Network States, Network School, & Ethereum [remote] - Balaji Srinivasan

Transcript

All right, great. Okay. So, um I'm going to talk to you guys about uh you know, we've started new currencies. Can we start new countries? And new communities, new cities, uh and why I think we can do that and why we think we're going to need to do that and perhaps how you can work with us on the start societies network states movement. So, starting new countries is possible, but why now and what next? Let me start with that first part first. Why is starting new countries possible? So, I wrote a book on this in 2022. It's pre-AI. Lots of things have changed, but I think the core concept has has held up and it's at the networkstate.com.

And in theory, theory and practice and saying and practice are different. Let me Let me describe the theory though first, right? Starting new countries, why do I think it's possible, preferable, and profitable? And the last part, by the way, the reason I mentioned profitable is another way of saying possible because it has to be economically feasible. Let me start with the first part, possible. So, are new countries even possible? So, we have started new companies like like Google out of a garage. We started new communities like Facebook out of a dorm room. New currencies like Bitcoin, as you know, arose from a white paper, so did Ethereum. Could we start new countries? Could we start network states? Or is is just slinging around coins is that the end of the line? I love that as much as you do, but like, you know, you can

only trade tokens so many times before that becomes old, right? Can we start new countries? Can we start what I call network states? And I think we can. And just to be very concrete about what a network state is, this is a visual of a network state with 1,729,314 people. That's 729 plus pi for those who get that allusion. Um with 157 billion in annual income and a real estate footprint of 136 million square meters. And as you can see, a network state is basically a physical social network that owns territory around the world and that is recognized as a degree of diplomatic recognition, is recognized as sovereign at least in part over some territory by one or more UN member states. So, until

such recognition arrives, it's not really a network state. And this is similar to how people would argue whether cryptocurrency was actually a currency or what have you, and you know, it's only got some of the attributes like medium of exchange and store of value and unit of account. And so, there's a continuous thing where Bitcoin and Ethereum went from just a LARP that was on a single server to this global kind of cryptocurrency that's in use everywhere. Similarly, a network state will have lots of intermediate stages where people argue about whether it's real or not, and eventually maybe it gets diplomatically recognized at least in part. Okay. And so, when you think of it as a physical social network, it's got all these nodes, it's got like a million people, right? It's on on par with a state in some sense. And how do we get

to 1 million, right? So, there's actually a way to start from one person, just like a Satoshi in Japan in this example, and you he recruits 17 people around the world, and then 172, and now 1,000. And once you start getting to even a few hundred people in one location, you can actually afford a fairly large building. Because if you have 254 people and they actually work together, they're not paying rent in a building, they can actually buy the building. And so, this kind of what do you call it, collective bargaining? I call it a network work union. A union doesn't have to be set up in opposition within a company, it can be just a union of people that is working together to get

things at bulk discounts and scale, like Costco. And this can be important in this time of supply chain crises where you can collectively bargain and bring down food costs and so on by bargaining with corporations, basically bulk discounts. So, in this case you get a bulk discount on real estate by buying an apartment complex together. Once you can coordinate, you can coordinate for the good of everybody in the community. That does by the way mean some degree of cooperation, some degree of you know, maybe you don't get your number one choice, you get your second choice, but everybody gets their second choice together and now you get equity in the building and that's actually a pretty good, right? Okay. So, this at 1,729 then at 17,000 you can actually start affording entire sub-developments. You know, a few thousand people online it's a small number like the number of views

on a tweet a few thousand it's not that much, but a few thousand people in person is a lot a lot a lot. So, you can actually afford entire suburbs and you know, large towers and stuff with even like 10,000 something people. 10,000 by the way actually puts you at the scale of the smallest countries in the world like Palau and Nauru and so on. Then you get to 100,000 and now eventually you get to a million and now you're actually at the scale of a Latvia or Bahrain, you're a true you know, state scale thing. So, that's how you this thing could emerge, right? And it's a gradual process just like Facebook started with one person in a dorm room and rose up, Bitcoin started with one person, Google started with two people in a garage.

