The Network State: How to Start a New Country

Summary of The Network State – How to Start a New Country by Balaji Srinivasan: In this book, Balaji Srinivasan lays out how the “Network State” could become the successor to the Nation-State. Throughout the entire book, he provides the nuts and bolts of this new concept and explains how anyone in this modern age can create a country from the internet by bringing together a fully decentralized digital community, scattered across the globe but organized and connected by a common cause.

By Balaji Srinivasan, 2022, 474 pages.

Review and Summary of The Network State – How to Start a New Country by Balaji Srinivasan

Chapter 1 – Quickstart

1.1 – Preamble to the book The Network State

Notes:   

• Among his many roles, author Balaji Srinivasan is founder of Counsyl and former CEO of Coinbase.

As a preamble to his book The Network State, author Balaji Srinivasan recommends considering his work as:

• A dynamic book: The Network State exists in digital form, available online or on Kindle. It is regularly modified because it is continually updated. Each time you come back to it, you’ll find it in its latest version. This review concerns the late 2022 version.
• A toolbox: for the author, it is by no means necessary to agree with everything he says in the book. In his view, the Network State is a flexible enough concept that we can appropriate it and personalize it in our own way.
• A book that defines the concept of the Network State and shares how it works, its viability, and its ecosystem.

1.2 – What is a Network State?

In the first chapter of his book, Balaji Srinivasan offers a simple summary of the concept of the Network State, before developing its full complexity in the subsequent chapters.

1/ The central idea: a conception of the State in terms of spirit, no longer in terms of territory

The first key idea in the concept of the Network State is that the State is no longer conceived in terms of territory, as in the Nation-State, but in terms of spirit.

Balaji Srinivasan puts it precisely this way:

“When we think of a Nation-State, we immediately think of the lands, but when we think of a Network State, we should instantly think of the minds. That is, if the Nation-State system starts with the map of the globe and assigns each patch of land to a single State, the Network State system starts with the 7+ billion humans of the world and attracts each mind to one or more Networks.”

2/ A simple definition of the Network State and its 11 components

Balaji Srinivasan goes on to give a short definition of the Network State:

“A Network State is a highly aligned online community with a capacity for collective action that crowdfunds territory around the world and eventually gains diplomatic recognition from pre-existing States.“

However, the Network State is actually far more complex and developed than this simple definition.

Indeed, the author points out that a Network State is a social Network that presupposes 11 specific elements.

These are:

• A moral innovation.
• A sense of national consciousness.
• A recognized founder.
• A capacity for collective action.
• Personal civility.
• An integrated cryptocurrency.
• A consensual government limited by an intelligent social contract.
• An archipelago of physical territories financed by a crowdfunding system.
• Virtual capital.
• A population verified by a census recorded on the blockchain registry.
• Revenues and a real estate footprint large enough to achieve diplomatic recognition.

3/ Three key points of the Network State

Still, with the aim of better grasping the concept of the Network State, Balaji Srinivasan shares an image. This image represents what we might consider the next version of a Network State, with:

• A population of 1.7 million.
• With annual revenues of $157 billion.
• An area of 136 million square meters.

This image is taken from the book:

In fact, this image illustrates three key ideas central to the Network State concept:

• A Network State is not physically centralized like a nation-State, nor limited in scale like a city-State: it is geographically decentralized and connected by the Internet.
•  It is possible to create a Network State from our own computer: just as Facebook was born from an individual’s laptop, a Network State of a million people, owning a global archipelago of physical territories, may well be a startup company launched by a single person.
• Real-time census is crucial in a Network State. It must combine information on different levels (currency, country, companies, annual income, real estate footprint) to focus on the continuous growth of people.

1.3 – The 7 key steps to starting a Network State

If technology has enabled us to create new forms of enterprise; currencies and communities, the author is convinced that it is also possible to create new cities and countries.

He describes how he sees this happening in 7 key steps.

1/ Summary of the 7 steps to creating a Network State

Step 1: Community

Create a startup company, i.e., an online community that aspires to something bigger.

Step 2: Network Union

Organize this community into a “Network union” – in other words, a group capable of collective action for a common cause.

Step 3: Physical meetings and economy

Establish offline trust by increasingly organizing physical meetings between members. Then build an economy using cryptocurrency.

Step 4: Financing and creating physical nodes

With the participatory funds collected, and once trust has been established; finance real estate and even cities to bring digital members to cohabit in communities physically around the world. The author uses the term “physical nodes” to describe where these communities physically cohabit. These are actually enclaves, non-contiguous territories of various sizes: a Networked archipelago doesn’t need to acquire all its territory in one place at once: [it can connect a thousand apartments, a hundred houses, and a dozen cul-de-sacs in different cities … with its capital in the cloud,] writes Balaji Srinivasan.

Step 5: Archipelago of Networks

Connect these globally distributed nodes digitally to each other in a Network archipelago. Community members can migrate between these enclaves. Physical access is via a “web3 cryptopassport,” and mixed reality is used to seamlessly link online and offline worlds.

Step 6: Cryptographic census

Carry out a cryptographically verifiable census. Showing the growth in population, income and real estate footprint of the future Network State helps counter skepticism.

Step 7:

Acquire diplomatic recognition from a pre-existing government, then increase sovereignty until it becomes a Network State.

2/ The key to creating a Network State

Balaji Srinivasan emphasizes another key idea behind the concept of the Network State: unlike [an ideologically misaligned and geographically centralized inherited State, which brings together millions of conflicting people in a single location,] a Network State is ideologically aligned but geographically decentralized. People are distributed around the world in clusters of varying size [but their hearts are in the same place.]

The aim is to populate the earth everywhere from the cloud.

1.4 – 6 + 1 ways to create a new country

As we’ve seen, creating a new Network State means transforming an online community into a physical State, thanks to virtual capital.

To do this, says Balaji Srinivasan, we need to be motivated by the desire to build something new without the constraints of history.  In short, we have to want to make a new start, and not, as we’ve always done; fight to change the old.

That’s why, if until now there have been at least six ways of forming a new State – three conventional and three unconventional – we should perhaps now imagine a seventh way of doing so…

1/ The three conventional ways of creating a new country

• Election: the power gained by winning an election is recognized internationally, giving the right to change the laws of an existing State or to create a new one.
• Political revolution: this usually involves violence, and often results in a new government.
• War: although destructive, war generally leads to a new configuration of borders.

2/ The three unconventional ways of creating a new country

• Micronations: we speak of micro-nations when an “eccentric” or a small group of people plant a flag on a disputed territory or offshore platform to claim to be an independent nation. For the author, however, a territory occupied by a few people in the middle of nowhere, with no official recognition by any official country, cannot be viable.
• Seastanding: created by Patri Friedman and supported by Peter Thiel, this concept aims to implement permanent or semi-permanent living quarters in international waters; in other words, outside any existing zone of sovereignty. Although there are people living on cruise ships all year round, there are as yet no concrete examples of seastanding. Balaji Srinivasan points out that seastanding is a concept that could be used to create a Network State (by developing a startup capable of providing participative financing for a cruise ship, for example).
• Space: although seen as technically unfeasible today, the idea of colonizing other planets is much more socially accepted than seastanding, which is seen as a “crazy” project (probably because space exploration has been glorified in numerous films and supported by governments). This process is currently being seriously considered by Elon Musk’s SpaceX company to create a new State on Mars.

3/ A seventh way to found a new State: the Network State route

For Balaji Srinivasan, there is one final way to found a State. And this is the one he advocates: the process of creating a Network State. This is quite different from the 6 ways of forming a country described above.

– The process of creating the Network State

Here’s how Balaji Srinivasan describes this process:

“We create a startup society, organize it into a Network union, crowdfund the physical nodes of a Network archipelago, and — in the fullness of time — eventually negotiate for diplomatic recognition to become a true Network State. We build the embryonic State as an open-source project, we organize our internal economy around remote work, we cultivate in-person levels of civility, we simulate architecture in VR, and we create art and literature that reflects our values.”

– The “reverse diaspora” principle

To build such a State, the author evokes a kind of “reverse diaspora”: emigrants are dispersed internationally but connected.

The Network State first attracts a community via the Internet and builds an online culture. Only then do community members physically come together to build homes and structures. New recruits can visit virtual or physical parts of a Network State, beta-test it; and decide whether to leave or stay.

– Minimal innovation required

Creating a new State on the Network-State model doesn’t require inventing new technologies. However, the process does involve many existing Internet-related technologies. These are used to bypass the political obstacles (elections, revolution, and wars) that leave little room for individual initiative.

1.5 – What is a “new country”? 

While some people understand the creation of a new country to mean colonizing an entirely new territory or changing the form of government; Balaji Srinivasan sees the startup of a “new country” as having a digital and societal dimension.

According to The Network State, a new country can be created by approaching it from these two angles.

1/ The digital angle

The author proposes imagining a table showing real-time figures to attest to the indisputable importance of the new country. The table would show:

•  The number of members of its community (5 million committed digital citizens worldwide, for example).
• The area of real estate owned by these members (thousands of square kilometers of dis-contiguous land, for example).
• The community’s revenues on the blockchain (billions in annual crypto-currency revenues, for example).

2/ The societal angle

In Balaji Srinivasan’s words, a new country is one that is [diplomatically recognized by other countries as a legitimate political entity capable of self-determination.] It is a State with [sufficient bilateral relations to have the societal significance to accede to a group of pre-existing States such as ASEAN, the OAS, the African Union, the EU, or the United Nations.]

Chapter 2 – History as Trajectory

2.1 – History is the prologue to the Network State

In the second chapter, Balaji Srinivasan explains why history is, in his words, [the prologue to the Network State.]

He also points out that, while a technology company is concerned first with technological innovation and then with corporate culture, creating a Network State requires the opposite: first with community culture and then with technological innovation. [And if to innovate on technology is to foresee the future, to innovate on culture is to probe the past,] he adds.

1/ Studying history is crucial to building a new society

Balaji Srinivasan argues that, in order to build a new society from scratch, it is useful to know, first and foremost, how countries have been built.

Secondly, he argues, history is crucial in that it:

• Brings weighty arguments, because it’s based on facts that actually happened.
• Forms the basis of our laws, morals, political doctrines…
• Influences the media and determines who is responsible for events.
• Represents the true value of cryptocurrency.

“A new society involves moral, social, and legal innovation relative to the old one – and that requires a knowledge of history.”

2/ A startup society is based on a moral issue, not just a technological one

Balaji Srinivasan goes on to explain why a startup company is based on a moral issue (historically informed) and not just on technology.

In fact, he explains that creating a startup company isn’t about inviting people to buy some product. It’s about inviting them to join a community. The pitch is cultural and collective, not economic and individualistic.

In short, says the author, [you argue that the culture of your startup is better than the surrounding culture; implicitly, this means that there is a moral deficit in the world that you are correcting.]

And it is to identify this moral deficit that history must be studied: we can then [draw on the past to find alternative social arrangements where this moral deficit has not occurred.]

2.2 – Macrohistory and microhistory

1/ Blockchain makes human history cryptographically verifiable

In this section, Balaji Srinivasan explains how, thanks to technology, it is now possible to apply the history of an isolated, reproducible system (microhistory) to millions of interacting human beings (macrohistory).

Until recently, too many variables made macrohistory (in other words, the history of humanity) fallible. However, the birth of the Bitcoin blockchain now makes it difficult to falsify:

“Unless there’s an advance in quantum computing, a breakthrough in pure math, a heretofore unseen bug in the code, or a highly expensive attack …, it is essentially infeasible to rewrite the history of the Bitcoin blockchain.“

And even if this were to happen, the data remains extremely well secured.

