg episode, or solana being a billionaire, or sotomayor and the 100k, or biden sat scores, or yglesias’ tweet on random people on twitter getting math totally wrong
    • sneaking suspicion they may actually just not be good at math
    • sneaking suspicion that we have drained everyone who is capable of quantitative reasoning out of politics

  • on one level, who can blame us? why wrestle an increasingly moronic bureaucracy when you can make your fortune in the private sector, have real impact, total autonomy, etc?

    • but there is a nonlinear effect. the more smart people leave government, the dumber the government

    • and indeed, before the centralization of power the talent was not concentrated in the state

• Think about all the softw

• dataism from harari book

• the state is collecting data but unable to act on it

• diagram out the full data processing pipeline

• this is because it’s a retrofit on an originally paper-based system

• and without even the capitalistic incentives that made at least some newspapers navigate the platform shift

• this hybrid structure is in some ways barely functional

• eg weeks to get out checks in 2020

• what does an asymptotically automated administration look like?

• it means you are measuring response time and trying to automate every form

• a customer service mentality

• compare with singapore, which has smiley faces feedback on every government form

• that’s a v1

• also: do not collect what it cannot secure

TODO A ROC-based Realtime Regulator 

• FDA decentralization article

• regulation is information

• regulation as binary classifier

• problems with the regulatory state

  • realtime regulation - vs delayed regulation
  • realtime regulation = uber star ratings, vs taxi-cab medallion
  • combine machine learning + data collection to improve

• we see this already there in uber, airbnb, etc

• realign with citizen incentives with FDAO

• calculated risk, risk-tolerant, not so risk averse that we fail

• • first of all, the FDA is not like the DMV. it’s not a checkbox experience. The regulator is essentially your first customer. If they don’t like you, they can ban you from the market.

  • you don’t have the right the mental model from TV. the first thing people ask is “why would a regulator do that?” You have internalized the story of the evil CEO. You haven’t really seen the evil regulator, the evil nonprofit, the evil journo, the evil professor.

    • this itself is what i call jurassic ballpark
    • like jurassic park itself, you ballpark based on snippets from movies
    • compare the CDC of Contagion to the real life CDC and you’ll see the diff

  • public choice theory is good on the concept of regulatory capture but even it doesn’t really go far enough. Yes, after a certain point, the corporations do become evil too. If you have low status/high money for going into pharma, then you get a get-rich-or-die-trying attitude. They’ll hate you even if you save millions of lives, so play by the rules then get that green

  • FDA likes it when people play by the rules and tries to get one industry player to defect. that first one who defects gets easy treatment. All the rest get the stick. It’s N-vs-1 game theory.

  • Alternative game theory is profit vs ambit. This is what is happening with the SEC now.

  • regulation by intimidation (dragon lady citation, “no retaliation” policy, TSA experience, Reputation and Power book)

  • frances kelsey is classic example, she didn’t know there were teratological issues, just denied everything

  • the model of phase i/ii/ii is not like s & p orbitals

  • it’s a risk-based approach, not a reward-based approach

    • minimize PR, not maximize effect size or cost benefit
    • minimizing side effect size is not
    • drug lag
    • off label
    • compounding pharmacies
    • AZT episode
    • lawsuit vs shuren
    • decoding a sample citation for Tiger Balm
    • mobile mim’s case study
    • pull several of these from regulation & disruption
    • ask current folks what’s going on
    • interview scanadu founder
    • genomesunzipped founder
    • go through about 100 like these, it gets numbing after a while, but now you have the secret decoder ring and can understand exactly how

  • no case/control studies on regulation itself

  • banting and best model, before the FDA

  • disalignment with patient outcomes (eg Martha Stewart Imclone issue)

  • books on the FDA

    • reputation and power
    • gulfo
    • makower

  • interviews with people from personal genomics at that time

• macarthur email on the nonlinear impact of regulatory delays, a simple mathematical model for how this chokes off capital to the space

