The Network State in One Preface

Here’s what you read thus far:

One Image: a visual of the network state as a decentralized country, projected onto the map.
One Sentence: a verbal definition of a network state, handling many edge cases.
One Thousand Words: a procedural approach for how to create a network state in seven steps.
One Essay: a historical argument for why network states are more feasible than other methods for political reform, including elections, wars, revolutions, micronations, seasteads, and space exploration.
One Deck: an operational discussion of how you’d actually pitch a network state to an investor by beginning with an online startup society, acquiring shareholder-subscribers, gradually gaining real estate, and scaling up from there.

So: those are visual, verbal, procedural, historical, and operational quick takes on the network state, all compressed into less than 10k words.¹⁶

We’re now going to slow down for a bit and do two longer summaries. First, we’ll discuss the book from a meta-level by giving the preface to the second edition. Then we’ll give the promised overview in outline form, before launching into the book proper.

Preface to the Second Edition

Wait. A preface, now!? Sure, it’s normally supposed to go at the beginning. But to enable the quickstart, to let you jump right into those compact descriptions of the network state, we broke all the rules. You know how movies start with a cold open, and then the opening credits play? That’s what we just did.

So now let’s play those opening credits — and formally welcome you to the second edition of The Network State. We’ll start with some basic questions:

Let’s jump in.

Who am I?

If you’re here, you probably know me a bit from twitter.com/balajis, but let me make a few remarks about where I’m coming from. You can then upweight or downweight my words as you see fit.

I’m the former CTO of Coinbase, former General Partner at Andreessen Horowitz, and an angel investor at balaji.com with 500+ investments, including dozens of unicorns. Prior to that, I earned a BS/MS/PhD from Stanford in electrical engineering and an MS in chemical engineering, then taught machine learning and bioinformatics at Stanford before founding a genomics company that got acquired. I was interviewed to run the FDA, I launched USDC, and I’ve built robotic factories, turned around companies, and cofounded nonprofits. Finally, I’m an online creator with 1M+ followers, a conference organizer, and actually also a bestselling author (of this book!)

All that just by way of background. Because I’m not really the world’s best at any of those things. OK, I have some establishment credentials, but I’m not the best academic in the world (Vijay Pande is better), nor the best nonfiction author in the world (Tim Ferriss is better). And I am a decent tech founder, investor, and engineer – but my collaborator Brian Armstrong is a stronger CEO, my mentor Ben Horowitz runs a far larger fund, and my friend Vitalik Buterin is a superior engineer.

What I think I do have by dint of spending years on technology and policy, academia and social media, for-profits and nonprofits, in the physical and digital worlds, as founder and investor, and across America and Asia…is a unique perspective on the world.

Over the last four decades I had a first hand seat to the rise of the Internet, the return of Asia, and the decline of the West. I saw the creation of the tech founder class, their globalization, and their frustration by the establishment. I saw the invention of life-saving treatments and their strangulation by hostile governments. I saw the possibility of unprecedented technological prosperity…and the prospect of unlimited digital tyranny.

And I realized we need to take the Internet seriously.

Why write this book?

Most people do not take the Internet seriously.

I don’t blame them. They see the visible map of the land, not the invisible map of the cloud. So they talk about everything in terms of “nation states”, as if offline countries will remain the dominant mode of human organization, even as online communities capture ever more human attention.

For example, the leader of the free world is assumed to be the head of a nation state. The unipolar world is assumed to refer to which nation state is dominant. The very concepts of national security, government regulation, and the monopoly of violence all assume that the apex predator is a nation state. Even as every transaction and communication happens online, the site of their legitimate regulation is presumed to be offline in a nation state.

What if this is wrong? Or, more precisely, what if it is becoming wrong?

You see, everyone is aware of tech companies, peer-to-peer networks, and cryptocurrencies, but establisment writers think of them as either (a) just another element on the geopolitical landscape or (b) a pesky irritant to extant nation states rather than (c) the seed of a peer competitor to the nation state itself.

