Bankless - 41 - Crypto-Civilization | Balaji Srinivasan

Episode Date: November 30, 2020

BLACK FRIDAY DEAL: GET LEDGERS for 40% OFF! 🔥🔥🔥 https://bankless.cc/ledger 🚀 SUBSCRIBE TO NEWSLETTER: http://bankless.substack.com/ ✊ STARTING GUIDE BANKLESS: https://bit.ly/37Q17uI ❤️ JOIN PRIVATE DISCORD: https://bit.ly/2UVI10O 🎙️ SUBSCRIBE TO PODCAST: http://podcast.banklesshq.com 👕 BUY BANKLESS TEE: https://merch.banklesshq.com/ ----- GO BANKLESS WITH THESE SPONSOR TOOLS:  ⭐️LEDGER - 40% OFF LEDGERS THIS WK ONLY! 🔥🔥🔥https://bankless.cc/ledger 🚀 ZERION - INVEST IN DEFI FROM ONE PLACE (download it now!)https://bankless.cc/zerion💳 MONOLITH - GET THE HOLY GRAIL OF BANKLESS VISA CARDShttps://bankless.cc/monolith 🤖YEARN - YIELD-SEEKING MONEY ROBOT THAT FARMS DEFI FOR YOU  http://bankless.cc/yearn ------ A Crypto Civilization | Balaji Srinivasan No one blends the academic, startup, & venture world quite like Balaji Srinivasan. With multiple engineering degrees, multiple exits, being early into Bitcoin, selling a company to Coinbase, being CTO to Coinbase, Balaji lives on the cusp of the frontier of human innovation.  Rumor is that he’s trying to create a digital country, we’re gonna talk about it.  - Legacy of COVID creating distrust In Institutions Balaji thinks that the world is ready for new institutions and that the movement of time is to generate new solutions rather than repair old ones.  - ‘Crypto-civilization’, or what Balaji calls: The Network StateThe leveraging of the most useful modern technology and coordination tools, to produce structurally independent organizations  - Digital Nations vs the Nation-StateHow might this independence generate friction with the status quo? And of course, how does a new 'crypto civilzation' actually manifest.  Balaji is a real Big Brain thinker, so strap yourself in! ------ Don't stop at the video! Subscribe to the Bankless newsletter programhttp://bankless.substack.com/ Visit the official Bankless website for resourceshttp://banklesshq.com/ Follow Bankless on Twitterhttps://twitter.com/BanklessHQ Follow Ryan on Twitterhttps://twitter.com/ryansadams Follow David on Twitterhttps://twitter.com/TrustlessState ----- Not financial or tax advice. This channel is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. This video is not tax advice. Talk to your accountant. Do your own research. Disclosure. From time-to-time we may add links in this channel to products we use. We may receive commission if you make a purchase through one of these links. We'll always disclose when this is the case.

Welcome to bankless, where we explore the frontier of internet money and internet finance. This is how to get started, how to get better, and how to front front run the opportunity. This is Ryan Sean Adams. I'm here with David Hoffman, and we're here to help become more bankless. David, we just had Bellaji Shrinvassen on. What a fantastic episode. I was going to ask you what we covered, but I almost feel like asking you like, what didn't we cover? We talk a lot on the bankless podcast about Bitcoin and Ethereum being neo-nations, right? Different new types of organizational structures. And I thought that, I think that's a really compelling thesis.

And that's something that we've been sharing readily on the bankless program. Bellagie takes this a big step forward. And Ryan, you called Balaghi the guy that thinks a decade ahead of everyone else. And so Belagli is taking that metaphor that, like, you know, these things are kind of digital nations. and he's pondering the idea of what happens if we make a real nation. What happens if we make a real country? A country that starts in the cloud and then actually manifests itself somewhere in the world with a sourcing of capital to purchase property and then actually construct a real country.