This is a mechanism for going from zero to one to 1 million, okay? And that mechanism when you can see it somebody will do it. Right? Like that is to say it just you know, when when you see something like this it's technologically feasible, it's built on the stack that already exists, the internet stack of remote work and cryptocurrency and WhatsApp and telepresence and so on and so forth. It doesn't require something completely new like you know, as as much as I like seasteading or Mars that requires new technological breakthroughs, this doesn't. This is literally just coordinating people in in ways we've already done, okay. So, why does 1 million put us within country range? Well, actually most countries are small countries, the majority of UN members have less than 10 million

citizens and in fact 38 have less than 1 million. The countries we think of as countries like China, Russia, America, India, there's very few countries that have more than 100 million people, okay? Most have less than 10 million if you define a country as a UN member. Moreover, UN membership has actually grown over time, going from 50 to almost 200 UN member nations over the last 60-70 years. And even though it's been flat since the end of the Cold War, um you know, the number of currencies has recently exploded, so the number of countries likely will as well. So, UN membership has grown over time. And cryptocurrencies rank with fiat currencies. So, cryptocurrencies are now at a scale that rank with fiat currencies, and at the time of the screenshot, Bitcoin was between the Turkish Lira and the Chilean Peso. And so, if you put that together,

um that most countries are small countries, the number of countries has actually increased a lot, and that cloud or cryptocurrencies rank with fiat currencies, could crypto countries rank with fiat countries? Okay, if the currencies can rank, could the countries rank? Could we have a cloud country that is on par with the the the countries we've inherited? Could we have a network state with 1 million 728,314 people ranking between Latvia and Bahrain? I think we could, and the main parameter is it's decentralized. Just like Bitcoin or Ethereum are decentralized currencies, a network state is a decentralized country. Okay?

And the thing about this is uh that dashboard over here is actually, you know, the same thing that underpins this. Imagine 1 million 728,314 proof of humans zero ones on chain that sum up to a network state census. That's actually a whole other talk that I gave, but you know, this is a dashboard just like CoinMarketCap, but we call it, let's say, network state pop. If you're interested in working on this type of stuff, by the way, just apply to Never School, and uh we're we're hiring folks and and so on. Okay. So, sufficient traction equals diplomatic recognition. Why do I say that? Why Why would that be the case? Well, if you look at, for example, Tuvalu, the country Tuvalu, they did deal with GoDaddy for the .tv domain extension. Nevada did deal with

Tesla for the gigafactory years ago. Um Now, obviously has adopted Bitcoin as its national currency. So, that means the land is already negotiating with the cloud. We've already seen sovereigns ink deals with companies in in cryptocurrencies, in a sense, and whether they're inking a deal with the cryptocurrency or adopting it. So, why could they not do that with the crypto community? I think they could. Okay. So, sufficient traction, numerical traction, will eventually equal societal recognition. It might be unpredictable because, you know, who would have who would have figured in 2008, 2009 when Satoshi is launching Bitcoin that El Salvador would be the first to adopt it.

Very unpredictable. That Bhutan would mine Bitcoin. Who would know? One thing I think we can predict, though, is that small countries are going to be the biggest adopters of this kind of thing, of special economic zones and startup societies, because they have, um, you know, the ability to set laws, but they lack capital, and they often want technology to come to their country. So, there's a big win-win deal between large networks and small countries. Okay. So, now, why why is it preferable? So, why are new countries preferable? Because powerless people have an alternative in in the form of new states to their failed states, and ambitious people have an alternative in the form of frontier society. So, at the top, lots of countries around the world are basically

