From 1,000 Startup Communities to 1 Network State - TOKEN2049 Singapore 2023

all right uh just uh mic check fire Gary Gensler can I get a fire Gary Gensler okay everybody so if we had asked Gary or the fed or anybody else for permission we wouldn't have been able to start this entire space start this entire industry uh and so the next step in my view is not simply starting new companies and new communities and new currencies but new cities and even new countries and that's what the network state is about so um basically what I'm going to try and give is a five or ten minute overview of this but it's sort of like describing a blockchain you know it's a complicated thing you need to kind of go and read the code base to really get the scope of it uh so I've written a free book it's online at the networkstate.com it's being updated the real release a video version of that as well soon but let me just try and make the quick case that starting new countries is actually possible preferable and profitable so why is it possible okay basically over the last 20 years within the lives of most the people in this room or so you've seen new companies like Google arise from a garage and new communities like Facebook come out of the dorm room and new currencies like Bitcoin come from a white paper and these are not small things these have touched the lives of billions and billions of people worldwide just about you know every single educated person or you know probably every person has heard of Google or Facebook or thereabouts now if you've got a smartphone and most people have heard about Bitcoin as well and so the question is can we take it one more step or is that the end of the line is the last thing that we do is just slinging coins and tokens all day which would be nice but it's you know it's we can do even more than that and that's that's a recipe that I think uh I'm gonna propose which is how to start a new country this concept of the network state so what does that even look like well on a map um just to get a visual of it a network state is a decentralized country just like Bitcoin is a decentralized currency so it's uh it's something that's got the population and the income and the real estate footprint of a legacy nation state but it's just distributed around the world and networked together much like let's say the islands of Indonesia in this area are a bunch of physical pieces of land that are separated by ocean the islands of a network state are physical piece of land separated by internet okay but they think of themselves as one country conceptually it's a psychological unification and uh you know the thing about this is it answers the question of where do you start a new country it's everywhere in nowhere it's decentralized in the sense of where do you start a new currency that crazy concept of decentralized everybody here gets that we've kind of shown that that works over the last decade and in this example I've shown you know a million person Network state but how do you actually get to a million people how do you you know what's a zero to one so in this example let's say you start with a Japanese guy another Satoshi okay a single person in Japan one person you know annual income square meters are their apartment okay and uh they recruit people around the world 17 people and then 172 and then 1729 and they start crowdfunding buildings and apartments and cul-de-sacs and start co-living together as like a crypto tribe and this kind of already happens we see hacker houses we see people buying property together and and so on especially because real estate prices have become you know so unaffordable and the thing about this is there's no upper limit it's just your ability to coordinate and scale you get to 17 and 172 000 and eventually 1.7 million people and there's a smooth path from one person to a million just like there was for Facebook or Google the difference being that these are not customers but they think of themselves as digital citizens and that's kind of the next level right in the 90s we talked about eyeballs people just look at the internet in the 2000s we talked about daily active users you're engaged on a daily basis right by the 2010s you started talking about holders who had a significant chunk of their net worth in digital entities and now I think in the 2020s the next step is full digital citizenship where you think of your digital Community your network is actually being your primary identity and you know your your offline State membership is your secondary identity in the same way that you spend much of your work Time online and much of your money is made online and most of your friends are made online those are actually your neighbors if you think about you know who are the last 100 people of you you've communicated with or transacted with they're probably not within a 10 mile radius of of your home right so your network is actually your true neighbors it's a very deep kind of thing that that is going to impact politics and um you know the thing is I mentioned a million why is that kind of a magic number that puts us within a country range it's actually not that big for a social network and the answer is actually that most countries are small countries okay if you define a country as a member of the UN which is an operational definition that's that's got its merits to it if if you define a country as a member of the UN um most countries actually have less than one million people many countries have less than 100 000 people okay you know Singapore's only you know about six something million people so um the the thing about this is uh sorry maybe most countries have less than 10 million people and many have less than one million and only a few countries are greater than 100 million in size that's you know some of the ones you think about like the USA or Brazil or something like that but most countries are small countries and moreover most people don't know this lots of new countries have actually Arisen over the past 70 years during a period where we think of the number of countries as static uh right after World War II there are about 40 50 something countries recognized by the UN but as the British Empire and the French Empire and the Soviet Empire broke down there's like you know Atomic fishing events and we got a bunch of new States arising from them and for the last 20 or 30 years since the fall of the Soviet Union uh we've been mostly flat it's been a period of cartographic statuses but the currency graph looked like this country graph and then started going vertical about you know five ten years ago and I think the country graph is going to as well the third point is that cryptocurrencies already rank with Fiat currencies this is a fun site you guys all know coin market cap this is Fiat Market cap.com and in this you know screenshot over here the you know we see Bitcoin between the Turkish lira and the Chilean Peso okay so this Cloud entity this cryptocurrency ranks with these land entities these Fiat currencies so so putting those points together that you know most countries are small countries and that many new countries have actually been started we've gone from 40 something to almost 190 something and that cloud entities can rank with Fiat entities we put that all together and we ask