Admittedly, the Bitcoin blockchain is not absolutely infallible (it has several problems, which the author develops in detail). However, it is, to this day, the best technology ever invented to record human history, that of an economy and a society.

“If the concept of cryptocurrency can endure past the invention of quantum decryption, we will likely think of the beginning of cryptographically verifiable history as on par with the beginning of written history millennia ago. Future societies may think of the year 2022 AD as the year 13 AS, with ‘After Satoshi’ as the new ‘Anno Domini,’ and the block clock as the new universal time.“

This is why today we speak of cryptohistory.

2/ Cryptohistory: the concept behind the Network State

With blockchain, virtually all human behavior now has a digital component.

Blockchain makes it possible to digitally record and quantify data on both a small and large scale. It is the diary of what billions of people choose to make public.

Blockchain is the future of public records: [a concept that is to the paper system of the inherited State what paper records were to oral documents,] launches the author. Gifts, births, deaths, marriages, acquisitions, financial documents – all digitally signed, time-stamped, and hashed in freely accessible public registers. Also, [every purchase and communication; every ride in an Uber, every swipe of a keycard; and every step with a Fitbit…]

For the author, macrohistory is becoming the complete diary of the community. In short, a cryptohistory.

“The unification of microhistory and macrohistory in one giant cryptographically verifiable dataset. We call this indelible, computable, digital, authenticatable history the ledger of record.”

This concept underpins the Network State. And it can be used for better or for worse.

2.3 – Political power and technological truth

This section of The Network State develops two important ideas at length. They are summarized below.

1/ History’s biases collide with technology today

In this section, Balaji Srinivasan explains that history is the complete account of everything mankind has ever done. And that it’s a very rich data structure, but one that we’re just now beginning to see as a data structure.

He points out that history as it stands (known as “top-down history”) has been written by the “victors”: in other words, that it has been biased because it has been written by political powers, distorted or incompletely rendered in order to favor a State. The author recalls the distortion with which the media cover events: in favor of the political powers in times of peace and war alike. By way of illustration, he cites the example of atrocity stories, often false, exaggerated with the aim of bringing the public over to their side.

When we are aware of these biases; we can adopt a critical eye and thus guard against being too cynical or too gullible.

Balaji Srinivasan concludes on this point by mentioning three very concrete examples of the collision between political power and technological truth.  In all three cases, technology has provided a more robust means of determining what is true; it has also shown how the story written by the media and political powers is distorted.

These attempts to exercise political power are now coming up against blockchain, which has [decentralized the determination of truth away from the centralized establishment.]

2/ A balance between political power and technological truth is needed

For the Chinese, if you’re bad at technology, you’ll be beaten politically. Americans think the opposite: no matter how good you are at technology, if you’re unpopular; you won’t have the political power to build in the physical world anyway.

For Balaji Srinivasan, we need both. What we need, rather, is to seek to maintain a balance between political power and technological truth. In other words, between nationalism (in the sense of “group identity”) and rationalism.

And it is for this reason, the author points out, that political and technological theories of history are interdependent: [Technological history is the history of what works; political history is the history of what works to maintain power.] Numerous examples demonstrate this interdependence.

2.4 – God, State, Network

1/ The three most powerful forces in the world

– God, the State and the Network are three fundamental driving forces

In this section, Balaji Srinivasan examines the history of power. He identifies the three most powerful forces in the world as God, the State, and the Network.

These three forces should be seen as three fundamental driving forces:

“Every doctrine has its Leviathan, that prime mover who hovers above all. For a religion, it is God. For a political movement, it is the State. And for a cryptocurrency, it is the Network. These three Leviathans hover over fallible men to make them behave in pro-social ways.”

– The emergence of a new Leviathan: the Network

Balaji Srinivasan goes on to declare that, ultimately, any movement is part of one of these three Leviathans:

“Once we generalize beyond God, once we realize there’s not one but three Leviathans in a Hobbesian sense, much becomes clear. Movements that aren‘t God-worshipping religions are often State-worshipping political movements or Network-worshipping cryptotribes. Many progressive atheists are by no means astatists; they worship the State as if it were God. And many libertarian atheists may not believe in either God or the State, but they do believe in the Network – whether that be their social Network or their cryptocurrency.”

In fact, the author sees the Network as a [true peer and complement to both God and the State as a mechanism of social organization.]

– The idea of One Commandment

For Balaji Srinivasan, the idea of the One Commandment is the key concept of this second chapter: in the same way that a technological business innovation attracts customers to a startup company; it’s a history-based socio-political innovation that attracts citizens to a startup society.

In other words, we can formulate the comparison between startup and startup society as follows: if a startup begins by identifying an economic problem in today’s market and presents a technologically informed solution to this problem in the form of a new company, a startup society begins by identifying a moral problem in today’s culture and presents a historically informed solution to this problem in the form of a new society.

2/ The evolution of these three forces

Balaji Srinivasan then looks back at the history of these forces (or Leviathans).

– From fear of God to fear of the State

The author describes in detail how we have gone from a time when people behaved well because they feared being punished by God (1800s) to a time when the intelligentsia no longer believed in God, or at least not in the same way as their ancestors (1900s), and behaved well because they feared being punished by the State (which had begun to take on a new meaning).

Today, faith in God is collapsing (despite an embryonic revival of religious faith in waiting). And it’s the Network – the Internet, the social Network, and now the cryptographic Network – that’s the next Leviathan.

“So: in the 1800s you wouldn’t steal because God would smite you, in the 1900s you didn’t steal because the State would punish you, but in the 2000s you can’t steal because the Network won’t let you. Either the social Network will mob you, or the cryptocurrency Network won’t let you steal because you lack the private key, or (eventually) the Networked AI will detect you, or all of the above.”

In other words, the most powerful force on Earth was:

• God in the 1800s.
• The US military in the 1900s.
• Encryption in the mid-2000s.

–  Today, encryption limits States

Now, encryption limits governments in a way that no legislation can:

“So, it doesn’t matter how many nuclear weapons you have; if property or information is secured by cryptography, the State can’t seize it without getting the solution to an equation.“

3/ The conflict between two Leviathans: the Network and the State

– In more and more key areas, the Network is becoming stronger than the State

On the other hand, the Network is the next Leviathan as it becomes, in many areas and on key issues, more powerful and fairer than the State. The human justice system remains fallible with its error-prone or politicized law enforcement.

To illustrate this idea, the author shares many other concrete examples that show what the strength of the Network becomes in the face of the State. Among those cited:

• Encryption > State violence => encryption cannot be deciphered by a government, so transactions cannot be intercepted, for example.
• Social > national: our social Network is now more powerful than our national Network.

But also: Peer-to-Peer > State Media, Mobile > Sessile, Virtual Reality > Physical Proximity, Distance > In-person, International > National, Smart Contracts > Law, Cryptographic Verification > Official Confirmation…

– Government powerlessness in the face of the Network

The author goes on to mention a number of telling examples of the American government’s powerlessness in the face of the Network. Like when, in 2021, Google, Apple, Amazon, Facebook, and Twitter agreed to wipe out the Internet accounts of Donald Trump, then president in office.

“This was undeniable proof of the US government’s impotence because the ‘most powerful man in the world’ was clearly no longer even the most powerful man in his own country. The informal Network (the US establishment) trumped the formal State (the US government).”

– Network and State, forces in conflict

Of course, the Network is not always more powerful than the State.

Here, too, the author cites examples: China’s crackdown on cryptocurrency; the US government’s arrest of Ross Ulbricht, the persecution of cyber-activists and whistleblowers Julian Assange and Edward Snowden; exit bans on digital nomads during the COVID epidemic; the European Union’s GDPR regulation, activities aimed at Internet censorship, and so on.

For Balaji Srinivasan, [the conflict between these two Leviathans will shape this century, just as the conflict between God and the Leviathans of the State shaped the last.]

4/ The fusion of a Network/God and a Network/State

Balaji Srinivasan goes on to explore the possible fusion of a Network/God and a Network/State.

– The Network/God 

In this scenario, we would see the emergence of a Network-God. This could look like a super-powered AI – like a GPT-9 or DALL-E 10, observes the author – capable of providing [ instant, superhuman answers to difficult questions using the knowledge of all humanity.] [After all, people already confide in Google as if it were God sometimes, or at least a confessional,] says the author.

This god wouldn’t have to be a general AI. It could encode a specific morality, be tuned and trained on particular corpora rather than the general Web.  For example, an app could indicate what Jesus would do in this or that situation, or what George Washington would do, what people you respect would advise.

– The Network/State 

For Balaji Srinivasan, the most interesting fusion to study is this one: that of a Network/State. There are several ways to achieve a Network/State merger, he asserts.

The first is the from-scratch version described in Chapter One, where an Internet leader builds a Network syndicate large enough online to fund a territory and eventually gain diplomatic recognition.

However, the author discusses other scenarios: scenarios where existing governments merge with the Network. This would result in two scenarios: either positive Network/State versions, or negative Network/State versions.

Positive syntheses: BTC, Web3, Efficiency

In such a scenario, companies, cities, currencies, communities, and countries all become Networks.

Everything is dematerialized: movies, books, music are sent via the Internet, stocks, bonds, gold, loans, and art are just debits and credits on blockchains. All cities and countries are beginning to follow this model where citizens can be geographically remote and with government functions transferred to private Networks.

Negative syntheses: USG, CCP, Monopoly

In this configuration, the Chinese and American States take control of centralized technology companies.

To achieve this, these States employ similar means: media demonization, regulation, and anti-trust. This fusion of State and Network is becoming malicious: companies are being transformed into surveillance machines and tools of social control. The US national security State could even gain access to Google and Facebook data, exposing them to hacking risks.

– God, the State and the Network

The author then asks whether it is possible to reunite the three Leviathans. And to this question, he answers that yes, these three forces could well coexist in the modern era.

In addition to the positive version of the Network/State synthesis mentioned above – the very one that would offer greater administrative efficiency, greater economic returns, and higher levels of citizen consent – there could be a higher objective.

For, as we’ve seen, to build a successful startup society, a moral innovation is also necessary (without it, people would come as “consumers” only, not as “producers” as they must necessarily be if we wish to create a great society). This goal could be a traditional religion or a doctrine with a deeply thought-out “One Commandment.”

This is where the “One commandment” comes in.

5/ New Leviathan, New States 

Here’s the passage from the book that concludes this reflection on the three Leviathans:

“The concept of three Leviathans explains why a Network State is now feasible. The Network is a new sheriff in town, a new Leviathan, a new force that is more powerful than the State in many contexts. That has changed the balance of power. While syntheses are arising, so are conflicts between Network and State. And that explains much of today’s instability: when Leviathans wrestle, when Godzilla fights King Kong, the earth trembles.“

2.5 – People of God, People of the State, People of the Network

Having studied the history of God, the State and the Network, the author here focuses on the power struggle between these three forces:

• God => offers thoughts and prayers.
• The State => advocates the establishment of laws.
• The Network => writes code.

So, depending on who the people prioritize between God, the State and the Network, the differences are profound: the people will choose a tactic, will have values according to it.

In this part of the book, Balaji Srinivasan develops at length how the introduction of the Network Leviathan should clarify certain conflicts and divide certain factions.

Below are the author’s two main ideas.

1/ The emergence of a “realignment” = the Network versus the State

What the author calls “realignment” is the following possibility: a future in which libertarians on the left and right align against authoritarians on the left and right.

In other words, instead of the scenario of nationalists and capitalists (the right) versus internationalists and socialists (the left), we would have, with the Network as Leviathan, internationalists and capitalists (libertarians left and right) versus socialists and nationalists (authoritarians left and right).