melting down due to the supply chain crisis, inflationary crisis. At the bottom, it shows that, uh, since the dawn of humanity, humans have wanted to push the limits, push the frontier, radiating out of Africa to the new world, and eventually the moon. There's always been this kind of push for what's better. And this is actually the same U-shaped coalition as the crypto coalition itself. Why? Because it's the powerless and the power user. It's a powerless person trying to hang on to what a bank account even is, and the power user who's pushing the limits of what a bank account is, right? And, uh, so so, in the same way, the powerless, their state is failing, and the, uh, the power user is reinventing the state, right? Same kind of coalition. And the there's a certain kind of person who

thinks, "Oh, the existing financial system, political system, is working for them." Then this is not for them, they can safely ignore it. But those people on the edges the U-shape, this is for them. Okay, same as the crypto coalition. Now, why is it profitable? So, this is another way of saying feasible because if it wasn't profitable, you couldn't do it. Um, but why are new countries profitable? This is a fun graph of nation states social networks and network states on the same graph. And on this axis is people and this axis is annual revenue per user. And you know, over here for example, there's meta, WeChat, TikTok, LinkedIn. You know, this is um, Snapchat, Weibo, this is Twitter back then. And this is showing that their scale of these social networks is in the 100 million to billion person range, but

their monetization per person is in the tens of users, tens of dollars per person per year. So, like 30 bucks per person per year times 3 billion, 90 billion dollars a year is a lot, but it's relatively small scale per person. Then over here are like these small countries which have, you know, 1 to 10 million population and like 10,000 bucks, 20,000 bucks per person per year monetization. Then over here are the US and China which have large populations and annual incomes and tax revenue. And then finally over here would be startup societies network states that might start digital and have an annual revenue in the order of hundreds of dollars per person per year. They become physical and now we actually got that and they start charging on the order of, you know, 10,000 dollars per person per year for society as a service. And eventually

they start growing out and and and they start moving upward like this and getting to millions of of people. And this is the new SAS, society as a service. And you kind of start on this axis of small but large monetization as opposed to um, you know, high numbers of people and small monetization per person. You're basically providing way more value to people when you go up this axis. And and I think that this is important because it means you can put capital behind it like, you know, Ethereum is a, you know, in a in a sense it's a human rights movement to give rule of law around the world, but by putting capital behind it that meant that you could have property rights plus human rights in the same package. This is what startup societies are. It's basically projecting crypto's values into the physical world.

Okay. Starting new countries is possible, but why now? Why now? Because history is running in reverse. So, what do I mean by that? Well, basically many things that were happening in the past are happening today but in the opposite order. So, for example, back then, 1890, the Western frontier closed. Today, 1991, the internet frontier reopened. Back then, there's a Spanish flu, it was heavily censored. Then there was COVID-19, heavily covered. Back then, the captains of industry, the so-called robber barons, today the tech founders, right? Back then, the journalists beat the founders, today the founders are being the journalists.

Back then, the New York Times sided with Stalinist Russia versus Ukraine. Today, the New York Times reinvented itself as a champion of Ukraine versus Russia, even though the New York Times is the reason Ukraine was occupied by Russia in the first place. Back then, this is a really important one. This showed that in the late 1890s, America was shipping goods to China. That's a person that's stereotypically portrayed Chinese person, and this says something like "Wanted, you know, 20,000, you know, railroads, engines, cars, rails." So, China's portrayed as the passive market, and America is the manufacturing superpower that's exporting all these rails and goods and so on over the ocean via, you know, the Philippines and whatnot. And obviously,

today that's completely in reverse. It's America that's the passive market and China that's exporting across the Pacific. Back then, Russia was a senior partner to China, today China's a senior partner to Russia. Back then, a British ancestry man ran India, recently, an Indian ancestry man ran Britain, okay? So, the reason I'm putting all this out is that those are qualitative examples, but quantitatively, what's what's actually happening? If there's only one graph that you keep in mind, this graph is perhaps the single most graph in my view to understand the state and the future of the world history in the past of the world. Cuz it shows the trajectory of billions of people across a thousand years and trillions of dollars, right?

