The Next State - Thoughts Inspired by The Network State by Balaji Srinivasan.

August 2022

“Because the brand new is unthinkable, we fight over the old” (Srinivasan 13). For over 7,000 years, clay tablets were the prominent form of written communication. In more recent times, we fight over institutions in the same way we have for the past hundred years. Humans are resistant to change and would rather fight over the old than create what is new. Creating what is truly new is often unthinkable, seemingly impossible, but typically revolutionary. The creation of network states and the transition from nation states to network states (analogous to the transition from tribes to nation states) may prove to be the next revolutionary force to alter humanity and allow us to cease fighting over the old and instead build together what is new.

To provide context on the distinction between a nation state and a network state, here are a couple definitions: a nation state is “a territorially bound sovereign polity that is ruled in the name of a community of citizens who identify themselves as a nation;” a network state, as defined by Balaji Srinivasan, 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” (Srinivasan 9). The definitions of each of these forms of state can expand to much more, but the obvious differentiator is that network states, unlike nation states, are not bound by land; network states would have been near impossible to form just twenty years ago as few people understood the capabilities of the internet. However, as major internet networks like Facebook and Google emerged, society witnessed the dawn of a new life of global connectedness. In no other time could a person in Canada and another in Singapore, for example, communicate so easily and not only communicate but collaborate and transact with one another. Before the modern internet age, the tech hub was in one defined physical location, the banking hub was in another, and so on. However, these hubs (some faster than others) are now converting to bits. People around the world are slowly finding themselves on the same playing field, enabled by global internet networks.

The networks of today have opened the world to the capability of forming new societies based around shared goals and ideals rather than solely shared territory. As war becomes more costly and dangerous, fighting over land and supporting the governments that wage these wars becomes less sensible. As nation states helped tribes to organize and lead us into the modern era, network states can dismantle the broken bureaucracy of nation states that has stifled growth and productivity in recent decades. But why a network state?

The network state as a concept will be successful in large part because it is based around a blockchain. Blockchains are crucial to the formation of new countries not because they allow users to gamble on random coins and tokens but because they democratize access to history. Bitcoin is only valuable because it has billions of actions (transactions) of verifiable history. In the past up to the current era, the winners write history (we have seen this with everything from book burners to books that conveniently exclude aspects of true history). However, with blockchains, history no longer needs to be a centralized force passed down by those who have taken the authority to do so.

The decentralization of history is not only important just to understand where one came from, but history also allows us to predict the future. On a superficial level, we can see this with pricing (e.g. the price of my home is moving like this now; let me look to the past to see what price movement was and possibly I can make a prediction). On a deeper level, we can use history to create innovation and predict the needs of mankind going forward. When history is on-chain and unable to be tampered with or forged, members of a network state can easily review the past to see into the future. History has been distorted in the modern global state, and he who controls history, controls power. To put history on-chain is to decentralize it and thus decentralize power, allowing for the network to become the state and real innovation to flourish.

Through the network state, we can imagine a re-centralized center, away from the warring poles of NYT and CCP and towards the neutral BTC. I want to leave this paper with a great quote from Balaji that summarizes this point: “When you mention a recentralized center, at first it seems laughable. The centralists will say ‘what’s the point of decentralizing then? Just stick with our existing system!’ And the decentralists will say ‘new boss, same as the old boss, I prefer freedom!’ Derisive references to Rube Goldberg Machines and Animal Farm will abound. But the whole point is that the new boss is not the same as the old boss, anymore than Apple was the same as BlackBerry, Amazon was the same as Barnes and Noble, or America was the same as Britain…Just as companies and technologies keep leapfrogging each other, so too can new societies…combine moral and technological innovation to genuinely progress beyond our status quo” (Srinivasan 198). Shifting beyond the status quo to something greater is the challenge for all mankind; to break from the herd in order to create what is new is the ultimate display of selflessness and respect for the good of humanity.