Part IV – Trends Driving the Network State

Trend #1 – Value Creation Moves to the Cloud

In a digital world, where you work does not matter. “Place” is less valuable than it was during the Industrial Age.

Governments are institutions focused on dominating specific places on the map. The network, on the other hand, operates outside of physical location. As significant portions of value creation migrate from physical location to the cloud, almost everything we know about governments will change. In response to increased competition in the sovereignty market, governments may pursue a strategy of partially commoditizing their sovereignty, which could make governments more eager to partner with network states. 

Trend #2 – Digital Borders

Telepresence and crypto defeat physical borders. Encryption erects digital borders.

Digital borders allow groups to organize in the cloud outside of state control.  Digital borders are highly relevant for network states because their “capital” exists only in the cloud, outside easy reach of disruptors. 

Almost everything we believe about borders is about to be flipped on its head. With telepresence, workers can participate in meetings and interact with other on-site workers in completely new ways. Payments can be made across borders with zero friction, practically no fees and no currency conversion. Physical borders are becoming little more than expensive and time-consuming pains in the rear for travelers, while becoming much less relevant for business, value and work.

Trend #3 – Network > State

“Uber and Lyft are better regulators than the State’s paper-based taxi medallions, email is superior to the USPS, and SpaceX is out-executing NASA.  Or if you care about the process of creating a census, the network gives a real time survey which is far more up to date than the State’s 10-year process.”  (The Network State)

Below are ten examples where the Network is superior to the state.

The Network is not more powerful than the state in all ways, however.  See “The State is Still a Leviathan” section of the book for further information and specific examples of where the state remains on top.

Trend 4 – American Anarchy – Shredding the Existing U.S. Political Paradigm
In the section titled “American Anarchy”, Balaji argues that the axis defining American politics is about to pivot. When the pivot is complete, the “political teams” will be reshuffled. The US establishment and nationalist conservatives will form the new “Fiat Green Team” while Bitcoin maximalists, left and right libertarians, and internationalists will form the “BTC Orange Team.” The sudden switch will make for extremely strange political bedfellows.
The political axis pivot will feel like a very unpleasant anarchy.  “Civil conflict is not romantic, it’s not targeted, it’s not proportional. It’s insane.  If you think the scenario of American Anarchy is a possibility, you probably want to get as far away from it as you can, regardless of your “sympathies” with either side.”  (The Network State)