So, billions of people and trillions of dollars across a thousand years. It shows over here that for um in the lower right corner, for almost a thousand years the center of mass of the world economy, if you took Japan and China and India and the Middle East and Europe and approximated where their capitals were and you average their, you know, historical GDPs, and these guys who have done this kind of thing, most of the world economy was actually centered in Europe Asia, and that's why Marco Polo set out China, why Columbus risks his life to get to India, why Persia was always a peer of Rome, why the Mongols and the Huns were able to invade, you know, from uh all the way from Asia into Europe, why the Arabs were able to take Andalusia. There's rough military economic parity across the Eurasian supercontinent. Then with

the advent of the Industrial Revolution, Europe basically rocketed to total dominance, the world economy rocketed over there, then they all blew each other up with rockets, and then by 1950 only the USA was not bombed or under communism or both, right? Soviet Union, Japan, India was under socialism, Eastern Europe was blown to smithereens, Western Europe was largely blown up, everything was blown up other than America. And so, all of these post-war institutions were set up in the '40s and especially late '50s, um early early '50s, you know, mid late '50s. And that was peak America, arguably, and you can argue maybe 1991 was peak America after the end of the Cold War.

But this period of 1950 to 1991 was, in retrospect, extremely unusual historically in the period of peak American dominance. After 1991, once, you know, India was no longer socialist and China was no longer communist and Russia was no longer communist, Eastern Europe was no longer communist, now the world economy rocketed back out to Eurasia much faster than it had come. And this U-shaped curve is history running in reverse quantitatively. Among other things, it shows MAGA is infeasible because 1945 is not coming back. The entire post-war order is based on a state of the world with the US, UK, France, Russia, and China being the winners of World War II, where now the world economy is just totally, totally different, and those are not the, you

know, the the same kind of actors, right? So, um now, you know, you have BRICS, for example, and and things have moved out east. Uh so, this is maybe the most important graph in the world, and it leads to many other graphs. It shows, for example, you know, taxation went in reverse like this, right? Um in the US, it peaked in the mid-1900s, and then it then it crashed afterwards, because, you know, the Soviet Union had 100% marginal taxation, but America had 90% marginal taxation back then. Um you see other things where, like, quote, income inequality, but basically, wealth re-decentralized individuals. The peak of the centralized state mid-century was really the peak of state power. Um you see history running in reverse on steel, where the US was 10x

Chinese steel production, now it's 10x in reverse the other way. You see it running in reverse on politics, where, you know, the US was politically centralized in 1951, and and basically it's broken apart by 2011. And, you know, basically that disintegration is also visible at the level of um social networks. It's a totally different graph that shows individual Twitter users in blues and reds in 2017 were already basically separating out into two different clusters. By 2024, 2025, America is just ideologically disintegrated. History's running in reverse, where it went from a centralized uniparty to now blues are on Blue Sky and Mastodon and threads, and reds are on Truth Social and Gab and and X. America is just broken into pieces.

That means we're going to see new countries. And the reason is, if you remember that graph I showed at the beginning with the number of UN member countries arising, that did not happen just by accident. It happened because the British Empire fell, and lots of new countries arose, and the French Empire fell, and lots of new countries arose, and the Soviet Empire fell, and a bunch of new countries arose. And when the American Empire ends, and it's ending now, you know, even if we might love Uncle Sam, and I have a lot of affection for Uncle Sam, but I also recognize that it that it's ending. As it ends, you're going to see a huge surge up in new jurisdictions cuz there's going to be a lot of chaos around the world we'll still return to.