• How taboo it was to criticize regulation in 2010

  • and an example story that i saw
  • the fda consultant industry
  • pathway genomics
  • washington post Rob Stein
  • lawless process
  • 23andme on the cover in 2008, then evil in 2010
  • Josh Makower’s book, Gulfo’s book, Obama and Gutierrez attack on LDTs
  • even so far as to commit perjury
  • guy who got up to speak at the hearing saying they serve him (Ray XX of biocurious)
  • “do you know we are listening on this call”
  • big companies are favored (shuren quote, very similar to Gelner)
  • difference in 2022 vs 2010 is that we are woker on some things but much more critical of the regulatory state
  • migration from top left to bottom left.
  • there was much more deference 10 years ago
  • Kalanick walked so Vitalik could run, Vitalik ran so blank could fly
  • Uber walked so Bitcoin could run, Bitcoin ran so transhumanism could fly
  • Uber and Airbnb walked, so crypto could run, crypto ran so genomics could fly

• type i vs type ii errors

• moral condemnation

  • summarize regulation as information

• list all the failures of FDA

• technical improvements

A Citizenry Centered On Single Sign-On 

In many ways, we can think of modern citizenship as being defined by access to a single sign-on service like Singpass, as opposed to physical proximity to another person per se.

As we’ve mentioned, the backbone of the network state is likely a blockchain, whether that be permissionless, permissioned, or some variant thereof. Why? Because it can be used to replace the following services of a legacy nation state.

• Identity card: Your private keys give your user account and login to the digital services of the network state. It all starts here, with the new single sign-on for citizens. Like ENS’s satoshi.eth, you’d have an official name like yourname.countrychain.

• The Social Smart Contract: The metaphorical social contract becomes a literal social smart contract that you sign every time you want to re-up your subscription to the network state. There are explicit contract terms, multiple choice questions to ensure that you understand those contract terms, reviews of the contract terms by other competing network states, and so on.

• Passport: Your private keys, the network state’s foreign relations, and the technological state of chain interoperability determine what other network states you can access.

• Voting: Every vote, shareholder vote, poll, or survey is done via digital signature using your private keys. Sophisticated kinds of privacy-preserving votes can be done with this infrastructure.

• Governance: Should you be elected or appointed to office, your private keys determine your permission level, in terms of what budget you have as governor of a subgraph of the network state, or what actions you can take towards untoward citizens, such as deplatforming for 10 days after a first warning.

• Crime and Punishment: On this topic, different network states will make different decisions here, but unlike the lawless deplatforming of today’s social media platforms, digital punishments could be more humane and acceptable than physical punishments so long as there are clear and pre-agreed rules that all members of the network state abide by at the time of joining.

• Driver’s License, Pilot’s License: Your private keys determine which smart vehicles you can operate, either in person (eg a Tesla) or remotely (eg a drone).

• Security Clearance: Your private keys determine whether you have Top Secret clearance, and in general whether you have permission to view any given document, enter a facility, or interact with any digital object.

• Postal Service: Your private keys give encrypted p2p and group messaging. Note that the Postal Service was in the US Constitution!

• Fund Recovery and Lawful Intercept: This is a controversial area, and different network states will make different decisions here. But if the network state founder has admin keys, it may be able to do lawful intercept of some messages or reversal of fund transfers after a pre-agreed social process, which proceeds on-chain and thus more transparently than the status quo of star chambers and civil forfeitures.

  Why even mention this? Because it’s an open question as to how to deal with crime in a network state. The fact that the United States and other governments have abused their police powers and are likely beyond reform does not mean that the complete absence of lawful authority is the right answer; that path leads to crypto-anarchy and criminal gangs. The right answer is a new network state where you can choose to trust it and revoke that trust and exit to a new network state should it abuse it.

  Here’s another way to think about it: as a user of a crypto exchange, you want complete privacy. But as the CEO of a crypto exchange, you want complete analytics on every user. Why? Because some users are genuinely seeking to harm or defraud other users, and you may need tools like Sift Science to determine who they are, and to ban them from the platform.

• Defensive Border Walls: So long as your chain is sufficiently sovereign resistant, no other entity besides the network state itself can penetrate the cryptography protecting your citizens’ messages and possessions.