could crypto countries rank with Fiat countries if you take not the order of currencies by their market cap but the order of countries by their population okay if you could build a 1.7 million person Network state that would be somewhere between Latvia and Bahrain on the map okay so it'd be Global and decentralized so it wouldn't have one physical location again just like Bitcoin it's everywhere in nowhere and that's actually its strength it's set up to be resistant to and transcending of the Legacy state in its apparatus and that's the Collision that we have but something like this is totally possible it's in a sense just a physical social network you know a social network that takes physical form Cloud first land last but not land never so and this is kind of what this uh you know Network shape map looks like in a chart now one might ask okay you might you might be able to build a large social network but people have done that it still isn't a country it doesn't have law enforcement rights or things like that and the thing is that with sufficient traction I argue you can attain diplomatic recognition you won't necessarily get like the USA or China to recognize you at the beginning diplomatic recognition is a Continuum even Taiwan can't get you know countries to recognize it right um but what you can do is you can start inking a bunch of deals and you think of diplomatic recognition as being a year or multi-decade long process so some examples of deals that have already been done for example tuvalu has done a deal that's a country of two blue uh GoDaddy did a deal with two blue for the dot TV domain name and Tesla did deal with Nevada for the geiger Factory and of course uh Bitcoin is now the national currency of El Salvador and there's many examples like this uh ethereum was adopted by Wyoming and Tennessee for their Dow law and uh the you know Bitcoin is a salary of the mayors of Miami and New York and um you know Columbia at least it's dot Co name to to GoDaddy so the the point is that the land is already doing deals with the cloud okay countries and cities and states are already signing deals with companies and they're using cryptocurrencies so why can't they sign deals with crypto communities right of course they could to get special economic zones to get land rights with enough money and with enough cohesion and with enough persistence recognizing that you might be laughed at the first time the second time the fifth time the tenth time but you knock on the door on the 11th time just like you know BlackRock a few years ago was saying Bitcoin was money laundering and now they say actually it's you know this amazing thing and we're going to launch an ETF just sheer persistence in being dogged and in the game and then knocking again two three five years later uh you you know you may be able to get something so sufficient traction leads to diplomatic recognition and uh if you put that together that's my argument as to why starting your country is it possible but why is it preferable why do we even need these things well you know Gary Gensler is certainly one reason but it's it's broader than that it's basically um the the Coalition that's behind new countries is in my view the same as the one behind cryptocurrencies it's the powerless and the power user it's the person who's just trying to hang on to a bank account and the person is trying to redefine what a bank account even is it's like a u-curve it's not the Normie it's not the person who's going to Starbucks and you know swiping a card crypto isn't really that much of an improvement for that but it's really a huge Improvement for people who are being de-platformed or people who are building the next financial platform and that's the same thing for countries basically if you are in a decent country and it kind of works for you okay fine but many people around the world are experiencing inflation riots food shortages that type of stuff it's not being covered that much but inflation is a is a problem for rich countries it's a serious problem in poor countries okay so the the power list wants an option to these failed States an alternative and the power user is the same kind of person who's uh you know Pioneer who explored the frontier who you know the same person who radiated Out of Africa or immigrated to America or got to the Moon um that's the uh that's a frontier mentality right you want to push what what the limits even are can't we have better regulations can't you have a pro-technology state um I think we can and we just have to set that as a goal and the third last but not least is why is it profitable why is it economically feasible so this is like a fun chart where I've put uh nation states social networks and hypothetical Network states on the same chart and arpu is average revenue per user an arpu front slash C is average revenue per user per capita so in the lower right corner there what you see are the social networks so that's like WeChat and you know So Meta and WeChat and Tick Tock and so on at billions of users or hundreds of millions of users and on the y-axis there are uh their revenue is not that much per User it's like maybe ten dollars per but if you have four billion users that's like 40 billion dollars per year conversating the upper left corner you have the small nation states like Estonia like Singapore they've got a small population one to five million people but they've got a large annual income in the sense of tax revenue from their residents in the tens of thousands of dollars per person and in kind of the upper right you see the USA and China and that's why they're the two superpowers because they have the largest population and income and so that's why they're fighting it's kind of like the Pareto optimal you know sort of curve and what's what's interesting is um where Network states are uh or or could be which is in this Niche that we haven't really thought about that much in Tech not millions or billions of people globally but maybe on the order of a few million people but you monetize much more on a per person level it's like a Discord subscription of hundreds of dollars per year and then it's rent in person at thousands of dollars per year and I think these can grow to be at least as large as the top left corner and maybe larger than that over time because there's no upper bound on the scale of these networks but you actually start focusing on the strength of the network in terms of the value it's giving to users now in a sense this is just like materializing all the Dows that people have into the physical world getting people to not just hold the same currency but actually you know co-live and build things together and so on and so forth and certainly not every Dow will be suitable for that but some will be and it those I think will be some of the most uh persistent Dows because that's really what a what a country is that's why a currency holds its value those folks you know do something together so that's why I think starting new countries is possible preferable and profitable um the book is online at the networkstate.

com you can just read chapter one and that'll be a five minute version a little bit longer than this but goes into more detail on the practicalities of how you do it um and uh and that's it so thank you very much