May 4, 2023 2 min read

Executive summary: The Network State by Balaji Srinivasan — How To Start a Digital Country

In this article, I explore the concept of the Network State by Balaji Srinivasan, discussing its potential benefits, step-by-step formation process, and the future implications of digital countries based on blockchain technology.

Summary: The Network State by Balaji Srinivasan explores the idea of creating digital countries using blockchain technologies as their foundation.

Who Is Balaji Srinivasan?

Balaji Srinivasan is an angel investor and entrepreneur, the former CTO of Coinbase, and a former partner at Andreessen Horowitz.
He is a thought leader in the blockchain space and a respected voice on the topic.

What Is a Network State?

A network state is a highly aligned online community that can take collective action, crowdfund territory, and gain diplomatic recognition from existing states.
Based on the premise that blockchain technology allows the foundation of new societies, which can evolve into digital nations and states.
Avoids traditional methods of country formation such as war or secession.

The 7 Steps To Forming a Network State

Founding a Startup Society: A network state begins as a community focused on a specific purpose and introduces a "moral innovation."
Organize the Society Into a Group Capable of Collective Action: Similar to a union, a network state drives positive change by taking collective action according to its guiding principles.
Build Trust Offline and a Crypto Economy Online: A network state is backed by a cryptocurrency and builds trust offline to develop into a high-trust society.
Crowdfund Physical Nodes: The society secures a physical footprint by building physical nodes, such as apartments, farmlands, or other locations.
Digitally Connect Physical Communities: The capital of a network state is online, connecting members who may be physically distant.
On-Chain Census Tracking Its Growth: A network state has a ledger of its members, which allows it to track metrics and build clout with other organizations.
Diplomatic Recognition: The final step is obtaining recognition from existing entities, such as becoming a member of the United Nations.

Why Do We Need a Network State?

Balaji Srinivasan believes existing systems are not working efficiently and do not foster innovation.
Network states can provide new ways of organizing societies, ensuring positive change, and legitimately starting new countries.

Do Network States Already Exist?

While there are some examples of similar concepts, such as e-residency programs in Estonia and blockchain-based voting systems in some countries, network states in the full sense of Dr. Srinivasan's concept have not yet been fully realized.

What Does a Network State Look Like on a Map?

A network state would have both an online presence and real-world physical nodes, like workspaces or communities.
It might be spread across multiple geographic locations, with its "map" being a representation of the online connections and offline nodes.

What Does Vitalik Buterin Think About Network States?

Ethereum co-founder Vitalik Buterin is intrigued by the concept of network states as a potentially more legitimate and organized way of starting new countries.
He emphasizes the need for careful design and governance of these new digital nations to avoid the pitfalls of the past, such as centralization and a lack of transparency.

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