• Name Change: Seemingly trivial, but less so in the pseudonymous economy. Your private keys let you do this as well.

• Signatures and Notarization: Your private keys allow digital signatures and, via multisig, notarization of others’ signatures.

• Community Trust: A web-of-trust network of on-chain endorsements serves as a computable measure of community trust, like a higher stakes form of friending or following.

• Corporate Law: Most corporate law can go on-chain. See this post mirrortables for details: balajis.com/mirrortables.

• Dispute Resolution: Smart contracts give more predictable dispute resolution.

• Land Registry: Cadestration and land registries can be put on chain. Even more interestingly, any land use permits can be put on chain, as can community ownership of land through a REIT, in a sort of neo-Georgist configuration.

• Crowdfunding for public goods: All of this can be organized on chain, potentially with traditional crowdfunding and possibly with commemorative NFTs where the largest bidders get their names on a digital plaque.

• Currency: The internal currency or currencies of the network state are of course on-chain, as are any bonds or other securities it issues to finance its operations.

• Taxes: these turn into (a) subscription fees paid on chain and (b) Bitcoin-checked inflation of the network state’s native currency. The subscription concept is intuitive; it’s the annual payment for being a member of the network state. The inflation component is less obvious. Isn’t the whole point to get away from inflation? The idea here is that this “inflation” is highly visible, and more like a fundraising round where new shares are issued and closely scrutinized than the current hijinks the Federal Reserve prints trillions of dollars and then hides the scoreboard. In the event any network state tries to inflate its currency too much, the citizens cash out to Bitcoin, which thus acts as a kind of pro-freedom global government.

• Birth, Marriage, and Death Certificates: All of these go on chain too. Everything that the city is asserting is true as an oracle.

• Property Rights: user balances for all assets where the network state mediates disputes go on the network state’s blockchain. Notably, BTC is not included in that list, as Bitcoin stands above the network state on its own blockchain as a check on every state.

This gives you a sense of where city coins can go. They eventually become city-state coins, and network state coins.

A 100% Democracy instead of a mere 51% Democracy 

TODO:

51% democracy is 49% dictatorship. And that can lead to 100% tyranny or 100% anarchy. So, instead, we want to reopen the frontier to get a 100% democracy.

Let’s expand the first sentence. In a 51% democracy only 51% of people actually get the leader they voted for.⁶⁸ 49% did not vote for that person, did not consent to their leadership, and are often the rhetorical and legal targets of the person in office. So in a 51% democracy, 49% feel they are subject to dictatorship.

Now, why can that lead to 100% tyranny or 100% anarchy? Neither side is happy, so that can lead to serious fights, as each wrestles for full control. One or the other might in theory achieve it, leading to 100% tyranny and a crackdown on the other side, ranging from simple speech and thought controls to much worse. Or, alternatively, two equally matched sides might fight inconclusively for months, years, or even decades, as in the Thirty Years War and many third world conflicts, leading to a vacuum of legitimate authority and possibly a leaderless anarchy.

Now the third concept. What is 100% democracy, and why does it necessitate reopening the frontier?

First, the concept of 100% democracy is that everyone within the jurisdiction has consented to be there, in the same sense that they have consented to be at a company (and can leave), or consented to be remain within

It is that consent which is upstream of leadership.

In the context of a startup society or network state model, the migrant has explicitly signed a Rousseauian social smart contract prior to emigrating. So it’s consent, bound by contract. They give up some freedom on a contractual basis in return for some order.⁶⁹

• democracy or military occuptation

• democracy or corporate feudalism

• democracy or regulatory dictatorship

• democracy or surveillance state

• democracy or limited democracy

• what % of people feel they actually have a say in the outcome?

  When the NYT calls the US 'our democracy', they mean it in the possessive sense: it's a bureaucratic oligarchy that they control. After all, who has more say on the day of the election, the journalist writing the frontpage headline or the citizen with just one vote? The corporate journalist likes the regime of one-newspaper-one-million-votes, and conflates this with the one-person-one-vote of democracy.

