Crypto-ethnusiasts often voice bold ideas related to the potential of the blockchain, that it is about to “take over” all areas of human activity. Conceptually, blockchain is a technology for collecting, storing and organizing information. In addition to cryptocurrencies, it may well be used in other areas, for example, in medicine, retail trade and even as a real estate registry. The most daring ideas are associated with an attempt to implement with its help a “network state” or “Network State” (to be a little more precise, “network states”). The idea is quite fresh, but some media have already assessed it as “revolutionary.”
The main idea of the “network state”
The author of the concept is Balaji Srinivasan, former CTO of Coinbase. In 2022, he published the book The Network State: How To Start a New Country.. The book is available for free download in English. This means that its author seeks to maximize the audience and achieve wide dissemination of his ideas, and is not chasing royalties. Balaji expresses the idea of the book in one sentence:
“A network state is a tightly knit online community capable of collective action that jointly acquires territory around the world and ultimately gains diplomatic recognition from other states.”
The claim is more than serious: we are talking about the fact that online cooperation and self-determination of people will reach such a level that traditional nation states will have to reckon with them.
How utopian is this? It seems that this is some kind of optimistic crypto-utopia, but let’s take a look, for example, at Bitcoin for comparison. Didn't states eventually have to take him into account? But in essence, Bitcoin is also an online cooperation of people who, for some reason, believed in it and began to mine and exchange it.
The Bitcoin community, unlike the “network state,” is neither a political nor a social entity. But even with the existing level of cooperation, it quickly attracted the attention of states and in some places even achieved recognition from the authorities, for example, in El Salvador.
What should be in a “network state”
In Srinivasan's model, cooperation does not stop at cryptocurrency – the community claims political and social recognition. This means that the community in its development must reach such a level as to qualify for the performance of functions that are today monopolized by the state. In part, this is reminiscent of the ideas of early cypherpunks and crypto-anarchists, as well as the ideas that formed the basis for the creation of the first cryptocurrencies, including Bitcoin.
Next comes technology. In many areas occupied by the state, blockchain copes more effectively. For example, in monetary areas and in registering transfers of ownership. Therefore, in addition to the “sense of community,” Srinivasan also names technological requirements as necessary. Among them:
-
general cryptocurrency;
-
consensus government limited by a public smart contract;
-
archipelago of physical territories;
-
virtual capital.
Thus, the above criteria define the Network State model. According to the author, if all this is implemented, then it is quite possible to talk about diplomatic recognition of such a project. That is, in essence, some kind of large-scale DAO is being proposed that will be able to compete with states in the political field. Why political? If only because the participants are defined in the status of “netizens” (by analogy with “citizens” – citizens). Such a DAO has everything that makes up the basis of a modern state – currency, land, population and authorities.
Srinivasan also identifies specific types of cooperation within the framework of his idea, namely:
-
A startup society is a cooperation that has a specific founder, as well as common ideas and goals on the basis of which collective actions are taken;
-
Network association is the next stage of a startup society. It uses technologies like blockchain as widely as possible, has its own economy and is able to defend interests;
-
The network archipelago is the next stage of network association, which begins to go beyond the “online” and acquires real physical assets. For example, land.
-
Network State – at this stage, cooperation achieves diplomatic recognition and acquires political sovereignty.
Strengths and weaknesses of the “network state”
Srinivasan’s book notes that there are already individual examples of successful human cooperation that have the properties of a “network state,” be it cryptocurrency, social networks, DAO, and so on.. Combining successful cases with diplomatic and international recognition could lead to a “revolution of network states”. Among the positive and effective mechanisms within this concept are:
-
Reliable and efficient technological solutions, be it blockchain, DAO or smart contracts;
-
Decentralization and voluntarism: in the absence of a state monopoly, the interests and voluntary consent of digital citizens come to the fore;
-
Material security. Real physical assets, especially in the form of land plots-territories, give the project “seriousness”. No one can say that he is not provided with anything;
-
Institutional competition: Market competition with the “network state” will force the state to improve the efficiency of its services.
However, there are also obstacles to the implementation of such projects. First of all, this is a state that is clearly not enthusiastic about the prospect of sharing its monopoly role as a way of political organization.
Do not forget about another important attribute of the state – the monopoly on violence. Theoretically, it is easy to imagine that in a network state, issues of coercion will be avoided in a civilized manner through agreements and smart contracts. But will the state behave in the same civilized manner towards its network competitor?
Also, other questions arise regarding the concept of Srinivasan.. For example, he insists on the important role of the founder of the network state, which has drawn criticism from, for example, Vitalik Buterin, although in general the founder of Ethereum was quite complimentary about this idea.
On the other hand, the very way of thinking in terms of political autonomy encourages us not to blindly copy other people’s models, so if political projects on the blockchain see the light, they do not have to correspond to Srinivasan’s vision.
Related examples
Overall, Srinivasan did not offer anything out of the ordinary. Human societies tend to strive for independent arrangement of their own social and political life.. Now this niche is reliably occupied by the state, but many cryptocurrency supporters have a desire to organize freer cooperation, without a lot of government restrictions, administrative barriers and prohibitions.
Even in very recent history, there are many examples of how people in a certain territory actively strive for autonomy, for example, Brexit and the same Catalonia. Among the lesser known ones, we can mention the Free State Project, in which like-minded people who found each other online decided to move to a sparsely populated State and arrange their lives there the way they think is right.
Conclusion
The idea of a “network state” was largely on the surface: it combines many existing successful practices of cooperation and aspirations with the possibility of their implementation through new technologies. Thus, many crypto enthusiasts are already considering blockchain as the basis for building a model of the future.
This material and the information contained herein do not constitute individual or other investment advice.. The opinion of the editors may not coincide with the opinions of the author, analytical portals and experts.