Crypto investor Balaji Srinivasan’s book The Network State was released on July 10 and centers around creating startup societies that are founded in the cloud, use an integrated cryptocurrency, and crowdfunded physical territories.
In a July 12 blog post, Ethereum founder Vitalik Buterin shared his thoughts on the book.
Although Vitalik disagrees with Balaji on some points, he’s undoubtedly in favor of experimenting with network states. He writes that network states “can be viewed as attempts to sketch out a bigger political narrative for crypto.” Rather than crypto being just a playground for degen traders and crypto bros, network states offer an opportunity to build entire communities and ecosystems around the blockchain.
While this idea of network states sounds like something out of a Ray Bradbury novel, there have been multiple network states initiated during the bull run. CityDAO formed in July 2021 and soon bought a 40-acre plot of land in Wyoming for an undisclosed sum, and Praxis raised $15M to fund their techno-optimistic city.
Vitalik has said before that he would like to see more public goods in crypto and fewer monkey jpegs. Network states may be a potential answer. Vitalik cites CityDAO and gives a few examples of potential network states, with some more realistic than others.
Looking to be in a country that only serves keto food? Build a keto community online, buy land, and then build a community in the real world. Looking to be in a country that allows public nudity or a country that only uses crypto?? The playbook remains the same. “Someone of almost any political ideology could find some form of network state under this definition that they could get behind,” Vitalik wrote.
But, a network state according to Balaji, is far more in-depth than simply a keto-strict city.
What Is A Network State?
“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.”
Vitalik admits that he and Balaji differ on the amount of libertarianism in their style of thinking about network states. Vitalik says that he is accustomed to a leftist idea of increasing equality through regulation, but Balaji leans further to the right, believing that the answer lies in creating brand new self-sustaining, more homogenous communities.
To find a middle ground, Vitalik suggests bringing in more democracy and large-scale coordination. Vitalik believes that while it is natural for founders to initially be key players in network states, there should be a transition of power to the masses over time. He writes, “As the network state enters higher tiers of maturity and scale, more input from community members is taken into account automatically.”
To decentralize power even further, Vitalik believes that coin-based governance is not always the answer, and more traditional democratic voting may be appropriate.
Balaji responded favorably to Vitalik’s suggestions, tweeting, “my quick response (and I think Vitalik would agree) is that the network state concept is flexible enough to accommodate these proposed edits. It’s very much a toolbox rather than a manifesto.”
Like countries and empires, both Balaji and Vitalik agree that network states will undergo countless experiments and iterations in pursuit of the perfect system.