• social smart contract

• optimize for consent

• democratic choice, and democratic voice

A Society Funded by Subscription and Seignorage 

Just to preface this section: to be clear, the network state starts as a non-sovereign entity, an imaginary construct, a LARP. Each netizen of the network state, and each network node, is expected to comply with the laws of its surrounding host state for the indefinite future.

But suspend disbelief and assume we can wave a magic wand. Assume we can eventually gain a degree of legal sovereignty for the network state by collective bargaining with a host state, perhaps by paying them a fee or otherwise working with them.

For example, a set of network nodes in the vicinity of Tuvalu might do a deal with Tuvalu similar to the purchase of the .tv domain. They might pay the Tuvalese (say) $X million annualy for the privilege of being considered a Tuvalu special economic zone and setting their own revenue policy.

What could that revenue policy look like?

As context, current nation states are based on (a) coercive revenue collection, (b) financial surveillance, (c) bond-fueled debt, and (d) hidden inflation. The network state is set up to be financially solvent and ethically strong from the beginning by avoiding each of these pitfalls.

Subscription > Coercion

The primary source of revenue for a network state is subscriptions⁷⁰. Each netizen pays for the citizenship-as-a-service single sign on.

If they do not renew their subscription, their single sign-on is turned off, and they end up being unable to enter buildings or log in. This is enough incentive for them to remain compliant with the terms of the social smart contract they signed upon entering. The blockchain handles the various details of nonviolent contract enforcement.

Importantly, as the cost of coercion rises, these types of subscriptions will end up being more profitable than traditional means of coercive revenue collection.

Why? Because if an illegitimate state like Venezuela tries to implement something like civil forfeiture on a national scale, if they tried to do Lenin’s Hanging Order in the age of Bitcoin, they will need to ensure that each act of seizure must pay for itself. That is, they need to deanonymize each ’kulak’, geolocate them, ensure they have jurisdiction, send in the SWAT team, successfully execute the wrench attack, collect the Bitcoin, and then repeat this over and over again in many places while managing the PR fallout.

The key concept is that each such act by a Venezuela-style gangster state must generate more Bitcoin than it costs. It is not obvious that this will be the case as physical attacks are far less reproducible than the practice of simply hitting a key and printing money. And they are also less profitable than the new proposed practice of simply rendering a valuable enough citizenship service that people will consensually renew their subscription.

Privacy > Surveillance

There’s a second reason why subscriptions will be preferred over the current mechanism of invasive data collection and financial surveillance: namely, privacy.

You don’t need to fill out endless numbers of forms to pay Dropbox. You certainly don’t need to spend hours giving them a snapshot of your entire corporate and/or personal financial picture in order to pay them a percentage of your income, thereby risking your privacy further should Dropbox get hacked. You just pay Dropbox a flat monthly fee for services rendered, and cancel it if you don’t like it.

Compare this to the state of affairs for states. Major government agencies are routinely hacked to an unbelievable degree. The OPM Hack, the Texas state hack, and the Solarwinds hack are just a few that have been publicly reported. If it has not already happened, it will likely soon occur that your personal financial information is sprayed over the internet by a hack of an incompetent government agency. The cloud may burst, with all this information raining down upon the internet. Add to this the surveillance state that one cannot opt out of, and the potential for abuse becomes clear.

So the network state starts with an alternative principle: minimal necessary data collection. Governments should not collect what they cannot secure. The subscription state protects financial privacy relative to the existing system.

Sovereign Equity > Sovereign Debt

While subscriptions are expected to be the main source of funds, another mechanism network states can use to raise capital is seignorage. Specifically, much like a company issues new stock, the network state issues new units of its digital asset on its main blockchain.

Unlike the current process of secretive and random inflation, this is more akin to the highly ritualized ceremony around stock issuance that occurs when a company raises a new funding round. In such a ritual, the exact number of new shares is specified to the unit, the exact purchasers are known, the terms of those shares are detailed, the new liquidation waterfall is updated, and so on. If these terms are not agreeable to the purchasers of equity, then they walk, and the round is not completed.

