Crypto-Powered Communities: Exploring the Era of Network States

Have you ever thought about what a nation or state really is? Maybe the first thing that comes to your mind is an established area of land. But wait there: without people, the USA or Japan would be just another patch of dirt, plants, and animals, wouldn’t they? So, people and all that they imply (minds, traditions, culture, laws, language, etc.) are also key to defining a nation. When talking about network states, they might be all that matters.

In 2022, the Indian-American entrepreneur Balaji Srinivasan published the book “The Network State: How to Start a New Country.” As the second part of the title implies, he’s proposing to create a new nation from scratch, independent from others, with its own money and systems, and formed by like-minded people distributed all around the world.

This new type of nation would start online and then would evolve into “physical nodes” funded and governed by its members. He described it like this:

“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.”

As an individual, anyone could choose to join a certain network state and abide by its rules and benefits, written and shared via smart contract. For Srinivasan, this system could be better than the alternative: be governed by the left or right global powers, which will always ensure the control and surveillance of the population while competing against each other.

How to Build a Network State?

It may sound nice, but it requires a lot of work. As the author mentioned, a network state just doesn’t come to exist without previous steps or stages. Therefore, he describes seven points to build a network state, and they don’t even need significant resources in the beginning. One person from their computer at home could start a network state.

They can begin by founding a startup society: an online community of like-minded people with ambitious aspirations. Then, organize this community into a purpose-driven network union, fostering collective action. The third phase involves building trust offline through physical meetups and concurrently developing an online economy through the creation and promotion of their own cryptocurrency.

With growing trust and accumulated funds, they can initiate crowdfunding campaigns to secure physical spaces, from apartments to entire towns, creating real co-living communities. The fifth step is connecting these physical nodes digitally to form a network archipelago, linking territories worldwide. Employ web3 crypto-passports for physical access and utilize mixed reality to seamlessly integrate the online and offline realms.

As the society expands, conduct a cryptographically auditable census, showcasing population, income, and real estate growth. Finally, seek diplomatic recognition from existing governments, gradually attaining increased sovereignty to evolve into a fully recognized network state.

The core concept revolves around populating land from the cloud, fostering a geographically decentralized but ideologically aligned community globally. As the network state's population and economy grow to rival that of legacy states, achieving recognition from established sovereign entities, including the United Nations, becomes a foreseeable milestone.

Why Build a Network State?

Because the current global landscape doesn’t seem very amicable or open to free innovation. That’d be the short answer, at least. Srinivasan put it this way in the book:

“We want to be able to peacefully start a new state for the same reason we want a bare plot of earth, a blank sheet of paper, an empty text buffer, a fresh startup, or a clean slate. Because we want to build something new without historical constraint.”

He also talked about how the world is facing a “Tripolar Moment,” where three main powers and visions are competing to win more influence: the American Establishment (symbolized by the paper NYT), the Communist Party of China (CCP), and the Global Internet (symbolized by BTC). The first one is described as “capitalism that enables decentralized censorship,” the second one would be fully centralized capitalism, and the last one is stateless capitalism, the decentralized and neutral sector.

In CCP-like societies, you must submit to their government's will; while in NYT-like nations you must sympathize. In the decentralized world, you must be sovereign —but that’s good only to some extent. No one wants to submit to undesirable or unjust laws, and it’s not always possible to “sympathize” with others’ ideas. On the other hand, an excess of sovereignty would mean that every person is alone with their needs, with only them to help themselves.

The concept of a network state tries to fuse the best of these three visions, in different flavors and communities. Not only “one” network state is meant to exist, but multiple of them, destined to different groups with diverse ideas. It’s said in this way: “… 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.”

Potential Issues of Network States

The concept of network states carries both opportunities and challenges. On the positive side, it enables global collaboration and democratizes participation. However, navigating legal complexities, regulatory hurdles, and the risk of widening digital inequalities poses significant challenges.

Not to mention the logistics, promotion efforts, funding, and mere years it would take to achieve something like this. To add some perspective, Bitcoin didn’t achieve “diplomatic recognition” (legal tender status) soon after its creation, but 12 years later. And only by a couple of countries, so far.