That's not a joke. Bellagie is actually having this thought about how to make a real country. And so since we talk about this on the bankless podcast all the time, it was just a perfect fit to get him on the show to talk about how do we go from a metaphorical country in the clouds to a real country on land. So that's what we covered in this very ambitious podcast. I expect this podcast to sound unrealistic to you. Maybe even a little bit crazy. But that's what happens when you have a conversation with basically like somebody who feels like a time traveler, David. It's like, I mean, if you heard Bellagie when he first got into

crypto and Bitcoin, right? Like, at the very inception of things, Bitcoin is a completely bonkers crazy idea, right? Or even Defy and Ethereum, completely crazy bonkers ideas. The fact that a uniswap can deliver $4 billion in trading volume, and it's a tiny protocol written by, you know, one individual on a $100k grant. That is unrealistic and,

crazy. So there's sort of a pattern to these kinds of ideas in crypto. And a lot of times, Blaji has proven to be right. So if this episode sounds crazy to you, that is to be expected, but it might be crazy and right. Right. That's exactly right. And like imagine you can go even further back and say like, okay, it's 2010. You just read the Bitcoin white paper. And for some reason, you're compelled by it. And so you go to your friend and be like, oh, my God, there's going to be this new money on the internet. Imagine how crazy you would sound in 2010. Well, now it's 2020 and kind of all bets are off on things.

And so I'm kind of hoping that the world can appreciate the effort to maybe create a brand, the idea of creating a brand new nation from scratch. Maybe that's not, maybe because it's a new era, maybe it's not such a hairbrained idea. It's cool, too, because we start with present times. We talk about the legacy of COVID and this distrust in institutions that has fomented. and then we get into those broader topics of the crypto civilization, or as Belaghi calls it, the network state. So this is definitely an episode that you do not want to miss. All right, we're going to get right into the episode with Belaghi.

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yield they're generating for you. All right, Bankless Nation, we are super excited to have our next guest. This is Belaji Srinivasa. No one blends the academic plus the startup world plus the venture world quite like Belaji. This is going to be exciting conversation with him. He's got multiple engineering degrees, multiple exits. He was early into Bitcoin. He sold a company to Coinbase as well. I think Belashi lives a decade or two in the future. His superpower, at least it seems to me, is to be able to see things before the rest of us. And we're going to ask just what he sees on the horizon today. Belaghi, welcome the bankless nation.

Thanks so much for being here. Great to be here. All right, man. So two things just hit all-time highs, Bitcoin market cap and COVID infections in the U.S. How do you feel about that? Well, so, you know, COVID, I haven't been talking about it too much recently simply because it's just become so so dumb in the West in many ways. You know, basically, well, I'll say a few things about COVID. First is an interesting thing to do is to Google COVID worldwide deaths.

And what you'll see is an interesting graph where, which I don't think actually has been circulated that much, it shows this total exponential rise going into Maine. of COVID. And then it actually does kind of flatten out at roughly 6,000 to 8,000 deaths per day for like the last six months. And with a lot of oscillation that appears to be due in part to, you know, testing mainly on Saturdays and Sundays or rather not testing on Saturdays and Sundays. And, you know, the thing is that from like the early perspective of COVID, it wasn't obvious that this was the way people would flatten the curve. namely that the exponential would flatten out at 6,000 deaths per day as opposed to 60,000 deaths per day, right?

That's not like an obvious place that it lands up, you know? And it's actually kind of remarkably flat, given that this is like an average or a summation over the whole world. It's like a bunch of different curves that are happening at the same time. You know, some countries are going up, but other countries are going down. It's sort of yo-yoing back and forth. So that's kind of one aspect. Number two is, you know, look, I'm, you know, as hopeful for the vaccines, you know, as anybody, the Pfizer and Moderna, you know, vaccines that have been announced. But these are, you know, sample sizes of like 100 people.