Compare this to the current practice of lawlessly printing trillions, watching M2 ramp, then complaining that it doesn’t measure anything, thereby acknowledging that there are zero dashboards to monitor the flow of trillions into the economy. Or the practice of encouraging many entities to buy “debt” in the form of negative interest rate yielding US bonds, even as it becomes obvious that the long term strategy is to monetize the debt by printing so much money that the bonds become worthless.

Bitcoin > Inflation

The third governor of the network state’s financial solvency is Bitcoin. This works in several ways.

First, because the Bitcoin blockchain is so difficult to interfere with, we can think of it as a form of property that even the world’s most powerful legacy states can’t stop. In this sense, Bitcoin is a global government that checks all other states, network and nation state alike.

So, any investor who doesn’t like a network state’s seignorage practices can cash out to BTC, which cannot be issued by any network state. Any citizen can do the same. This is similar to how an investor who doesn’t like a company’s practices can cash out to USD.

Moreover, each network state itself holds Bitcoin as a strategic reserve, which cannot be seized by any other state. Having funds on-chain also allows a network state to demonstrate proof-of-reserve.

Of course, a network state will hold more than Bitcoin, just as traditional states held more than just gold. Each network state decides what digital assets are held in its portfolio, and which are approved for its medium of exchange, unit of account, and store of value.

TODO A Nation Built From The Internet Rather Than Disrupted By It 

• nation underpins the state
• then the state
• now the network first
• start with community, laws on top

-# right now we have nation states that are neither

The internet is causing American anarchy and Chinese control. Can we instead get to infinity, build a future city?

• generalize Bitcoin in the direction of programmability: smart contracts

• generalize Bitcoin in the direction of privacy: privacy coins

• generalize Bitcoin in the direction of physicality: network states?

• polarization trends predated social media and cryptocurrency

• but we can think of twitter and bitcoin, and social media and crypto more general

• as the end of this chapter of western civilization and the beginning of the next

• the volatility that social media and cryptocurrency introduce

• social media has made everyone citizen journalists and amateur politicians; everyone understands democracy because you are canvassing for votes with every utterance

• cryptocurrency has made everyone venture capitalists and financiers; everyone understands capitalism because you are allocating capital with every click

• ultra democratic and ultra capitalist

• social media is american glasnost, cryptocurrency is american perestroika

• the USSR had total controls on speech and capital

• the US had looser, but still real controls - it was more robust but not internet-level robust

• Wokeness is one solution, but we’ll see how long it lasts

• China is another solution, and it may be more robust

• The real

• these trends were ine

• the loosening they represent

• just like a city needs earthquake proofing, tsunami,

• we need to build a state that from the beginning

• it uses social media to buffer cryptocurrency, and cryptocurrency to buffer social media

• pseudonymous economy,

• we need to refo

  • levers for founders and citizens, to channel ambition in a positive sum direction
  • common purpose in the form of technology
  • zero knowledge to minimize surveillance
  • elaborate internal rituals of politeness to maximize comity and minimize disagreement

FAQ 

As you can see, we’ve put some thought into how to make the network state feasible. The concept has been defined to address many of the immediate questions - and emotional interjections - that arise when you discuss the concept of starting a new country.

1. What is a network state, anyway?. We defined the network state as a social network with a recognized founder, an integrated cryptocurrency, a definite purpose, a sense of national consciousness, and a plan to crowdfund territory. It’s a country you can start from your computer. There is a path for founders, and a path for citizens, as anyone can declare themselves founder or citizen of a network state at any time, and also switch between these roles.

2. How should we think about nation states? The root word of nation is related to the word natality, which refers to birth. That is, a nation is considered to be an ethnic group with common culture, inheritance, language, traditions, etc. The state by contrast is the government. So in the classic nation state, an ethnic group like the Japanese (the nation) names leaders (the state) to manage disputes, collective defense, and the like. The Jewish community by contrast was for a long time a nation without a territory or a formal state, until the establishment of Israel. And today we have multiethnic nation states like Singapore, Luxembourg, and the USA, which generalize the concept beyond the historical ethnostate, and where the state becomes more primary. In the latter case the defining principle is really a proposition, rather than a nation, but this is a retrofit on what was previously an ethnostate. A major issue today is that the internet is accelerating the decay of the Western nation state by making long-distance bonds over networks more salient than geographical ties between neighbors.