And uh one way of thinking about this is actually you're returning to what the state of the world used to be, history running in reverse. Cuz if you go backward in time, go backward before this moment of, you know, only 50 sovereign entities, you actually get tons and tons of independent political units because here's what Germany used to look like before Bismarck. Here's what India used to look like, okay? And you zoom in and it's fractal like this because people organize on the base of community not geography. Maps are actually a very novel invention where a straight line on a map goes over mountain ranges and rivers and all this kind of stuff. You wouldn't actually draw a straight line on a map historically. So you go backwards in time, you have all these different jurisdictions. And so the the thing is this is not how normally people think of

things. It's surprising to them that there's so many more independent states as we go backwards in time. The 1950 was actually extremely unusual. It's peak centralization, peak Westernization. So all the hearkening in America to that being the time that was the way things were, and, you know, a high school grad could go and provide for a family and have a car and a house when he didn't have any education, that meant there was a guy in Poland or China or something like that who was in a gulag or starving because they're they're in this post-war crazy situation. That's not how the world was supposed to be. It's how Americans have told themselves the world is supposed to be. It's actually a very, very unusual and aberrant time in world history. And so when you actually think about the world returning to what it

used to be, it was a decentralized world, then it radically centralized in the 20th century with the giga states of, you know, China and and, you know, communism and fascism and even democratic capitalism is very highly centralized. And now we're re-decentralizing. And that is both a uh technological phenomenon going from mass media and mass production to the smartphone, but it's also a political phenomenon going from the uniparty of 1950s America to the fragmented, you know, West, the the decentralized West that we're seeing today, what I call American Anarchy.

That's why history is running in reverse. But we actually aren't done re-decentralizing. As I said, when the American Empire ends, and it's ending now, uh for for better or in many cases worse, right? I you know, often when people say that, they're often saying it in a gleeful way or they're denying that it was an empire in the first place, but the American Empire was in many ways the greatest empire in world history, and it's very We're all going to feel it when it ends, but it's ending now, and it's pulling back militarily, it's causing all these crazy wars, it's pulling back, uh you know, de-dollarization is underway, lots of things are happening where America is declining and or retreating from the world and walling itself off in the process. And as such, lots of its security guarantees are collapsing, a lot of the order, the post-war order

gets replaced with the post-American disorder. And so you're going to see a re-decentralization similar to the end of the Soviet Union and the Soviet Empire. And when people say the world is multipolar, is increasing multipolarity dragging the world into chaos? Maybe yes. And the thing about this is there's a guy who's a president of Kazakhstan, and he said, "If the right of nations to self-determination is realized in reality on the entire globe, over 600 states would emerge on Earth instead of 193." Of course, that would be chaos. And so he actually lived through that. He lived through the fall of the Soviet Union. He understands what that is. And um you know, he's probably right, except here's the thing, if we see it coming, maybe we can forge order out of chaos, right? Maybe we can understand that it's not simply about restoring the

rules-based order on chain, that's part of it, but projecting that order into the physical world so we can have opt-in peaceful communities where people can find some shelter, some oasis amidst this, and we can have a seed of, you know, essentially rebirth of civilization. So what next? Um you know, I wrote this book, The Network State. I I've been holding conferences. We're going to have our fifth conference uh this year, October 9th in uh Singapore. I'm going to announce it soon. And uh we opened something which I call Network School. This is the first year of Network School. And Network School is a startup society that bootstraps other startup societies. This is the first year of Network School.

That's me and my friend Brian Johnson there. Um we basically there's this uh essentially empty island that was built off the coast of Malaysia and right next door to Singapore. And um it's as close to sea setting as you'll get. And actually that's where I'm you know, coming in from right now. That's where Veronica is as well. And uh Network School is making startup societies real and thereby bootstrapping more startup societies. And so, you know, the goal is we start with 128, 256, 1024. Then eventually we open up Network School nodes around the world. And uh we also have projects like Zuzalu and Dōte that are friends. And you know, Zuzalu, whether you call it the Ethereum Network State, it's it's Network State inspired and it's an Ethereum project. Brian