Yet we already see email replacing the postal service, Uber obviating taxi medallions, SpaceX superseding NASA, and Bitcoin scaling against the dollar. We see Internet First alternatives to state services rising from nothing and even dominating.

There’s a reason for this. When you look closely at the cloud here is what you see:

The internet is to the USA what the Americas once were to the UK — a frontier territory, a cloud continent, the place where all the action is.
Just as the Western frontier once gave rise to an American pioneer class, the Internet frontier has given rise to a global technology class. This class is not defined by inherited wealth (many were born poor in places like India and China), nor by legacy institutions (many are born anti-institutionalists), but by the ability to create wealth and the desire to found new institutions.
So that’s why the postal service, the taxi medallions, and the dollar itself now face competition: because there is a new cloud contintent populated by a new cloud class. Given a clean slate in the cloud, they can recruit from everywhere, raise from anywhere, and build anything.
And the institutions this cloud class builds will eventually include not just new companies and new currencies, but new cities — and even new countries.

That’s the central thesis of this book.

The Internet is as disruptive to the pre-internet world as the discovery of the Americas was to the old world, and for similar reasons. It draws the best of the world, and reforms the rest of the world. Just as the new versions of capitalism and democracy born in the New World radiated back¹⁷ to transform the Old, so too are the new versions of techno-capitalism and techno-democracy being born in the Cloud radiating back to transform the Land.¹⁸

I wrote this book to explain why everything moves online, including the state itself.

Who is this book for?

If you’re serious about technology, you need your own sovereignty. A few headlines explain why:

Crypto is attacked by the Federal Reserve and SEC
Space travel is hampered by the FAA
AI is impeded by executive orders and patent lawsuits
Tech acquisitions are blocked by random antitrust suits
Self-driving cars are driven off the road by NHTSB and California
Social media is censored by nonprofits and federal agents
And, most importantly, biotechnology, quantified self, and life extension are held back by FDA, HHS, and the US medical establishment

These examples are drawn from US headlines in the 2010s and early 2020s. But collisions between what I call the State and the Network have actually been occurring for decades, in dozens of countries worldwide. And for reasons we will get into, they are only set to intensify.

That immediately suggests an audience. Or three: the technological, the global, and the political.

The Technological

The first audience is technological. If you’re a founder, investor, executive, or engineer, you get this book right away. This is the kind of person who follows Marc Andreessen, Vitalik Buterin, Naval Ravikant, David Sacks, and our friends on social media. You know on some level that there is another level. That the end of the line isn’t launching companies and slinging coins. That we need not stop at corporations, that we can build wholly new institutions.

And that we need to. Because we need to run the full stack. You cannot simply build and ignore politics. That’s now a losing strategy, as your company will be regulated or seized by the state. You need a plan to either (a) ally with existing politicians or (b) gain political power yourself. Because the political system underpins your technology platform. The Delaware courts that govern your company, the police that protect your property, the banking system that safeguards your money…all of those low-level “APIs” to the state are becoming unreliable at best and hostile at worst.

You might think you can get away with enterprise software, by keeping your head down and staying safe. You’re wrong. Think about how hard the establishment went after Travis Kalanick for simply improving taxis. Even online design platforms are being hit with antitrust! Coding itself is being criminalized under the guise of protecting you from dangerous AI. All these examples can be multiplied, because these countries are being disrupted by the Internet and want to preserve the status quo.

Thus: you need to build your own state, or become buddies with one, if you want to build anything of technological significance. And that’s what The Network State is: a recipe for how to start your own country, or start partnering with one. If you are serious about technology, you need your own sovereignty.

The Global

The second audience is global. Whether you’re Indian or Pakistani, Southeast Asian or Eastern European, from the Middle East or the Midwest…this book is for you. It’s for American dissidents and Chinese liberals, who don’t want to be under the thumb of the USD or RMB. It’s for the supermajority of the world that wants to avoid destructive wars and accomplish political reform without revolution.