“That Realignment would be the Network against the State. The authoritarians would outnumber the libertarians domestically and have the institutions on their side. But the libertarians would have stronger individual talent, as they’d draw the iconoclasts, and they’d also draw support from the rest of the world.“

2/ The opposing methods of State officials and Network officials

For Balaji Srinivasan, there is a collision of fundamental values between Network people and State people.

He invites us to consider “Network people” as technological progressives, and “State people” as political progressives or technological conservatives.

While both have certain objectives in common (managing COVID-19, building housing, reducing car accidents), they don‘t have the same method: Network people generally start by writing code and thinking about individual will, whereas for State people, the first recourse is to pass laws and use collective coercion.

In other words, and even if it’s a bit of a caricature, Balaji Srinivasan explains that:

• Network people start by wanting to appropriate a part of the Network (by creating a website, for example, that would be massively and voluntarily sought after by everyone). Their goal is that of technological progressives: to build without anyone having power over them.
•  State people start by wanting to take over a part of the State (win an election, be appointed to a strategic position, make an impact with an article, influence legislation via an association…). Their aim is to be able to manage a budget, to have a means of coercing people, to [get a piece of that gigantic stick that is the government] and thus pass a law, make something compulsory or prohibit it.

In short, the primary goal of the political progressive is the opposite of the technological progressive: [his goal, verbalized or not, conscious or not, is to exercise power over others,] writes the author.

2.6 – If the news is fake, imagine history

In this part of The Network State, Balaji Srinivasan reviews the various ways in which people in the State have used their power to distort recent and distant history; and how the Network rectifies this distortion.

Access to all information via the Network has changed our perception of the present; and with it our perception of the past.

“‘If the news is fake, imagine history.’ This pithy tweet reverses Orwell because he who is acknowledged to be faking the present can no longer distort the past. That is, once enough people see that the establishment has been lying about today’s events, they naturally begin to think the establishment might have been lying about yesterday’s news as well.”

Balaji Srinivasa mentions and develops numerous examples of historical distortion and propaganda. To further illustrate these distortions, he includes in this section of the book an interesting reading list.

2.7 – Four alternative theories

After showing the extent to which history has been distorted in favor of the American establishment, Balaji Srinivasan develops four alternative theories of the past and future.

These theories, he points out, describe trajectories far more complex than the narrative learned from our textbooks and through the mass media.

What all four have in common is that they no longer assume that the American establishment will continue to be at the center of the world. They thus describe a pre-American era when the United States did not yet exist; and prepare us for a post-American period when the United States, in its current form, will no longer exist.

However, the author warns: the aim is not to condemn the United States, but to transform constants into variables.

“Just as Bitcoin turned the constant of the US dollar into a variable, we need new stories that turn the constant of the US establishment into a variable. By decentering the US establishment in our mental models, we enable decentralization. We envision a world where the US may not be there for us, because it was not always there in the past, and may not endure far into the future.“

1/ The fragmentation thesis

This thesis shows that while for decades technology helped centralization (railroads, telegraph, radio, television, cinema, mass production), it has now – since the 1950s – favored decentralization (personal computer, internet, teleworking, smartphone, cryptocurrency).

2/ The frontier thesis

Balaji Srinivasan’s second thesis is a generalization of Fredrick Jackson Turner’s frontier thesis.

The author also refers here to the thesis of the book “The Sovereign Individual,” written in 1999; which had already heralded many aspects of our digital future, including Bitcoin.

In short, this thesis puts forward the idea that technology could enable us to escape the obstacles put in place by States to retain their power and allow us to create new frontiers, not only digital but also physical: on distant lands, on the sea, and possibly in space.

3/ The fourth turning thesis

This third thesis recapitulates Strauss and Howe’s concept of the Fourth Turning; as well as the work of Turchin and Dalio, all of which predict major conflict in the West.

The book “The Fourth Turning,“ published in 1997, is based on a quasi-cyclical theory of Anglo-American history, in which a conflict breaks out approximately every 75 years.

Dalio’s thesis is that we are about to experience events that have never happened before in our lives but have happened many times before in history.

The work of these analysts thus predicts major physical and/or monetary conflicts in America in the 2020s and a consequent change in world order.

4/ The future is our past thesis

The fourth thesis developed by the author is about how the past can prejudge the future.

In particular, Balaji Srinivasan highlights how we repeat past events but obtain opposite results.

2.8 – Left is the new right is the new left

For Balaji Srinivasan, creating a society from scratch necessarily involves tackling political notions. In his view, a new State cannot be technology-driven alone. That’s why it’s impossible not to talk about left/right.

However, as the author points out, it’s not a question of choosing sides, as political “consumers” currently do. A political “founder” can, he asserts, create something different: he can build a new ideology.

Balaji Srinivasan develops various points to support his idea.

1/ Reunifying technological and moral progress

Balaji Srinivasan begins by explaining that starting a new project requires both technological and moral innovation.

The author returns to the split that exists between visions of moral progress and technological progress. He explains that today’s revolutionaries are of two types:

• Technological founders, financed by venture capitalists.
• Political activists, funded by philanthropists.

The ecosystem put in place to find and support political activists is often less explicit than that put in place for technology founders (no mandate, not the same media coverage as investors who “pump out” billions of dollars). However, the development process is the same: the brilliant idea of a revolutionary evolves into a small group with little funding, until it becomes a mass movement.

Indeed, according to Balaji Srinivasan:

“If the top tech founders end up running companies like Google and Facebook, the top political activists end up running countries like Myanmar and Hungary. It’s ‘going public‘ in a different way.“

What the author is actually telling us is that startup societies combine these two aspects: technological progress and moral progress.

They reunify:

• The technology founder who creates a startup to effect economic change.
• The political activist who creates a social movement to effect moral change.

And by bringing these two different types of power together, startup societies offer a new path to power.

2/ Talk about left and right

The author goes on to say that he discusses the left and the right in terms of:

• Quantifiable phenomena, notably via the “spatial theory of voting.”
• A real axis that evolves over time.
• Ancient and ineradicable concepts, like yin/yang or magnetic north/south.
• Complementary tactics for accessing scarce resources: the left as a revolutionary tactic and the right as a ruling-class tactic. If one group uses left-wing tactics, the other is almost obliged to adopt right-wing tactics in response, and vice versa.

3/ The three evolutionary cycles of left and right

This part of The Network State examines how the left and the right have changed sides throughout history.  It also analyzes how mass movements all have both a revolutionary left and a ruling right component.

Balaji Srinivasan describes three cycles, summarized below.

– First cycle: the left cycle

The left cycle is when the revolutionary class becomes the ruling class in power.

The following concepts illustrate this: the Christian king, the Protestant establishment, the Republican conservative, the Soviet nationalist, the CCP (Chinese Communist Party) entrepreneur, or the enlightened capitalist.

– Second cycle: the right cycle

What the author calls “the right cycle” is the story of the following epistle: “strong men create good times, good times create weak men, weak men create bad times and bad times create strong men.”

– Third cycle: the libertarian cycle

The libertarian cycle is how a libertarian founder rebuilds the State.

To better understand this, Balaji Srinivasan describes a looping or helical process:

A [(rather) libertarian founder leaves the stifling bureaucracy of a large corporation] to set up his own business. The founder starts making enough money to hire someone. The company becomes structured. The founder must invest in a bureaucracy that depersonalizes the company and makes each employee “interchangeable.”

“Parasitic” employees begin to join the company. They want lots of benefits, high salaries, low workloads, and minimum work for maximum output. They are not really aligned with equity. For them, the company is just a job to pay the bills. They don’t feel individually responsible for the company’s success or failure and therefore see no need to do their part. The system will support them.

This type of behavior is rational, but it eventually leads to the collapse of the company’s business model, even if this sometimes takes a very long time: a “stifled” employee decides to break away from the mind-numbing bureaucracy and become a (rather) libertarian founder. And the cycle starts again.

– The unified cycle

Here, Balaji Srinivasan synthesizes these three cycles into a “unified cycle” theory.

• The left-wing cycle begins with a group of revolutionary leftists who then become institutional right-wingers.
• The right-wing cycle begins with a group of determined right-wingers who then become decadent leftists.
• The libertarian cycle begins with a group of ideological libertarians who end up building a bureaucratic State.

So, for the author, these cycles put together, we get, he says, [revolutionary, determined ideologues (a left/right/libertarian fusion) whose glorious victory ends in institutional, bureaucratic decadence (another kind of left/right/libertarian fusion!).]

And while it’s hard to imagine this cyclicality on a scale of 100 years or more; it’s easier to observe it in the life cycle of successful tech startups, which exhibit this behavior on a time scale of 10 years:

“A successful tech startup is typically a left/right fusion. It has the leftist aspects of missionary zeal, critique of the existing order, desire to change things, informal dress and style; initially flat org chart, and revolutionary ambition. But it also has the rightist aspects of hierarchy, leadership, capitalism, accountability, and contractual order. If you only have one without the other, you can’t really build a meaningful company.“

The author sums up the “unified cycle”: [Unified theory is therefore a cycle of centralization, decentralization, and recentralization. Revolutionary and determined ideologues break away from the establishment, then – if they succeed – build a giant centralized empire, which then degenerates and begets the next group of revolutionary and determined ideologues.]

He then concludes by pointing out that the “unified cycle theory” consists of merging the theory of the left as revolutionary class tactics and that of the right as ruling class tactics.

“A leader needs aspects of both to win. The left gives the holy justification to fight the war, the right gives the might to win the fight, and together they allow that leader to prosecute a holy war.”

4/ The four ‘flippenings’ of history and the One Commandment

The end of the second chapter of The Network State looks back at four “flippenings” that have taken place throughout history. Then, the author shares a thesis on “what” the next flippening might look like, which he calls “The One Commandment.”

– The proletarian flippening

The reversal Balaji Srinivasan describes is the left/right inversion of the working class.

He explains in great detail how, over time, the white working class has gone from oppressed to oppressor, from “revolutionary logic” to “revolutionary obstacle.”

– The American flippening

The second flippening concerns the inversion of the Republican and Democratic parties over the past 155 years.

It explains how the Republicans gained moral authority after the Civil War, and how they used it to gain economic authority. The latter, criticized by the Democrats for being so wealthy, then lost their moral authority, and consequently their economic authority. The Democrats were the opposite of this cycle.

– The global flippening

The third flippening concerns the global reversal that has taken place over the last 30 years: communist countries have become ethno-nationalist, and capitalist countries have become ethno-masochistic.

In this flippening, the countries of the economic left have moved to the cultural right, and the countries of the economic right have moved to the cultural left. Ideologies are reversed, but geopolitical rivalries remain the same.

– Historical flippenings

Balaji Srinivasan then develops a series of historical flippenings that place these dynamics in a broader context. This analysis allows us to see current events in a different light and helps us to anticipate future ideological changes.

[It’s a bit like an experienced investor who has seen many companies rise and fall talking to a novice entrepreneur,] says the author.

5/ The One Commandment

The author takes up all the ideas from the second chapter to conclude with the idea of “The One Commandment.”

In other words, to exist, each startup company must define its own “commandment.” It must have its own moral code, and bring together a community that both agrees with this commandment and is willing to populate a new society.

On the basis of this “One Commandment,” the startup society will deconstruct the history of the establishment: the idea is to erect a replacement narrative in a specific area of the establishment. The new “One Commandment” will then have to prove its socio-economic value in order to attract ever more citizen-subscribers.

