The Network State: A Guide to Creating Your Own Nation

With the growing influence of Web3, the ambitions of IT specialists have only intensified. New groundbreaking ideas have emerged that might look crazy from the first glance. Just take for instance the prospect of establishing a fully digital nation that exists in the online space, but its benefits extend into the offline world! While it may sound like a plot from a science fiction novel, this development is entirely feasible and has already been officially named as "the Network State". Let's delve deeper into what this new digital sovereignty entails and thow big is the role of blockchain in it.

What is the Network State

The Network State is not just an idea but a well-defined concept for a new socio-legal nation that is tightly intertwined with both the digital and physical worlds, with blockchain technology at its core.

Balaji Srinivasan, formerly the Chief Technology Officer of the cryptocurrency exchange Coinbase, is credited as the creator of the Network State. In 2022, he published a book, in which he outlined the fundamental principles of this novel nation, its ideology, and ways to develop.

The core principles of the Network State

Balaji Srinivasan drew inspiration from the idea of creating a community of like-minded individuals who are technologically advanced in Web3 space. For such people, the development of digital infrastructure represents the next step in their evolution and a transition to a new way of life. Srinivasan himself, along with his supporters, believes that the Network State has the potential to create a more democratic and equitable world in contrast to the present state of affairs.

The book outlines the fundamental principles of this new digital nation:

• All its citizens are technically advanced individuals.
• The Network State has no borders.
• The primary means of communication for citizens of the Network State is the Internet.
• Decentralization is the cornerstone of governance.
• All public records will be stored on the blockchain and considered the "new chronicle".
• The Network State is conceived as an extension of the national state.
• Entrepreneurs will replace traditional government officials in the new nation.
• The new state is open to experimentation and grants every citizen the right to self-realization and the management of their own resources.

The process of creating the Network State

Balaji Srinivasan emphasizes that the first step is to establish a startup community. Just as in any endeavor, the initial focus should be on bringing together a group of people united by common goals, tasks, and a shared vision. In the concept of a digital nation, it's not necessary for people to be physically located in the same place — communication can be maintained through the internet.

As the startup community evolves, it will transform into a confident and active group that begins to formulate a plan for achieving its goals. At this stage, the group establishes dispute resolution systems, resource allocation mechanisms, and principles for making collective decisions.

The next step holds particular importance in the Network State system. It is aimed at building trust within the group to establish both online and offline economies. Besides maintaining warm relationships among group members, it is also essential to create a transparent financial management system (by using cryptocurrencies).

Once online connections have been established to the extent that no member of the group doubts the trustworthiness of others, it's possible to transition to building offline relationships. To achieve this, crowdfunding will facilitate the construction of physical centers – real-world places for further activities. Since these physical centers will be scattered around the world, communication between them will be made through digital communication with the integration of augmented and virtual reality technologies. the progress of the network state and all its developments will be recorded on the blockchain.

The final stage in creating the Network State is its diplomatic recognition. Once this recognition is obtained and other countries and states acknowledge it as an equal in terms of rights, then the Network State can rightfully consider itself the world's first legitimate digital nation.

Criticism

In his book, Srinivasan openly states that the traditional format of the nation-state has died out and it's time to move on to new forms. He argues that humanity is currently in a crisis, at a turning point where the established model of government clashes with the emerging digital reality. Many have called it the “god complex”, saying that the author is too ambitious.

Critics, in general, have previously accused IT specialists and blockchain engineers, in particular, of being inclined towards grandiose ideas of world governance. The greatest skepticism among experts and analysts revolves around issues of security, power distribution, governance, and the stability of the new state.

Conclusion

Despite the concept being very bold and contentious, it has garnered support from several influential figures in the tech world. One of the supporters of Srinivasan's ideas is Marc Andreessen, a well-known American engineer, investor, and creator of NCSA Mosaic. Vitalik Buterin, the creator of Ethereum, also spoke positively about the idea of creating a new world: "We launched a new currency, and the Network State shows how to create new cities and countries". However, he did not agree with all of Srinivasan's ideas, as we can see from his article “What do I think about network states?”.

In general, the idea of creating one's own decentralized space has long fascinated developers. Srinivasan is the first to have gone so far in his fantasies about a new reality. While his concept is imperfect, it is attractive, and it's quite possible that it will be realized to some extent in the future.