Of course, this audience isn’t wholly disjoint from the tech audience. Many global readers are also power users. But many are relatively powerless. So even if you don’t have the skills of a startup society founder, this book is for you as a startup society finder. The person who feels politically homeless and wants to find their new home. The difference is that we’re not proposing merely a third party, but ultimately a new country. The Network State is how you can find people of like mind. The Internet subsumes America as the place where you emigrate to find a better life.

The Political

Perhaps surprisingly, the third audience is political. These are the people of the State pragmatic enough to understand that the Network is rising. And who want to join ’em rather than trying to beat em.

Basically, suppose you’re an aspiring politician, policy wonk, policy maker, or political activist. And you see something wrong with mainstream society and want to fix it. Now you don’t have to spend decades paying your dues within a party to achieve the requisite power anymore. The Network State is a way for you to instantly become president of your own startup society, just like you can declare yourself CEO of your own startup company. Tech VCs might even fund you to do it!

So what’s the catch? As the president of a startup society, you have far more political power, but only over the limited audience of those who’ve chosen to give it to you. You’re subject to the fundamental constraint of 100% Democracy, namely that all citizens must opt in to your governance and can opt out at any time. This is the same constraint that every startup CEO is also bound by, as their employees and customers can leave at any time.

But if your ideas for social reform are indeed good ideas, then you should be able to attract new people to your community. So if you’re willing to abide by that constraint of consent, read this book. It provides a new path to power for ambitious young activists, writers, artists, professors, and politicians outside the US establishment.¹⁹

You no longer need to persuade some old muckity-muck to act on policy. Instead, you can build a new polity yourself.

Who is this book not for?

let me warn you off now and direct you to alternative paths depending on your state of mind.

If you want to back the American empire and always support the Current Thing, subscribe to Arthur G. Sulzberger’s New York Times and pay him $1,326 per year.
If you want to do that while pretending you’re fighting the American empire, there’s probably some Soros or Buffett money for you here.
If you want to instead reset the American empire and replace it with a tech monarchy, subscribe to Curtis Yarvin’s Gray Mirror.
If you want to champion the Chinese empire, Xuexi Qiangguo and Qiushi beckon.
If you want to escape the Chinese empire, there’s a Run Philosophy playbook for you.
If you want to overthrow the American and Chinese empires - as well as all other states - and replace them with Bitcoin citadels and crypto-anarchy, follow one of the devout Bitcoin Maximalists listed at hive.one/bitcoin.
And if you want to commentate diffidently without really sticking your neck out, or just keep your head down and make money, this isn’t really the book for you, but pretty much anything in an airport bookstore will do.

Lest I be accused of strawmanning anything, I think I can make the case for each of these paths. In reverse order:

I get the airport bookstore path; that’s really the smart thing to do for many people. Just keep your head down amidst the coming time of troubles. Stop posting under your real name, scrub your internet presence, do a Kolmogorov-style internal exile by obeying the regime in all aspects, and hope that’s sufficient.
I get the Maximalist critique of existing states, coercive force, Cantillionaire capitalism, and industrialized society (though see here).
I get the Chinese people who want to leave the rising militarism, digital surveillance, and neo-Maoist “Common Prosperity” doctrine of today’s China.
I also get the Chinese people who want to stay despite these issues given the enormous progress since 1978, to help “rebuild the great Chinese nation” after their century of humiliation by foreign powers (and self-inflicted Maoism).
I get the desire to reset America from disaffected Democrats and Republicans alike, and indeed cite many critiques of the US establishment in this work, though I think American anarchy may unfortunately be more likely than ’Merican monarchy.
I get the progressive desire to fight for the socially and economically marginalized with the tools of the state, even if I think the tools of the network are more productive.
I can even muster some good words for Sulzberger’s inherited media corporation - despite faking the news on everything from the Holodomor to the Iraq War, and Russiagate to Caliphate, the NYT did acquire Wordle, so they have that going for them.