For example: you manage to attract 100,000 subscribers to your “Keto Kosher” company thanks to in-depth studies on the obesity epidemic. You then show that these subscribers have lost a lot of weight: in this way, you’ve proved the establishment deeply wrong in a key area.

The key idea is that, to create a new society, we need to:

• Carry out a genuine moral critique of the establishment and understand precisely what is leading it to failure, in order to propose an alternative.
• Consider it as a Saas (Society-as-a-Service): we’ll have to finance it, attract subscribers, calculate the churn rate, provide customer support…

Chapter 3 – The Tripolar Moment

3.1 – NYT, PCC, BTC

In the third chapter, the book deals with the tripolar world we live in today.

According to Balaji Srinivasan, these three poles are [the only coalitions on the scale of a billion people and technological talents to survive as independent centers of power in the all-out digital struggle that has already begun.]

Here are the poles of this tripolar triangle:

• The American Establishment, or NYT (New York Times).
• The Chinese Communist Party (CCP).
• The global Internet, or Bitcoin (BTC).

Each of these three poles has:

• An “online source of truth”: paper (NYT), party (CCP 112 ), or protocol (BTC).
• A digital economy: the dollar economy, the digital yuan, or the web3’s cryptoeconomy.
• A Network in its own right, outside the State: the NYT Network leads the American State, the CCP Network leads the Chinese State, and the BTC Network stands outside all States.
• A ruling ideology:
  • Woke Capitalism is the ideology of the U.S. ruling class, which enables decentralized censorship by the U.S. ruling newspaper, the New York Times.
  • Communist capitalism is the ideology of the Chinese Communist Party. It is capitalism controlled by the centralized power of the Chinese party-State.
  • Crypto Capitalism is the international ideology of Bitcoin and the web3. It’s Stateless capitalism, capitalism without corporations, decentralized censorship resistance, and neutral international law. And it’s the second pole in both the US and China, the one around which opponents of the domestic regime are aligning themselves.

This tripolar world is set to evolve.

However, for the author, devoting a chapter to the NYT/CCP/BTC model is essential, as many still believe that our world is unipolar or bipolar. Moreover, certain aspects of this tripolar configuration have happened before, are recurrent, and therefore timeless.

3.2 – The end of the unipolar world

Balaji Srinivasan develops several ideas here.

First, he explains that at the end of the Cold War, the United States was the only dominant power on the planet. But since 2022, we no longer have this unipolar world.

So, with the decline of the American empire, the rise of China, and the rise of cryptocurrencies, we’re now talking about a “tripolar triangle.”

 Balaji Srinivasan suggests visualizing these poles as follows:

The author then summarizes the parameters of these three poles in a table:

3.3 – The three powers: moral, martial and monetary

Today, the decline of the American empire has led to the rise of a new power:

• Moral, represented by the NYT (New York Time).
• Martial, represented by the CCP (Chinese Communist Party).
• Monetary, represented by BTC (Bitcoin).

Balaji Srinivasan shows how, in this tripolar configuration, the power of finance (in the center) came to prevail over both the martial power of the right (circa 1945) and the moral power of the left (circa 1991).

3.4 – The three concepts: Submission, Sympathy, Sovereignty

1/ Each pole legitimizes itself by appealing to a socially useful concept

• For the CCP, we must submit => This power only really works in China and on the Chinese Internet.
• For the NYT, we must “sympathize” => As the oppressor (because white, male, straight, rich, able-bodied, or belonging to any other privileged category), we must bow our heads to those we have oppressed. This pole is particularly strong on the English-speaking Internet, weak on the Chinese Internet, and of intermediate strength outside it.
• BTC is the opposite of both => It implies that we are sovereign, autonomous, autarkic, and we live off the grid. This pole is strong on the global Internet, although it is confronted by both the CCP and the NYT.

2/ Extremes and counter-extremes are not desirable

Balaji Srinivasan doesn’t recommend imposing one power over another, nor does he advocate extremes and not necessarily the center either.

For him, building a startup society into a Network State ideally involves combining aspects of all three:

“And rather than trying to impose preferences on everyone, what we really want are a variety of points in between these three undesirable poles: different fusions for different groups.“

So, a Network State can coexist with a clearly identified founder who gives direction, digital and monetary players as a counterweight, and citizens who are free to leave the Network State if they wish.

3.5 – Conflicts and alliances

Such a tripolar configuration inevitably generates complicated dynamics. While history shows that coalitions between States are constantly changing, with Network States, coalitions are even more fluid and can exist simultaneously.

1/ Coalitions

The author describes the different forms that coalitions can take.

Here are the possible scenarios when they are made up of an alliance of two poles against the third:

• NYT + CCP against BTC => It’s the State against the Network. In other words, when the American empire controlled by the NYT and the Chinese empire controlled by the CCP join forces to attack BTC, for whatever reason-excuse (“climate”, for example).
• NYT + BTC vs. CCP => It’s the Western voice against Eastern control.
• BTC + PCC versus NYT => It’s the post-American world versus the American empire. Against dollar inflation, China and crypto can do something together that neither could do alone.

2/ Intrapolar conflicts

Close to each pole, there is an “internal dyad” representing a conflict within. Balaji Srinivasan represents this as an inscribed triangle within the tripolar triangle.

• Near the NYT pole are American dissidents, unawakened liberals, centrists, and conservatives. They disagree with the American establishment, but still identify themselves as Americans first and don’t want to see China become number one.
• Close to the CCP pole are the Chinese liberals, the internationalist capitalists who thought times were better under Hu Jintao (former Chinese Statesman), many groups on the left and right who have seen their fortunes sink under the aggressive new Chinese nationalism. However, they still see themselves as Chinese first and don’t want to bow to American imperialism.
• Close to the BTC hub is the web3 community and the tens of millions of Bitcoin holders who don’t identify themselves as supporters of any extreme position. They do, however, subscribe to many internationalist principles that presuppose an Internet without American or Chinese control over finance or communication.

3/ What about the others? The road to recentralization…

So, what about other countries and people who don‘t define themselves in reference to the Americans, the Chinese, or blockchain?

Well, for the author of The Network State, there will be a lot of pressure to identify with the first two poles. This will lead any group that doesn’t want to be under the thumb of the American establishment or the CCP to the third pole of BTC/web3.

“That is, one of our premises is that the Indians, Israelis, American dissidents, Chinese liberals, tech founders/investors, and people from other countries that want to maintain their own sovereignty will need to avail themselves of BTC/web3 for decentralized communication, transaction, and computation.“

And as far as Balaji Srinivasan is concerned, if the future scenario doesn’t involve remaining under American or Chinese control, it doesn’t involve falling into crypto-anarchic decentralization either. No, for him, the way forward is, in his words, [the path of conscious recentralization in startup societies.]

Chapter 4 – Decentralization, Recentralization

Whereas the previous chapters dealt with the past and the immediate present (around mid-2022), the fourth chapter of The Network State deals with several possible futures.

4.1 – Possible futures

The old models we use today are obsolete for understanding the world. [Not only are things changing faster, but things are changing faster in new dimensions,] says Balaji Srinivasan.

In this fourth chapter, the author begins by developing his analyses of possible scenarios for the very near future evolution of the world.

From these scenarios, we see that a refocused center of realistic and diplomatically recognized Network States could well emerge.

The author warns us, however, that these projections are only scenarios. We must continually bear in mind that they can be distorted by several elements he describes in the book, namely volatility, reflexivity, competing curves, and the resulting limits to predictability.

Here, Balaji Srinivasan shares the new socio-political and techno-economic data we may observe, as well as the new issues of conflict and cooperation that may emerge.

1/ Three new socio-political data are possible

They include:

• The entry into the arena of a new, unexpected, and still underestimated player: India.
• Transhumanism versus anarcho-primitivism: transhumanists believe that “technology is good”; they want to use it to fundamentally change humanity. Conversely, anarcho-primitivists believe that “technology is bad”; they want to abandon it, return to nature and deindustrialize. For them, humans are the pollution of this great Earth.
• The rise of identity-based attachment: to a city, a country, a company, crypto-currency, religion, ethnicity, or profession. Everyone is patriotic about something.

2/ The Internet increases variance

Note: variance is a measure that accounts for the dispersion of all values in a data set.

By connecting people peer-to-peer, the Internet removes the middleman, the mediator, the moderator, and mediocrity.

This situation – connecting people who would never have met without the Internet – can form something incredible (e.g. ETH Research) as well as terrible (a Twitter crowd). This leads to either extreme disadvantages or extreme advantages.

Technologists focus on the advantages (search engines, smartphones, social Networks, artificial intelligence). Conversely, the establishment sees only the negatives.

The author then specifies that the Internet actually increases variance in two particular ways. He does so via:

• Social media, which increases social volatility: on the internet, we can “go viral” as well as “be cancelled,” gaining or losing status overnight.
• Digital currency, which increases financial volatility: we can “go to the moon” as well as “get rekt,” experience major financial gains or losses overnight.

 The author ends this idea with an analogy. He describes the Internet as a tsunami: just as seaside towns were not built to cope with a thousand-year flood, few pre-Internet institutions will survive the Internet.

3/ All value will eventually become digital

– The digital transition is taking place naturally, in 3 phases

Another idea that Balaji Srinivasan develops here concerns the digital transition. We are, in fact, naturally shifting from the physical to the digital. [Digital is primordial and physical is now secondary,] he points out.

The author first describes how we have moved from working remotely to living remotely (2020, the year of the COVID-19 crisis, was the tipping point). It also shows how all value will eventually become digital.

This digital transition takes place in three phases:

• The first stage is called “physical” or “analog.”
• The second stage is “intermediate” or “analog/digital.”
• The third stage is “native” for the Internet, or “active digital.”

– Three examples of this transition

• Paper => digital file: a sheet of paper (step 1) / the sheet is scanned and becomes a digital file (step 2) / a native digital text file that begins its life on the computer and is printed only when necessary (step 3).
• Physical meetings => virtual reality meetings: a face-to-face meeting (step 1) / the meeting takes place with Zoom Video that scans faces (step 2) / the meeting is natively digital, achieved with VR (Virtual Reality) (step 3).
• Physical money => cryptocurrency: physical money in coin and banknote form (step 1) / a system like PayPal or fintech that’s just a scan of the pre-existing banking system (step 2)/ cryptocurrency, which corresponds to the truly native digital version of money (step 3).

We can see this transition, this pattern, everywhere. To date, we’re often still stuck at step 2, the digitized version. But overall, all value will become digital. Humans will still exist, of course, but the economy will become the cryptoeconomy.

Speaking of this near future, the author writes:

“Everything starts on the computer, generates cryptocurrency, and can be used either to buy digital goods or to pay robots to materialize things in the physical world.“

4/ The mystery of productivity

– We lack productivity despite the technological age we live in

What questions Balaji Srinivasan, however, is that despite all these technological means at our disposal, we’re nowhere near as productive as we should be.

The author highlights the work done by our predecessors (or even us) when we had no computers, no photocopiers, no Internet when we had to type everything by hand, when there was no turning back.  When [not so long ago, you couldn’t search all your documents, sort them, save them, search for items, copy/paste items, e-mail items, change item fonts, or cancel items,] the author reminds us!

And yet, our predecessors built railroads, skyscrapers, airplanes, and automobiles. All without computers or the Internet. And quickly, too. If today we can technically produce things in seconds (things that would have taken weeks in the past, even if they were feasible), then we should be much more productive than we are.