Looking deeper, unforeseen consequences could emerge. Digital nomadism offers freedom but raises concerns about dependence on technology. New social norms and a potential financial revolution bring opportunities but also introduce challenges, including increased cyber threats —as we’ve often seen in DeFi apps. The network state presents a mix of promises and uncertainties, demanding careful consideration of its potential impacts on our world.

In addition to the optimistic outlook, there may be notable risks. Prioritizing financial gains over genuine connections may commodify relationships. The risk of reinforcing cult-like echo chambers, marginalizing diverse opinions, and potential ethical concerns in inhabited areas require thoughtful consideration. As we explore the concept of network states, it's crucial to remain aware of both the possibilities and the challenges they may bring to the forefront.

Current Network States Initiatives

Despite everything, some parties have already started their own version of this futuristic concept. We can mention three running projects: Praxis, Afropolitan, and Epoch Island. Praxis aims to build cities as hubs of technological progress, emphasizing the importance of measurable economic and cultural capital. PRAX Credits, their own cryptocurrency, seeks to fund this new city in the Mediterranean.

Afropolitan envisions a digital nation, uniting Africans globally through a curated network. This initiative addresses issues of scarcity, weakness, and poverty experienced by Africans, proposing a Network of Abundance. The strategy involves building awareness, providing utility through the Afropolitan Super App, preparing for a transition to the physical world, and ultimately acquiring land for physical districts governed by the Afropolitan Network.

Finally, Epoch Island sets forth a mission to create a Network State by 2030, introducing a unique country governed by Islanders and Elders. It leverages a cryptocurrency, EPOCH, allowing ownership of land and treasury, and contributing to the growing economy. Intending to acquire diplomatic recognition, Epoch Island envisions becoming the Crypto Capital of the World, providing an alternative space for crypto users seeking refuge from centralized governments.

These ventures reflect the diverse paths toward building network states, ranging from creating cities grounded in technological progress, fostering an ethnic bond, or just establishing a new country with its own cryptocurrency. Each project navigates the complex landscape of community, governance, and economic structures in the pursuit of redefining societal models.

Obyte for Network States

Obyte, as a decentralized platform, possesses unique features that could potentially contribute to the realization of network states or similar decentralized communities. While it was not explicitly designed for creating network states, its decentralized nature and capabilities could facilitate the development of innovative social structures.

Known for its DAG (Directed Acyclic Graph) structure, Obyte provides a censorship-resistant platform. This architecture aligns with the concept of network states, where governance, decision-making, and participation are distributed among community members rather than concentrated in a central authority or a small number of central authorities — block producers in blockchains. It can foster a more inclusive and participatory model for building and governing communities.

Besides, the network supports smart contracts and Autonomous Agents (AAs), allowing for the creation of self-executing agreements without the need for intermediaries. It's also possible to create custom tokens, with or without coding. This feature allows communities to establish their own tokens with specific functionalities, use cases, or governance mechanisms.

Economy of Network States

Any country needs an economy, and the economy needs safe, properly enforced contracts. Obyte’s contracts with arbitration provide that, and Obyte is the only crypto network where they’re available. Likewise, any country needs a justice system. Obyte’s ArbStore and its arbiters provide a kind of autonomous justice for commercial relationships.

Contracts with arbitration, available through the Obyte wallet, offer secure decentralized escrow protection for two-party agreements, eliminating the need for mutual trust. They can work for individuals as well as businesses, and they’re particularly well-suited for international operations —like the ones a network state would need for its members.

These contracts can lock the funds until pre-set conditions are met by the parties. However, if one of the parties misbehaves, the other can call an expert arbiter to solve the dispute. They’re (human) professionals registered in the ArbStore platform with their real names and are available to solve certain types of disputes in exchange for a reasonable fee.

All of these opportunities are available with a strong emphasis on privacy and security — only the contract parties and, in case of a dispute, the arbiter, can see the contract text. This focus aligns with the need for secure and private communication within network states.

To explore the possibility of building an Obyte-based network state, community leaders and developers could leverage the platform's existing features and potentially customize certain aspects to suit the specific needs of their envisioned community. Whether it involves establishing a digital society, coordinating economic activities, or fostering collaborative projects, Obyte's decentralized infrastructure could serve as a foundation for innovative experiments in governance and community building.

Featured Vector Image by photoroyalty / Freepik