3. Why is a network now a better basis for a state than a nation? If we’re going to build a proposition nation, we should be honest about it and recruit on the basis of that proposition from the beginning. Many Western countries today demonstrate the level of dissatisfaction that occurs on both sides when what was arguably implicitly an ethnostate is converted to a proposition nation with less than 100% assent. By instead starting with a group of people defined by geodesic rather over geographic distance, we have a base population which is close together in an ideological sense and thereby much more likely to agree on what the state should do. By also articulating the proposition explicitly, we have a defined purpose, an objective that we are literally quantitatively optimizing as a society of optimalists. All recruiting is then for that purpose.

4. Why don’t you just reform existing institutions? We want to be able to start new countries for the same reason people want a clean sheet of paper, an empty text buffer, a bare piece of land, or a fresh cap table. It’s a clean start without legacy baggage. Think of the network state as a way to build replacements to reform-resistant legacy institutions that can’t be easily disrupted by tech companies, open source projects, or crypto protocols. If those replacements actually succeed, then our exit actually enhances voice. That is, if we are successful in what we’re doing, that gives ammo for people to reform existing institutions, much as many practices were pioneered in America and imported back to the old world.

5. Why do you consider this an ethical imperative? Suppose you’re interested in improving longevity and thereby life expectancy. It takes 12 years and billions of dollars to get a drug through the FDA. And it might literally be faster and cheaper to start a new country than to reform such a sclerotic bureaucracy. This is the concept behind building a ROC-based realtime regulator, a regulator that quantifies approval decisions like a binary classifier and tries to minimize type I and II errors.

6. How will you get land, if it’s all spoken for?. The short version is that we crowdfund discontiguous territory around the world and network it together into an archipelago of interconnected enclaves. A network state can thus can be visualized in a dashboard, and you can watch it grow over time.

7. Why is this not cosplaying like all the other failed micronations?. The key difference is that we start by building functional communities online. We aren’t just starting with a patch of territory, we’re starting with the network as the equivalent of the nation, and then building a state in the cloud before it materializes on the land. As for the LARPing part, (a) we just LARPed cryptocurrency to a trillion and (b) all countries start as imagined countries. For example, Herzl wrote Der Judenstaadt in the 1890s, five decades before the formation of Israel.

8. You do know we’ll invade you if you do it, and we’ll also denounce you if you have any plan for defense?. As noted above, the network state has nonviolent defense in depth. It’s a city-state with its capital in the cloud, and its territory is globally decentralized so it can’t easily be invaded. It might even be a secret state, with an encrypted membership list and set of network nodes, so it can’t even be easily found. It can however be bought and sold, with the consent of a sufficient number of coinholders, so it is a territory one can acquire but not conquer.

9. What about humanities and culture, techbro?!? Glad you asked so politely. Of course, when we think of France, we don’t think of the French Stock Exchange. We think of the Louvre and the Eiffel Tower, we think of the Mona Lisa and baguettes, we think of their art, culture, and food. So too will every network state need its own artists, writers, bards, and chefs. In the modern era we’ll think of these as crypto creators, who own their art and audience via private keys unlike mere internet influencers. These crypto creators help attract new citizens to each network state and define its culture and value proposition. Phrased humorously, you can fund the Eiffel Tower with afffiliate revenue from citizen referrals. This gives a sustainable business model for the arts.

10. How do you think about legitimacy and consent? The network state is a 100% democracy rather than a mere 51% democracy. That means that every netizen signs a social smart contract upon entering the digital (and eventually physical) environment, kind of like Envoy. They then periodically re-evaluate the terms at the time of subscription renewal, or reject them in order to leave for a new network state.

11. What about loyalty if everyone is switching all the time?. There are many mechanism to rebuild loyalty on the basis of conscious, affirmative consent. For example, at the time of signing the social smart contract, incentives may be offered for longer-term contracts and coinholding periods. Attractive cultures may also serve as network effects that keep people from leaving a network state at the drop of a hat. There is always a balance; the point is to amplify the possibility of choice, not to build a mercenary society. But there will be several possible solutions here, so different network states will do this differently.