– Hypotheses to explain the mystery of this productivity

In response to the question “Where did all this productivity go?”, the author puts forward several hypotheses:  

• The Great Distraction: productivity is wasted on distractions like social media and gaming.
• The Great Dissipation: productivity is dissipated on things like forms, compliance, and processes.
• The Great Divergence: productivity is harnessed by only a few, like the founders of tech unicorns.
• The Great Dilemma: productivity is used in strange ways, requiring [line-by-line profiling of everything.]
• The Great Dumbness: productivity is there, but “stupid” decisions are being made in the West.
• The Great Delay: productivity will be there when the slow actions of humans no longer limit it, i.e. when robotics arrives because, for example, if it’s [100 times faster to send an e-mail than to post it,] [a slow human still has to act accordingly,] says the author. And in this hypothesis, man is indeed the limiting factor.

Ultimately, the problem of productivity lies in the analog/digital interface. In other words, [humans still have to understand and act on electronic documents to build projects in real life,] concludes Balaji Srinivasan.

The author concludes this section by mentioning the Internet‘s Network shortcomings and linguistic boundaries (notably between the decentralized, global English Internet and the Chinese Internet, which is highly concentrated in China and controlled by the CCP).

4.2 – A plausible scenario: American anarchy, Chinese control, and an international intermediary

Having evoked the possible futures, Balaji Srinivasan looks ahead to the near future to describe other developments to be anticipated: while in the West, we could witness American anarchy, in the East, we could observe genuine Chinese control.

1/ Two major elements of the future for Network States

Among what will change, the author insists on two elements that will be essential for Network States:

• AR (Augmented Reality) glasses: these will bridge the gap between the physical and digital worlds and bring these two domains into complete blending. People would be able to see and interact with an open metaverse in real life.
• Cryptoeconomy: it will transform the macro-economy because it allows anyone to create a cryptocurrency, set monetary policy, and see what happens.

2/ A second American Civil War

The author then shares, in detail, a science-fiction scenario that could very well exist. In this scenario, Balaji Srinivasan projects American anarchy, Chinese control, and the international intermediary.

– American Anarchy

The author describes a second American civil war, triggered in part by a bankrupt US government trying to seize bitcoins. The author calls this situation “American Anarchy.”

Radical as it may sound, many thinkers across the political spectrum (Stephen Marche, David Reaboi, Barbara Walter, and Kurt Schlichter, for example) are already anticipating this prospect, in whatever way they can.

This civil war would be more “undeclared” than “declared”, more “invisible” than “visible.” According to the author, this conflict could end in decentralization and disunity instead of centralization and consolidation.

We would have two main factions. We can’t predict their names, but rather than “Democrat Blue” and “Republican Red,” the author suggests calling them the “Wokes” and the “Maximalists,” or more neutrally, the “Dollar Green” and the “Bitcoin Orange.”

– The two main factions

• The Wokes or Dollar Green 

These will align themselves with the US federal government, the NYT/establishment media, the Awakening, the dollar, and the Democratic Party. They’ll say they’re fighting for “democracy” against the “insurrectionists.”

In the author’s view, they will most likely go from Republican Red to Dollar Green: the institutional loyalists (including the police, the army, and the neoconservatives, because for them, it’s “my country, right or wrong”), certain centralized, old-fashioned and entirely wokified technology companies (like Google).

• The Maximalists or Bitcoin Orange

These will align themselves with State governments, decentralized media, maximalism, Bitcoin, and the Republican Party: they’ll say they’re fighting for “freedom” against fiat “tyranny” (note: the word “fiat” refers to an arbitrary order issued by a government or other authoritative figure. Applying the term “fiat” to fiat money refers to the notion that the dollar is only valuable because the government says so).

In the author’s view, it’s highly likely that the Democrat Blue will be replaced by the Bitcoin Orange: non-whites (crushed by inflation), independent technology founders and writers, and tools like Square cash.

– America, already in this conflict

Balaji Srinivasan then goes on to explain, by listing various points, how America is already sinking into this conflict. He mentions:

• Increasing political polarization.
• Declining State capacity.
• Declining economic prosperity.
• The growing desire of individuals to be better off.
• The looming foreign military defeat.
• The estrangement of American States from the federal government.
• The loss of respect for authority.
• The “national divorce” between Republicans and Democrats.
• The rejection of the status quo by radicalized movements.

– The triggering event for this civil war

The triggering event for this civil war, which the author considers particularly likely (but not certain), would be a combination of:

• Ruinous inflation.
• Followed by a surge in BTC/USD prices.
• Followed by an attempt by an insolvent federal government to seize Bitcoin from its citizens.

The author concludes by explaining why he thinks this relatively predictable event could trigger the Second American Civil War, especially if the Bitcoin seizure bill is passed by the federal government and some States refuse to implement it:

“The reason something like this could be the trigger event is that neither side could easily back down: Wokes would have no power if their State went bankrupt, and Maximalists would have no money if they surrendered to the State.“

– The war for minds and between Networks

Balaji Srinivasan goes on to explain that this war would not be a war for land but for minds. We live in an age of information warfare, where to win, you have to be able to invade the other’s mind if you can’t invade their territory.

“It’d be nothing like the movies with huge movements of uniformed soldiers, tanks, and planes … Instead, it’ll just be a continuation and escalation of what we’ve seen over the last several years: a Network-to-Network war to control minds, rather than a State-to-State war to control territory. A fusion of America’s domestic conflicts on social Networks and its foreign conflicts in the Middle East.“

The aim is to control digital Networks.

However, the power to determine what people can and cannot do in the digital world belongs to the people who manage these Networks. It’s power now in the hands of the huge technology companies that give the green light to online transactions, communications, and behavior.

So, if the first civil war was the [war between States,] the second civil war will be the [war between Networks.]

– Revolutionary class vs ruling class

In Balaji Srinivasan’s projected conflict, Bitcoin Orange would be the “revolutionary class” faction and Green Dollar would be the “ruling class” faction.

So, basically, in this scenario:

• Those who side with the American establishment would be of the same personality type as those who sided with the Ancien Régime during the French Revolution: they would fight to preserve the past. Their message would be one of particularism, of American nationalism, of the continued supremacy of the dollar.
• Those who side with Bitcoin maximalism would have a revolutionary personality fighting to overthrow what they see as tyranny. Their message would be one of universalism, of a system that puts everyone on the same playing field – and doesn’t privilege America over the rest of the world as the dollar does.

– Who would be the winner?

Ultimately, whose victory will it be?

The author puts forward several hypotheses on this subject. Broadly speaking, the winners could be:

• Maximalists

The maximalists could win at least part of the U.S. territory, because, according to the author, they will eventually outlast the U.S. establishment’s money printing.

In the American regions that would become maximalist, the value proposition would then be “freedom,” even if others would perceive it as anarchy.

• The American establishment

The American establishment could win a “war of attrition.” Its starting advantages are enormous: universities, the media, the army, intelligence agencies, most technology companies, and the federal government itself. The U.S. establishment also has an elite global sympathizer base, and therefore the support that comes with it.

The value proposition in regions that would remain loyal to the establishment would be “democracy,” although others will perceive it as “tyranny.”

The author concludes by making it clear that he takes no side in what he describes. He also stresses the seriousness of this civil conflict, should it arise. 

3/ Chinese control

Meanwhile, on the other side of the world, in this fictional scenario, the CCP (Chinese Communist Party) would implement intense domestic repression to maintain stability in China.

– The triggering event for Chinese control

In fact, for the author, the United States could – before it enters the serious internal conflict described above – support a Chinese coup attempt.

This would be the trigger for the deployment of a formidable Chinese control system (the author points out that certain trends are already pointing in the direction of restricting digital and physical movements).

Balaji Srinivasan sees AI as being directed against the population. All groups, even those moderately favorable to the West, would be recognized and dismantled at their roots. China would block the exits. It would also become increasingly difficult for the Chinese to leave their country or remove their property from the digital yuan ecosystem without CCP authorization

– The justifications and credibility of Chinese control

The CCP (Chinese Communist Party) would justify this system (which will work, even if it’s not free at all) as the only alternative to:

• Stop any possible contagion from American anarchy and restore “democracy.”
• Control crime and prevent unrest of any kind, legitimate or otherwise.
• Prevent mobile citizens from taking their funds to other countries.

The author explains that his heavy emphasis on controlling China (and not other countries) is due to China’s phenomenal performance over the past 40 years. The country has a huge trade surplus, an excess of hard currency, and dozens of huge new cities. [It’s the #2 economy, the #2 army, and the #2 unicorn of technology,] he warns.

Balaji Srinivasan points out that [conversely, over the last 30 years or so, the American establishment has squandered perhaps the greatest advance in human history, going from complete and unchallenged dominance in 1991, to internal conflict and, potentially, implosion.]

This growth means that the Chinese Communist Party enjoys credibility with many “neutral” countries and with huge sections of its own population (nationalist propaganda).

This relative credibility will increase if America descends into anarchy, as this will help China deploy its control at home and abroad. Why? Because in this context, while some Chinese nationals will certainly want to leave the country, others of Chinese descent will want to return: Chinese control, [while dystopian for the ambitious and freedom-loving, will probably be acceptable to many who value stability above all else, and see the scenes of flames and gunfire … of American anarchy,] points out the author.

4/ The International Intermediary

– What is the International Intermediary and who does it concern?

For Balaji Srinivasan, the International Intermediary is an alternative [to the failing American establishment, the maximalist cryptoanarchy, and the centralized surveillance State of the CCP.] It’s what we need to believe in to build startup companies and Network States.

The International Intermediary peacefully rejects the two extremes previously described: it brings together people who refuse to let their societies sink into American anarchy, but at the same time want a better option than Chinese control.

Thus, according to the author, it would include: Indians (India has risen to #3 among tech unicorns after the USA and China), Israelis, global web3 technologists, American centrists, Chinese liberals, and finally, as we said, all individuals worldwide who want to follow a different path from the American establishment, cryptoanarchy and Chinese control.

– Innovation rather than isolationism or interventionism

By default, this International Intermediary is ultimately “everyone,” says the author.  [Apart from the Americans and the Chinese, this group, which would represent 80% of the world, is no more than a ‘shapeless mass with no internal structure.’] However, billions of people are lining up around web3 to try and build alternatives to American anarchy and Chinese control.

To get away from this American anarchy and Chinese control, from the propaganda, coercion, surveillance, and conflict that may soon characterize the two pillars of the global economy, those in the International Intermediary must build something better. And for the author, instead of isolationism or interventionism, their answer is innovation.

This is where pragmatic founders could build startup societies or Network States. These circles of trusted communities would truly be intentionally designed as alternatives to failed States and surveillance States.

This is what Balaji Srinivasan calls the Recentralized Center.

4.3 – 3 + 1 possible endings to the projected scenario

In this section of The Network State, Balaji Srinivasan sets out three possible scenarios for how events might unfold in the scenario described above.

Note: this is an analysis of the projected scenario, not a solid prediction.

1/ First scenario: the American establishment wins and avoids American anarchy

In this scenario, what we have already experienced in the post-war era is repeated. The USA and the dollar remain number one. China – and Japan – collapse. Everyone keeps saying that the West is in decline, but it always ends up reinventing itself.

There’s no dramatic acceleration or collapse. Things go generally going well. There’s nothing to worry about.

If this scenario is possible according to some, for the author, it is not desirable.

2/ Second scenario: Chinese Communist Party wins and Chinese control triumphs

For this to happen, China would have to become an “autonomous, autarkic autocracy,” says the author, before adding that, while the experience of bilateral marketplaces shows that this scenario is a possibility, he is not in favor of it. For it would mean that those who have produced freedom have failed to create prosperity.