But if none of these paths draw you in - if you want to build an alternative to America, just as America was the alternative to Europe…just as Apple was to BlackBerry, as Amazon was to Barnes & Noble, as Netflix was to Blockbuster…just as the horseless carriage was to the horse…just as the New World was to the Old…just as Mars could be to Earth, and Bitcoin could be to the dollar…then read on.

Because the only thing more important than what comes after the US dollar is what comes after the United States of America.

What was learned from publishing the first edition?

Everyone has an “obvious” question

Feynman observed that children can recursively ask obvious questions and quickly get to deep questions. “Why does the ball fall? Gravity. And why does gravity exist? Well…”

So too for the network state. There are countless obvious questions. How will a network state defend itself? How will you get land? How will you deal with states that are indifferent or even hostile? How will you build the roads? What’s the role for normal people in a network state? And why do you think you can ever get diplomatic recognition?

It’s easy to ask such questions, but an essay to answer them. Nevertheless we try, both in this section and in the book as a whole. I just want you as the reader to be aware that the network state is a hyperobject which you can poke from many different dimensions to find a seemingly obvious flaw. And perhaps that flaw really is irremediable! But perhaps we just haven’t written up the essay response yet. Or perhaps someone needs to actually build something to convincingly respond.²⁰ Regardless, you can mention us at twitter.com/thenetworkstate with your questions and we’ll reply.

Books are much harder than essays

An essay is at most 10 pages. That means you can read and re-read it many times before publishing. With a book, particularly a complex one, you can’t reread the first 200 pages in the morning every day before writing the 201st. If you do that, you’ll never get around to writing. And in fact, if you read the same pages over and over again while revising them, they all blend together and become so familiar that you find yourself missing subtleties.

How do you address this in a large codebase? You use subroutines, such that you don’t need to re-read 10000 lines of code before writing the 10001. But for a book the encapsulation is not that deterministic. However, the rough equivalent to a “main.cpp” that lists all your subroutines is this chapter: The Network State In One Outline, which is a clickable outline of the entire book.

There’s a tension between science writing and storytelling

Nonfiction writers are taught to put the bottom-line-up-front, to not bury the lede, to instead structure it as an inverted pyramid, and to make everything instantly comprehensible within a few seconds. In short: to not write a murder mystery, so that the reader doesn’t have to figure out what you’re doing. Call this science writing.

By contrast, fiction writers are supposed to do the opposite. They are literally writing a murder mystery! So much of any fiction book is devoted to entertainment, to character development and world building, to jokes and asides. It’s exactly the opposite of going straight to the point. Call this storytelling.

As a reader, notice the difference between how you navigate works of fiction vs non-fiction. With fiction, you don’t want to jump to the conclusion and give away the ending; the whole point is to read it through front-to-back. With nonfiction it’s exactly the opposite. You get to the conclusion of a scientific paper or article right away, and then figure out if you want to get into the details.²¹

OK: putting all this together, that tension between science writing and storytelling is central to The Network State.

On the one hand, it’s a dispassionate recipe for how to build a new country from the internet. The Introduction and Foundations describe what a network state is, and the Implementation section describes how you’d build one. So, this part reads more like science.
On the other hand, it’s one man’s views on why we need to build a new country, which necessarily needs to point to flaws in existing countries, and thus gets (a) political and (b) historical because one must talk about why existing countries are flawed and how they got there. So, that’s been factored into the Motivation chapter, which reads more like a story.

You can use one of these parts without the other. You can use the framework for building a network state without agreeing with my particular motivation for doing so. Less commonly, you might agree with my critique of the existing order, but disagree that the answer is to start afresh.²³ Either of these is fine; either way you get some value out of the book.

And what changed in the second edition?

Next Section:

The Network State in One Outline