12. How does the network state resolve significant disputes? First off, part of the goal is to build a civilization that values digital civility. So many disputes are really about disrespect rather than substantive differences. But with respect to substantive issues, one way of thinking about the network state is as a union of sovereign collectives. Each sufficiently large network node has a CEO that folds into the CEO of the overall network state, which owns a stake in that node. If that CEO so chooses, they can spin out their network node into their own network state, or detach and join another network state. The signage of network state 1 goes down, and network state 2 goes up. This is a new mechanism for dynamic geography.

13. How does a network state come to consensus?. The network state is based on the ledger of record, which is a feed of cryptographically signed events. The metadata on these events can be validated (such as proof-of-who, proof-of-when, and proof-of-what via hash) and in this sense what is true is now based on math even more than “science.” This ledger of record turns every information source into an oracle or an advocate. The former is a dispassionate stream of data, the latter is interpretation on top of it. Just as every citizen posts on social media today, every citizen will be considered a citizen journalist tomorrow. Some will raw report information via oracles that gets recorded in that network state’s ledger of record, while most others will provide commentary. Everything will be signed with their digital signature, and there will be a web of trust and many interlocking levels of automated rating and peer review. A key concept is prioritizing truly independent replication over “peer review” or mere retweeting. The goal is a community aligned around cryptographic consensus.

That’s the end, for now. If you want to help build the network state, the first step is to subscribe to our newsletter at thenetworkstate.com/subscribe. You’ll also get free bonus chapters for The Network State as they are released.

Principles 

Internet First 

Optimalism > Westism and Sulzberger Conjugation 

Vitalik Buterin posed an important question here:

One broader sort-of-contradiction I think about is the open-mindedness vs passion tradeoff. Is it possible to both passionately act on the world based on your current beliefs and be open minded to the possibility that those beliefs are very wrong?

I’ve thought about this a lot, and after a lot of deliberation my answer is a concept I called optimalism. You set an explicit objective and do the best stochastic gradient descent you can to optimize it, incorporating new information as you go along, recognizing that to the outside world you may appear to be switching ideological direction in a non-principled way. This is similar to how tech companies manage to metrics.

The are two suboptimal alternatives to optimalism which I’ll call Westism and Sulzberger Conjugation respectively.

Westism is Excessive Ideological Consistency

Imagine a group of people who called themselves Westists because they liked the idea of California. They keep going West, till they actually get to California, but then they don’t stop there. They land up in the Pacific because it would be a compromise of principles to stop going further West! Weren’t they Westists, after all?

Optimalism avoids the “Westist” failure mode, where an ideology that has no quantitative endpoint gets taken to such an extreme that it ends up counterproductive. In the absence of a limiting principle, too much is never enough. In the case of the Westists, they would have been better off specifying the GPS coordinates they wanted to reach rather than their compass heading. Destination over direction.

Sulzberger Conjugation is Cynical Ideological Inconsistency

The other failure mode that optimalism avoids is Sulzberger Conjugation, which is the power-inflected version of Russell Conjugation.

For example, a factory worker has white privilege, but Sulzberger is the heir of a prestigious family. You doxx, he leaks, but an NYT journalist “investigates.” Zuckerberg’s dual class stock affords him too much control, but the Ochs-Sulzberger family’s dual class stock allowed them to protect the company. And so it goes - the org chart is in the words themselves, the tone is modulated to pathologize your actions and justify theirs.

Basically, Sulzberger Conjugation does acknowledge (implicitly) that excessive adherence to an ideology is against the US Establishment’s self-interest, but rather than publicly acknowledge this they smuggle the changes of direction into the words themselves. They avoid the Westist failure mode, but the foolish subscribers who take them seriously do not.

Ironically, in the absence of acknowledged self-interest, everything becomes who/whom. The alternative to this kind of hypocrisy is explicit alignment of interest. If all Americans made or lost money as NYTCO shareholders did, as opposed to taking the writing of the paper at face value, it’d be a different world.

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