3/ Third scenario: a surprise ending

In this surprise ending, the author imagines the American establishment and the Chinese Communist Party working together to stop the global insurgents of Bitcoin and Web3, both of whom they see as a threat to their power.

It would then be like the USA and the USSR aligning against the Third World. 

“And so you could imagine them teaming up without teaming up, where China does something, then the US establishment copies it, maybe without acknowledging it, and they thereby perform an unacknowledged pincer attack against technologies that oppose them.“

Balaji Srinivasan calls this scenario “the duopoly of digital despotism.”

4/ A fourth possible scenario: towards a recentralized center

The fourth possible ending imagined by Balaji Srinivasan is that of “voluntary recentralization.”

In other words, instead of choosing “anarchic decentralization” or “coercive centralization,” we should move towards the “recentralized center,” a concept described earlier by the author when he evoked the International Intermediary.

The author contends that this fourth option is one of constant innovation and market competition, which can only bring “new blood.” It‘s about conscious compromise [between submission, sympathy, and sovereignty,] rather than unconsciously capitulating to an extreme or counter-extreme.

Voluntary recentralization is what will enable us to [build the future rather than fail to do so,] says the author.

Chapter 5 – From Nation-States to Network-States

For Balaji Srinivasan, we are currently moving from Nation-States to Network-States.

In this fifth chapter of The Network State, he explains why.

5.1 – Nation-States

1/ What is a Nation-State?

It’s not easy to define what a Nation-State is.

To sum up, we can say that it is [a territorially delimited sovereign entity.]

The community of citizens living in this geographically delimited region of the globe is governed by a group of humans we call the “government.” It identifies itself as a people of the same nation.

In short, a Nation-State is a “country,” like the United States of America or the People’s Republic of China. It’s a region marked with a flag on a political map of the globe.

2/ The foundations of the Nation-State system

For a better understanding, the author indicates that the Nation-State system is based on several foundations.

These foundations concern the six essential parts of the State: borders, population, central government, international sovereignty, diplomatic recognition, and the national monopoly of violence.

These are described in more detail below:

• The map of the physical world: divided into geographical regions called States, this map shows borders precisely delineated by latitude and longitude.
• No terra incognita, terra nullius, or unclaimed lands: the map of the physical world is fully known and subdivided.
• In theory, a Nation-State is made up of a single nation (the people) and an administrative entity (the State).
• State citizens are generally citizens of that single State. Citizenship changes infrequently, and most citizens are governed by the same State as their parents.
• The legitimacy of a Nation-State derives from “physical control and electoral choice.”
• Management of the Nation-State is centralized: State administrators often comprise an executive and a legislative body. They write laws on paper to indicate what is obligatory and what is prohibited. These laws are generally interpreted by a judicial system and enforced by armed men.
• Each parcel of land is administered by a specific State, regardless of who is on it.
• Each State maintains order within its borders by means of a police force. Citizens who defy the law are subjected to increasing levels of violence until they comply.
• A State maintains its sovereignty only if it is sufficiently competent to defend itself against domestic and foreign rivals, via its police, intelligence agencies, and army.
• Diplomatic recognition is established through bilateral and multilateral agreements between States. A State can be recognized by multilateral bodies (such as the United Nations, the World Trade Organization, the International Monetary Fund, the G-20). This diplomatic recognition is both political and administrative, and a lack of recognition can isolate a State and/or its citizens.

The author points out that inter-State relations are governed by:

• A set of cross-border pacts or treaties (often flouted) supposed to limit possible abuses and regulate cooperation between States. They set out, for example, human rights, freedom of movement, and so on.
• The “Pax Americana“: this is a concept that stipulates that the United States is the guarantor of the current system of Nation-States. Thus, the headquarters of the UN, which claims to [provide global leadership” and “defend the rules-based international order,] is located on US soil. All other States must then [hope that this guarantor of order … does not decide to invade, monitor, sanction, machine-gun, or otherwise destabilize them.]

3/ Distinguishing the nation from the State

Finally, to better understand what is at stake in the “Nation-State,” the author suggests distinguishing the two concepts that make up the term Nation-State:

“In a sense, the Nation and the State are as different as labor and management in a factory. The former are the masses, and the latter are the elite.“

– The Nation

A Nation is a group of people united by common descent, history, culture, or language; inhabiting a defined country or territory.

Here, the author lists the many configurations of existing Nations: those with States, those without States, and those with partially sovereign States. He discusses the case of multi-ethnic States that attempt to create propositional nations, while others, conversely, have nothing that would allow a nation to form on their territory. Finally, he mentions States with multi-ethnic civilizations, but with long-standing cultural ties that seek to unify their constituent nations.

Balaji Srinivasan concludes on this subject by sharing the views of the many scholars and philosophers who have tried to set out general principles for defining groups that can be considered bona fide nations (Rousseau, Marx, Locke, John Stuart Mill, Hegel, etc.). He shows how the definitions overlap and highlights the points of tension between them.

– The State

This is the government, i.e. the entity that governs the group of people that is the nation, that commands the police and the army, and that holds the monopoly of violence over the geographical area inhabited by the nation.

A State is thus supposed to possess six properties:

• A border => a clearly defined territory.
• A population => one or more nations living on this territory.
• A central government => the ability to create laws.
• Inter-State sovereignty => in theory, control over internal affairs without interference from other States.
• Recognition => diplomatic recognition by other States.
• Domestic monopoly of violence => the ability to maintain order within the territory.

The author concludes with a comparative, pragmatic and philosophical study of the State.

4/ The rise of the Nation-State

Balaji Srinivasan reviews the concept of the “Nation-State,” and then traces how Nation-States came into being. He discusses the role played by the innovations of cartography and printing capitalism in their creation.

Next, the author recounts the historical and political events that led to the rise of the Nation-State.

Finally, he develops four ways in which a Nation-State can develop:

• Demographically: by reproduction or immigration.
• Geographically: by conquest (e.g. Ivan the Terrible’s expansion of Russia), acquisition (e.g. the Louisiana Purchase), or agreement (e.g. Singapore’s involuntary separation from Malaysia).
• Economically: through trade and open markets.
• Ideologically: through education and conversion.

5.2 – Network States

In the fifth chapter of the book, Balaji Srinivasan describes in detail what Network States are; what their components are, what a Network State might look like; and how this system might work in our world.

He then analyzes the change underway: outlining contemporary catalysts; and technological and political developments that are likely to alter centuries of practice.

1/ What is a Network State? | 12 essential components of a Network State

– Definition of a Network State

Balaji Srinivasan returns to the definition and image of the Network State he shared at the start of the book (see the beginning of this summary):

“A Network State is a social Network with a moral innovation, a sense of national consciousness, a recognized founder, a capacity for collective action, an in-person level of civility, an integrated cryptocurrency, a consensual government limited by a social smart contract, an archipelago of crowdfunded physical territories, a virtual capital, and an on-chain census that proves a large enough population, income, and real estate footprint to attain a measure of diplomatic recognition.“

The author’s definition refers to the final form of a diplomatically recognized Network State.

But it is, of course, not possible to achieve diplomatic recognition from the outset. A Network State cannot be founded in this way. The author explains that we must first create a startup company; and then transform it into a Network State that obtains diplomatic recognition from a pre-existing government.

Balaji Srinivasan then develops each component of the definition in detail.

– First component: the social Network 

The inhabitants of a Network State form their nation online. Social proximity takes precedence over geographical proximity. However, this is not a “classic” social Network, because, in a Network State; there is only one coherent community present and not many distinct communities as is the case with Facebook or Twitter; for example.

Admission to this social Network is selective. An application process must demonstrate alignment, the existence of shared values; as well as an investment of time and energy in the society. It also involves a social contract, a “smart contract” that every member signs before joining. This is what turns [an abstract proposition into a real nation.]

Finally, the author points out that people can lose their account privileges if they behave badly, and that everyone who participates in the nation has explicitly chosen to do so, by postulating.

– Second component: a moral innovation

A Network State develops from a startup society based on a moral innovation. Thus, everyone in the society believes that a principle considered bad by the rest of the world is good, or vice versa.

This moral innovation attracts people. It gives society a raison d’être, a purpose that sets it apart from the outside world; an ideology that others can understand even if they don’t share it.

– Third component: a sense of national consciousness

In a Network State, everyone has a sense of belonging to the same community. Everyone shares the same values and the same culture.

The nation of a Network State wants to do great things together.

– Fourth component: a recognized founder

The founder of the Network State provides strong leadership. This leadership is based on consent and support, not on propaganda or force. This recognized founder is listened to because people will have chosen to follow him/her by joining the community.

The founding leader needs sufficiently solid power to make difficult and important decisions without consensus.  On the other hand, just as the founder of a startup may choose to relinquish seats on the board of directors; this founder may share or relinquish his or her power. Should a Network State degenerate into a bureaucracy; the Network-State model is built to always allow for a peaceful exit by the founder.

– Fifth component: a capacity for collective action

This involves a combination of collective purpose (which is like a corporate mission Statement; but for a community) and the ability to act on that purpose.

The collective goal helps unify the community.

Collective action to achieve this goal requires a Network union. So, right from the start, people work together for the benefit of the community through an interface on their screens (with a team dashboard, and tangible objectives to be achieved by the group).

– Sixth component: a level of civility between people

A Network-State is made up of a “high-trust society.” This means that courtesy and civility are respected between members of the community, both offline and online.

This atmosphere of trust stems from members’ alignment towards a collective goal and a sense of national consciousness.

– Seventh component: an integrated cryptocurrency

[This is the digital backbone of the Network State,] assures the author.

This cryptocurrency manages internal digital assets, smart contracts, web3 citizen logins; birth and marriage certificates, property registers, national public statistics; and all other bureaucratic procedures that a nation-State manages with sheets of paper. Because it is protected by encryption, it can coordinate all the functions of a State across the borders of inherited nation-States.

– Eighth component: an archipelago of crowdfunded physical territories

This is the “physical footprint of the Network State.”

The community built in the cloud crowdfunds this physical real estate (offices, homes, stores) spread around the world in clusters rather than concentrated in a single location. These clusters are Networked: a member can, for example, see a small flag appear in his or her augmented reality goggles; or benefit from a login to open doors to property in the Network State.

– Ninth component: a consensual government limited by a smart social contract

For Balaji Srinivasan, contrary to what many believe, laws are not the first step in creating a new State. For him, laws should come only after the formation of an organic people, a Networked nation, not before.

Why? Because laws encode the implicit understanding of a people. In his view, we need to establish laws that reflect the moral consensus of a people, i.e., that reflect what the people want to encourage and discourage, what they consider acceptable and optional, obligatory and forbidden/prohibited.

In a Network State, the consent of the governed makes any form of government internally legitimate. Moreover, any member of the community is free to leave as soon as governance is no longer to his or her liking.

Of course, many questions arise: how can consent be given? How can others measure that consent has been freely given? And what happens if someone wants to withdraw that consent; perhaps just before being subjected to an act of governance they don’t like?

Overall, these questions are answered by the “smart social contract” that each new member agrees to sign on admission to the startup society.

For Balaji Srinivasan, the term “smart social contract” combines Rousseau’s concept of the “social contract” with the blockchain concept of the “smart contract.” 

Physical law may continue to apply to deal with physical criminals, but gradually; it could be autonomous robots (legged robot dogs called digidog, rolling cameras, or flying drones) that would take over law enforcement duties.

– Tenth component: virtual capital

The Network State is a physically dispersed community; but its members are digitally united in a single location in the cloud: this could be a simple Discord channel at first. Then, it could evolve into a private sub-Network of the “open metaverse,” in other words, into a virtual reality environment with parts projected into the physical world to see, through augmented reality goggles, digital buildings, people, or objects in the real world.