Johnson wants to do the Dōte Dōte Network State. We want to see a thousand different startup societies around the world. Some are vegan, some are carnivore. This is basically how we restore democracy to the world. Why? Because California is becoming a one-party state due to gerrymandering. Elections are held, but the party always wins, the same party always wins. Texas and Florida in response are becoming one-party states. And of course China is a one-party state. So, Democrat states, Republican states, and Chinese state, the Chinese state are all becoming one-party states or have become one-party states. So, the only way to kind of protect and preserve democracy is going to be between states rather than within them. So, to give people a choice over what their government is, we want to have a hundred, a thousand

startup societies. And you apply to the best country you can get into at age 18, just like you apply to the best college you can get into. And in fact, those are actually very similar. Just like uh you know, many, many millions of you know, immigrants would apply to the college at age 21 that they could get into, like get their masters in electrical engineering at Stanford with an F-1 student visa, then they get an H-1B to a company, and then they get their green card or permanent residency, they get their entrance to a country. College, company, country are actually one full-stack integrated thing that many people have actually traveled as a path over the last several decades. We can make that a full-stack thing where actually making something where at at age 18 you apply to the best country you can get into.

And um you should come and visit Network School. Um there's a lot of things I can say about it. You can save money, cut burn to 18,000 per person per year. We have just 1,500 a month if you're with a roommate for everything, room, board, etc. Raise money, co-liquidate your remote company, or just build a startup society. So, it's a very practical thing that's meant to turn this very abstract theory into practice of just having a peaceful internationalist community, neither neither MAGA nor woke, basically centrist, you know, center-left, center-right, centrist, democratic capitalists welcome. And Ethereum people welcome, Bitcoin people welcome. We we tamp all crypto tribalism down, and we have people of all, you know, uh you know, countries. We have more than 100 countries at Network School. And so, uh

that's where you should come and visit. Check it out. And we're at ns.com. All right, with that, let me stop, and I will take questions. I can't hear. >> Oh.

Can you hear me now? >> There you >> Yes, yes, I can hear you now. >> Amazing. Thank you. Thank you so much for for the talk. Uh so, I have a question um regarding um so so Um I mean, we can see Network States as um just like population cohorts uh that are spread across like different locations. Um, um, and then we have we have these concepts such as the the network school and kind of these like local pop-ups that that emerge uh, in these different jurisdictions. What are your What are your thoughts on uh, the the the coexistence of these two two communities in like one location that meaning uh, the standard jurisdiction somewhere is like Malaysia and then having a network school society that may be interest slightly different

rule set than what the current way what the local jurisdiction offers. How do you How do you think this will evolve? Like how do you think these like different like mindsets about rules and uh, and regulation will work alongside each other? >> It's a great question. So, the thing is there is like 193 jurisdictions in the world. And um, and actually if you include 50 US states, they're going to have different views. Um, and basically any country there's a there's a map called open zone map where there there there's a map of all special economic zones in the world. And many countries want tech talent.

Why? Well, you know, first they want to build digital sovereignty, they want to have their own Silicon Valley, they don't want to be completely reliant on US tech companies or Chinese tech companies. Um, number two is they want investment. Uh, number three is supply chain crisis is going to mean you're going to need a lot of engineers for oil, for for fertilizer, for all kinds of things. Um, and uh, so that's going to be traded off. Let's call that the pro-immigrant, pro-capitalist view of things against the anti-capitalist, far-left and the anti-immigrant, far-right. So, you're going to have a tension between let's say the center-left who's pro-immigrant, pro-democracy, center-right, pro-capitalist, pro-trade, pro-tech. And

the far-left is anti-capitalist and the far-right is anti-immigrant. And that tension is going to be there in every society between let's call it the cloud and the land. But because there's 193 countries, different countries will choose different trade-offs, and at least some of them will be welcoming towards, you know, people who are maybe a little different, but who are pro-tech and are living there with, you know, for coming there for peace and trade. And that's the opportunity that America has basically dropped on the floor that it used to have. It used to be the welcoming place for people who would come and and build in peace, and it could assimilate many different communities, and it's lost its way, unfortunately. And I hope it regains it, but if it doesn't, or if only partially regains it, there's an opportunity for many other countries to pick up that

mantle. >> Okay, thank you very much. We will end it there for now. >> Makes sense.