Access to the virtual capital of this Network State is restricted to citizens connected via the web3.

– Eleventh component: a blockchain census to prove that population, income, and real estate footprint are large enough

The census of a startup society must be carried out in real time (and not every ten years; as is the case in the USA, for example). The number of inhabitants, annual revenues, and real estate footprint of a startup society will be able to be proven thanks to the data collected and recorded on the blockchain.

This means establishing a supply chain of cryptographically verifiable information; as well as a transparent way of collecting and showing all the figures for the State-of-the-Network census.

– Twelfth component: diplomatic recognition

“Diplomatic recognition by a pre-existing government is what distinguishes a Network State from a startup society, just as ‘diplomatic recognition’ by an exchange like the NASDAQ distinguishes a public company from a startup.“

Diplomatic recognition requires a State to have established its influence and growth.

Balaji Srinivasan insists on the importance of diplomatic recognition. Because without recognition from other sovereign countries, a State is fundamentally not considered legitimate and real. This means that any government can invade it at will, without any concern on the part of other States; that it cannot sign trade agreements, that its authority can be challenged, and so on.

The author concludes by demonstrating how the 12 components he has just developed are fundamental to building and operating a Network State. To do this, he takes each of these elements and explains what would happen if they were removed.

2/ How the Network State system works: the 12 fundamentals

This part of The Network State examines the 12 fundamentals required to make the Network State system work.

– Digital, national, and governance Networks

The Internet’s digital Network is paramount. A Network State is made up of a national Network (the equivalent of the nation) and a governance Network (the analogue of the State).

– The Terra Incognita principle

Small Network States can adopt invisibility as a strategy.

– The Terra Nullius principle

Unclaimed digital territory always exists: in the form of new domain names, cryptographic usernames; plots of land in the metaverse, social media pseudonyms, and so on.

– The dynamic “upward migration” of people

Citizens migrate digitally and physically between Network States.

– N Networks per citizen

Unlike the Nation-State system, where most people are citizens of a single State; in the Network-State system, each person can in principle be a member of several States. An individual can thus hold several passports from different countries and several cryptocurrencies. He can use several social Networks.

– The legitimacy of physical migration and digital choice

The power of Network States is limited by consent and cryptography.

The governance Network of a Network State controls only those digital citizens (Internet users) who have adhered, individually or collectively, to its governance (a bit like explicitly signing an employment contract by joining a company or implicitly signing a social contract by crossing a border).

Cryptography guarantees that this choice is manifestly free and unconstrained. It also guarantees fundamental rights such as freedom of expression, free migration, private property; freedom of digital assembly, etc., since each user has exclusive access to his or her private keys.

– Decentralized administration 

The group of administrators of a Network State – called the “governance Network” – consists of a founder/CEO and his engineers.

The latter write laws in code to specify what is mandatory, encouraged, discouraged, and prohibited. These laws are interpreted by impartial servers and enforced cryptographically.

In the Network State system, each social sub-Network can choose which governance Network administers it (this is determined by its physical location and the location of its digital property).

People can therefore switch between Network States – and therefore between governance providers – [just as they switch between Uber and Lyft as cab regulators, or Bitcoin and Ethereum as currency regulators,] says the author.

– The national monopoly on root access

Only the governing Network has root access. Therefore, if necessary, it can activate digital switches to maintain or re-establish national order; just like system administrators in today’s technology companies.

– International sovereignty through cryptography

Access to a Network State’s administrative interface (by both government and individuals) is controlled by “private keys” rather than a username/password combination. In this way, encryption makes theft difficult; it’s a new way of defending the sovereignty of the State.

In short, cryptography (private keys) replaces or at least complements the military’s mission.

– Digital diplomatic recognition 

Network States can recognize each other bilaterally (a bit like connecting two applications with API integration) or multilaterally (by supporting the same blockchains, for example).

When people exit to other Network States, whether digitally or physically; they bring with them their assets in the form of private keys. Some of these keys give access to property in global blockchains, others give access to physical assets (cars, houses, etc.); and still others give access to records hosted on State-managed blockchains (the internet user profile in the Network State they’ve just left, for example).

– Managing cooperation and constraint through blockchains

Public blockchains are the equivalent of international law in a Network-State system. They facilitate economic and social cooperation between Network States and their Internet users but also subject these States to a cryptographically binding code.

– Pax Bitcoinica 

The ultimate guarantor of the Network State system as a whole is Bitcoin. In particular, Bitcoin prevents States from printing infinite amounts of money, illegally seizing their citizens’ funds, and waging war.

3/ The four assumptions required for a Network-State system to work

According to the author, for the Network-State system to work, four assumptions have to be met. 

– First assumption => Everything becomes digital, the physical is secondary.

Here, the author considers that the world has gone digital: all man-made events begin in the cloud; before being, if they are important, “printed” in the physical world.

So, everything is online: all office work, much socialization, courts, politicians, money, agriculture, manufacturing, shipping. The telephone has become “the world’s remote control” and all devices leave a digital trace.

[The physical still exists, of course,] says Balaji Srinivasan. [There are still physical human beings, physical plots of land, physical rivers and mountains,] he continues. And there are physical robots to carry out certain legal and military functions. [But in a Network State, everything physical is downstream of lines of code and enforced by cryptography, just as in a nation-State, everything physical is downstream of pieces of paper and enforced by the police and military,] launches the author.

– Second assumption => The State becomes an admin dashboard

Currently, there are no “private keys” on the digital interfaces of States. States can therefore continue to centralize the power of their technology companies by controlling them: they can monitor, distort, freeze, and punish Internet users who do not have a truly free choice of administrator. This digital power is exercised transnationally, without the consent of the governed.

The Network State system, on the other hand; assumes that we can constrain it: while every legitimate State inevitably needs a certain amount of power to govern, the Network State relies on decentralized services that have no single system administrator, and which offer tools for the physical and digital exit of citizens.

– Third assumption => The world is divided by the Network rather than by the land

The Network-State system limits the State’s digital power only to those who have opted to join the Network. [This is a probabilistic numerical division of people rather than a deterministic physical division of land,] observes the author.

– Fourth assumption => Consent and the cryptographic constraint energize States and citizens

Network States have a root dashboard with full access to all digital aspects of the Network they govern. Access to this data is secured by private keys, protecting the State from outside interference.

Internally, constraint is established by cryptographic and physical output (rather than by treaties or paper laws). In this way, a Network State does not resort to violence (unlike existing States); because if it were to become oppressive or incompetent, its citizens; free to enter or leave, would choose to leave, or not enter.

This system energizes both States and citizens, who thus find themselves under constant tension.

4/ Lastly, the Network-State is a single Network that brings together…

• Living beings (a national Network) => the organic, voluntary, bottom-up nation that underpins the State is formed online in a Network (people are dispersed in the physical world but grouped together online) on the basis of language, culture, proposition, or a combination of these.
• A digital territory (metaverse subNetwork) => when the world of virtual reality matures, the territory of a Network State will be identified as a subNetwork of the open metaverse.
•  Rules that bind people (governance Network) => “paper” laws, interpreted and deployed without any testing with hundreds of millions of people will be archaic. The Network State creates and applies laws digitally.
• The power that enforces laws (Bitcoin Network) => The Network State can be seen as a fusion of “God/State” Leviathans.

5/ Network terminology: 0-Network, 1-Network, N-Network

Balaji Srinivasan then generalizes the concepts of micronations and multinations to Networks (microNetworks and multiNetworks). He develops an entire argument to arrive at the following idea: [only decentralized Networks can give rise to Network States.]

The author then goes on to define the underlying Networks: 0-Network, 1-Network, N-Network. He cites the concrete example of Facebook to better understand what this means:

• 0-Network => an aspirational social Network startup with no users. Example: Facebook at its inception, 1 founder, no users.
• 1-Network => a coherent community. Example: Facebook at Harvard, one month after its creation.
• N-Network => a vast global Network of Networks. Example: Facebook today, with over 3 billion users.

6/ What does a Network State look like on a map? 

– On a physical map

In physical space, a Network State looks like an archipelago of interconnected enclaves: the author calls them “nodes.” Each of these nodes is populated by a group of digital citizens who have chosen to live together in the physical world.

These are the Internet users who finance the territory of the Network State throughout the world. Thanks to Web3 connections, they link every element of this territory digitally; as well as what is “online” and what is “offline.”

A dashboard shows the population, income, and real eState of the Network State across all Network nodes. As the State grows, these figures can, over time, become comparable to the footprint of legacy nation-States.

“So, a Network State is a physically distributed State, a bit like Indonesia; but with its pieces of land separated by internet rather than ocean.“

– On a digital map 

In digital space, a Network State resembles a densely connected subgraph of a large social Network. In the terminology evoked by the author above, this is a Network 1, not a Network N.

To understand the digital space of a Network-State, you need to know that it is very different from physical space:

“While the Nation State is based on a deterministic physical division of land into States, the Network State is based on probabilistic digital division of people into subNetworks.“

Balaji Srinivasan goes into detail on these differences, which he describes as fundamental:

They are summarized below:

• Its dimensionality: beyond latitude and longitude, representing a subgraph correctly requires more dimensions.
• Its plasticity: for a better understanding, the author has us imagine a bridge connecting South Africa and New York City, or an agreement between Spotify and Uber; suddenly, two huge Networks are connected and people can cross (this will become much more obvious with the metaverse).
• Its speed: to better grasp this, the author makes us compare the difference in time it took the British Empire for its global footprint to that of Facebook for a far greater global penetration than that in just a few years.
• Its elasticity: it’s easier to create digital lands than physical ones. In the physical world, land value is based on location. The value of digital real estate is based on connection.
• Its invisibility: borders between nation-States are by default highly visible, while those between Networks are by default invisible. Moreover, once continents have been discovered, they don’t move. In contrast, on the Internet, millions of nodes can disconnect and reconnect at the same time, and new supercontinents of over 100 million connected users (like TikTok) can appear out of nowhere.

7/ How and why found a Network State? 

Here, Balaji Srinivasan describes four new concepts for understanding how a Network State is built.

First, he describes the concepts of startup and parallel societies; which are roughly analogous, he tells us, to startups and technology companies respectively.

– Startup societies

You don’t just create a Network State, you create a startup society. This startup society is a new community, still small in population, built on the Internet; generally with the aim of voluntarily solving a specific social problem:

“Like a startup (and unlike a small business), a startup society is a small group with ambitions of doing big things.“

– Parallel societies

A parallel society is roughly equivalent to a startup company, except that it can be much larger:

“Like a tech company (and unlike a legacy entity), a parallel society is a small-to-large group of people with at least one proposed major innovation relative to how things were done before.“

Next, Balaji Srinivasan discusses Network unions, Network archipelagos, and Network States.

These three concepts mark out the path to the Network State. Their boundaries are sometimes blurred. Despite this, it’s a realistic path from a single Network syndicate founder to something big. 

– The Network syndicate (or Network union)

Although entirely digital, a Network union is a real entity organized as a social tree; with a leader, a common goal, a financial system; a cryptographically-based messaging system, and daily collective action.

Collective action and common purpose create a culture and gradually evolve a group of people into a Network 1, a Network with a national consciousness, into the foundation of a Network State.

A Networked union doesn’t just carry out private actions for the collective benefit of its members. It also carries out public actions that show the world how organized, aligned, dedicated; and mutually cooperative the members of the Network union are. These “public displays of alignment” – as the author puts it – prove that a Network union can coordinate like an organic nation. It’s a first step in the long process towards eventual diplomatic recognition.

– An archipelago of Networks

The Network archipelago is a Network union that has accumulated enough money to start acquiring and Networking properties in the physical world. Physical interaction is essential to establish trust.

– The Network State

A Network State is a Network archipelago that has obtained diplomatic recognition from at least one inherited State. Diplomatic recognition is the key to achieving sovereignty.

– Diplomatic recognition

Balaji Srinivasan calls the first government to recognize a Network State: a priming recognizer.

The system of priming recognition is based on the following idea: the formal acceptance of the new system by the old to form something stronger than either individually.

By recognizing a Network State, the inherited country undertakes to respect the internal sovereignty of the new Network State, admitted into the family of nations. To do so, it will have to open up and innovate in terms of trade and institutions. And the founders of the future Network State must not be misanthropic or isolationist.

“Each Network archipelago that wants to become a Network State should have a thesis on who its bootstrap recognizer is. It will likely be an existing State with many ‘binationals’ that have formal legal citizenship with their existing Nation State but have mentally migrated to become dual citizens of their new Network State. “

Lastly, the author indicates that once the number of Network States becomes significant; they could initiate the recognition of other Network States.

Lastly, Balaji Srinivasan explains why it is in our interest to found Network States. Here are the three reasons he outlines:

• Countries aren’t perfectly good, and it’s easier to create a new country than to reform one.
• Creating new countries allows us to start again “without the baggage of the old.”
• New jurisdictions are needed today for certain technologies (life-extension biotechnology, for example).

According to Balaji Srinivasan, Network States are particularly interesting for engineers, activists, idealists, the ambitious, technologists, and political progressives.

8/ How does a Network State develop and contract? 

The concept of the Network State offers a whole new way for States to develop/expand. It’s no longer a question of developing violently in the physical world: it’s now a question of developing peacefully in the digital world.

The process of Network State formation can begin with a single founding influencer and extend to a physical community of a million people.

Balaji Srinivasan lists the growth vectors of a Network State:

– Demographically 

A Network State (or predecessor entity such as a Network union or Network archipelago) can expand its user base through recruitment and reproduction (a policy will then be needed to recognize new family members as Internet users, such as jus sanguinis).

– Geographically

The citizens of a Network State can finance more and more territories in the physical world. This is a peaceful mechanism for territorial expansion.

– Numerically

A Network State grows by increasing its domain names, cryptographic usernames, and social media pseudonyms.

– Economically

A Network State grows economically through the revenues its members earn and reinvest in blockchain. These figures can be made public to the world via “cryptographic oracles,” showing the growth of its GDP and net worth.

– Ideologically

A Network State is fundamentally a propositional nation. In fact, it constantly preaches its beliefs and bases the recruitment of its members on its ideology.

– Technologically

A Network State knows that, in the absence of innovation, its (mobile) citizens will leave for more advanced jurisdictions. For this reason, technological progress is a defining characteristic of the Network State. [Steady, non-violent growth is now possible, not through conquest or coercion, but through will and innovation,] assures the author.

Balaji Srinivasan concludes by citing examples of nation-States that might otherwise be considered Network-States but are not.

5.3 – The 8 technological developments that enable the creation of Network States

To conclude the fifth chapter of The Network State, Balaji Srinivasan describes the technological changes that make it possible to consider founding Network States today (rather than 5, 10, or 20 years ago).

He outlines the 8 main catalysts of the Network State, summarized below.

1/ Internet

The Internet can be seen as a kind of digital Atlantis that has turned the world upside down. For Balaji Srinivasan:

“The Internet is to the USA as the Americas were to the UK: a wide-open territory that ultimately gave birth to new States and ways of thinking.“

2/ Bitcoin

Bitcoin constrains inherited States. It guarantees the sovereignty of both the individual citizen and the Network-State itself. It has created new fortunes outside the hitherto known system and enabled Web services to be designed in a decentralized way. 

3/ Web3

Web 3 enables new blockchains, decentralized identities, and censorship-resistant communities. Voluntary gatherings of people can exist outside the interference or surveillance of legacy States.

4/ Starlink and Remote

Today, as soon as something is published on the Internet, it becomes accessible remotely, all over the world. Starlink, and satellite broadband in general, opens up frontiers and makes previously abandoned areas on the map far more attractive. Unlike past eras, you no longer need to be near a mine or a port to build a city.

5/ The smartphone  

The mobile makes us mobile. With the advent of sufficiently advanced phones, we can now choose to move wherever we want.

6/ Virtual reality

Virtual reality, and more generally the metaverse, makes it possible to build capital in the cloud. Augmented reality reflects this on the ground.

“We can now build full castles in the sky, and then with augmented reality project them onto the earth. For a Network archipelago or Network State, that’s a powerful way to link distributed physical territories together into a coherent whole.“

7/ Social media

Social media enable anyone to build up a massive online audience. They have “disintermediated” legacy media and, combined with messaging applications and related tools, have made contacts infinitely portable.

8/ GAFAM

Here, Balaji Srinivasan sees GAFAMs as a catalyst for Network States. Here’s what he writes about them:

“Google showed us what could be done from a garage. Facebook showed us what could be built from a dorm room. The entire startup industry has shown us that big things can be done on a shoestring. Without the trillion-dollar companies and billion-user Networks, we wouldn’t feel like we could build million-person Network States.“

As a result:

“From the postal service to Gmail, from cab medallions to Uber and Lyft, from the banks to Bitcoin, from the maps to Google Maps, from the FCC to WhatsApp, from the courts to moderators, legacy States control less and digital Networks control more. Of course, the former lack technical competence and the latter lack democratic legitimacy, which is exactly the problem the Network State solves.“

5.4 – Three elements useful to Network States, but not essential to their construction

[The seasteaders and artificial islands built in Dubai show that land supply may be more elastic than we think,] says Balaji Srinivasan. These are, in fact, examples of how we could [reopen the frontier not just digitally but also physically.]

1/ The earth becomes elastic

2/ Telepresence changes the nature of immigration

For the author, it will soon be possible to dial up a robot on the other side of the world and use it to travel anywhere on the globe. And we’ll be able to control this humanoid robot in a completely immersive way.

3/ Innovation in atoms

[Innovation in fields such as biomedicine, robotics, and energy is not upstream from the State of the Network, but downstream,] the author points.

Indeed, the Network State uses digital technology to build a community in the cloud; a participatory financing territory, and, lastly, recognition as a sovereign regime. Once this has been achieved, however, innovation can be returned to the physical world of atoms.

Balaji Srinivasan concludes this section on Nation-States and Network-States with a sentence that summarizes some key points:

[The Nation-State was activated by maps of the world, tools to communicate, laws, and weapons to enforce them. The Network State is activated by the creation of a new world (the Internet); software to code and communicate with policies, and cryptography to enforce them.] 

Chapter 6 – Appendix

The final chapter is devoted to acknowledgments, annotations, and an appendix entitled “About 1729.”

In fact, “1729” is the name of the publisher of the book “The Network State“, from its original title. But 1729 is also the Hardy-Ramanujan number that symbolizes “black talent” for the author of Indian descent.

The term “black talent” is used to refer to:

“All those people from the middle of nowhere, passed over by the establishment; with crazy-but-correct ideas, who could do great things if only given the opportunity. These are exactly the kinds of people who we expect will found startup societies and Network States.”

The author concludes his book The Network State by pointing out that:

“It’s also a community for people interested in mathematics, cryptocurrencies, seasteading, transhumanism, space travel, life extension, and initially-crazy-seeming-but-technologically-feasible ideas…like Network States themselves.“

Conclusion to The Network State – How to Start a New Country by Balaji Srinivasan

The Network State: a book that takes you on a journey of thought that is as original as it is disruptive

Reading The Network State is quite the trip. It takes you through a labyrinth of dimensions (past, present, future) and Balaji Srinivasan’s incredibly in-depth analysis.

While the author’s original and brilliant thinking may require you to overcome certain prejudices at the outset; you’ll quickly be drawn into his inspiring vision of what the future of nations could be.

The perspective he shares through his radically new concept of the Network State suggests – to avoid a bleak future – replacing our obsolete systems of governance with a far more satisfying model of virtual, decentralized organization.

The Network State: an alternative to the traditional forms of failing governance

The Network State is a clear statement of the failures of our current governments; and of those that are very likely to follow. This failure of the Nation-State is a clear indication of the urgent need to rethink our modes of governance. At the same time, the book shows just how far digital innovations and technologies now enable us to imagine new ways of organizing government that were completely inconceivable just a few years ago.

In this context, Balaji Srinivasan’s Network-State is an almost natural alternative to the inefficiency of our age-old system.

Based on Networks and a digital rather than territorial grouping of citizens, the Network-State concept presented in this book offers us the possibility of living together in a decentralized society and economy. It frees us from the constraints of geographical proximity. Based on a shared moral innovation, the Network State described by Balaji Srinivasan relies on collaboration and cooperation between different players to achieve common goals, rather than competition or confrontation.

As such, the Network State is more flexible, resilient, and efficient than our current governments, including key areas such as communication, coordination, protection of privacy and data security, transparency, and accountability in decision-making, guaranteeing equal treatment for all, and so on.

A must-read to understand and positively impact our collective future

The Network State is an enlightening book for anyone seeking to develop an understanding of; and positive impact on, the future of society and the community.

In this age of global connectivity, artificial intelligence, and innovative technologies; Balaji Srinivasan’s book opens our minds to an infinite number of previously unexplored possibilities.

There is definitely a “before” and an “after” to this intriguing and fascinating read. An indispensable work in my eyes.

Strong points:

• A book that provides a better understanding of future economic, technological, and political upheavals in the world, sharing in-depth analysis and a number of hypotheses on the issues and challenges that lie ahead.
• An alternative proposition to what already exists, to governmental failures, an innovative and pragmatic path that appears almost self-evident.
• The numerous references and links to additional documentation throughout the book allow readers to explore the concepts and ideas further, if they so wish.
• The somewhat non-standard format, free and regularly updated.

Weak points:

• A read that requires considerable concentration and reflection, given the author’s level of expertise and in-depth analyses.
• If you’re unfamiliar with the current state of affairs and the subtleties of the historical-political stakes in the United States, you may find some of the information incomplete for a full understanding.

My rating :   

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The Handy Guide to Balaji Srinivasan’s The Network State

What are the three key points of the Network State?

• A population of 1.7 million
• With annual revenues of $157 billion
• An area of 136 million square meters

Frequently Asked Questions (FAQs) concerning Balaji Srinivasan’s The Network State  

1. How has the book been received?

The book has been very well received by the general public. On Amazon, there are over 80% positive reviews and glowing recommendations.

2. What has been the book’s impact?

It has provided invaluable insight into the concept of the Network State and has enabled readers to discover how anyone can create a country using the Internet, by bringing together a digital community.

3. Who is the target audience of The Network State?

This book is for anyone who wants to know the ins and outs of the new concept of the Network State.

4. What is the first core idea in the concept of the Network State?

It’s not a question of conceiving the State in terms of territory; as in the Nation-State, but in terms of spirit.

5. According to Balaji Srinivasan, what are the three most powerful forces in the world?

The author identifies the three most powerful forces as God, the State, and the Network.

Creating a new country: conventional vs. unconventional paths

Three conventional paths	Three unconventional path illusions
Elections	Micronations
Political revolution	Seastanding
War	Space

Who is Balaji Srinivasan?

Balaji S. Srinivasan (born May 24, 1980) is an American entrepreneur and investor. Co-founder of Counsyl, he is also former CTO of Coinbase and former general partner of venture capitalist Andreessen Horowitz.