We'll see what happens when you scale that to a billion. There's just all these stuff, whether it's manufacturing issues or, you know, compliance issues or what have you. compliance, I don't think in the sense of FDA getting, you know, they know enough to not try to block this for dumb reasons, probably, but compliance in the alternative sense of people actually taking it due to, you know, anti-vax or anti-farmac sentiment. And, you know, people might think, oh, the vaccine was rushed or I believe in vaccines in general, but not this vaccine, whatever. So will you actually get compliance? Will enough people take it? Will it have issues at scale that are not seen in, and in the vaccine? the relatively smaller trials. I don't know. I mean, the optimistic take is that it will be, it'll be fine and COVID will be a memory by this time next year. The pessimistic take, which I think is, you know, where I'd probably put more probability away, not 100%, but is that COVID's going to be with us for several years, maybe the better part of the decade. Nobody, you know, was expected 10 years of Iraq, right? And nobody expects 10 years of COVID. And yet I think that's something

that is a possibility, especially in those places in the world that can't afford a vaccine or, you know, won't have great compliance with the vaccine or will resist it for other reasons, whatever, right? So, you know, it's interesting because COVID, I shouldn't say it's being stamped out in Asia, but it's just been taken more seriously in Asia and they just seem to have a functioning public health system that has gotten the thing under control, but not so in the West. So it's not the lesson that anybody wants to hear. Everybody wants to point fingers at this or that political faction in the West, but it feels like there's some systemic, you know,

systematic thing that the West is doing incorrectly that Asia is doing right. And that's just sort of hard to copy. It's like, oh, do a social network or a search engine. And there's a thousand details that Facebook and Google get right. And so copying the way that Asia does it may just not be easily possible. And he said, you know, what is a legacy that COVID will leave behind? You know, this is not original to me. This is one of my friends who made this comment, but I think it's very much true.

You know, 2020 is the year the internet began. By which I mean, there's this concept I have of the primary in the mirror. For example, in the mid-90s, you know, the New York Times put its first website up. And it had, you know, it was just like a curiosity. The New York Times on the web, you know, we put some. articles up here just to look at this new technology, the World Wide Web, right? And it was just a few articles, you know, and the primary was still the physical paper and the mirror was, you know, the website. And then over time, sort of like Wiley Coyote, you've seen Wiley Coyote from Lintyons?

Of course, yeah. Yeah. You know how Wiley Coyote sort of shifts his weight gradually from one leg to the other like, like this, right? Right. So gradually shifting weight, you know, imperceptibly, and by degrees over time, the New York Times.com website became the primary and the paper became the mirror. It basically became a printout, an imperfect rendition of what was on the web, which was the complete version. And there were certain things, of course, like links to tweets or data science or interactive graphs and so on that were really digital first products where, you know, the paper was just not going to reflect that, right? At best it could include a URL to go and look at it online, right?

And even still, you can still think at the NY Times as well as the other, you know, newspaper side says transitional things because, you know, like they still buy, they still buy paper, right? They still have like a lumber operation and an ink operation, you know? you know, you can sort of invert the normal dictum, which is never listen to somebody who's still bising by the barrel, you know, or never argue with someone who still does, right? So the lasting impact that COVID has, though, as I think all these legacy institutions will start to get examined and you'll ask, how do you do the digital first version?

Okay, so just as an example, I talked about the NY Times, the primary in the mirror. everything is turning to having the digital version being primary and the physical version being the mirror or secondary or the printout or the expensive version. For example, you know, people used to talk about the digital divide, right? Now that 3 billion people have phones and, you know, probably everybody in the world is going to have a smartphone eventually. It's on pace to get there. Very poor people have, you know, smartphones that were. only the province of the extremely wealthy, you know, like, like a relative, you know, within our

lifetime, right? So, so everybody has a phone and digital stuff is cheap. And so that actually means is we're flipping it around so that the actual divide is the physical divide. That is to say, you can make an assembly of a thousand people online very inexpensively. But the physical version is, is no longer cheap. The physical version is the premium. Okay. So it's flipped. And so that, means is every event is digital first. Every document is digital first. That already happened prior to COVID, but increasingly so. Every court hearing, everything for education, everything for healthcare, the hygiene argument has sort of shifted that every meeting is digital first. So everything has been shifted to be digital first, and it's the physical that's the premium, even for really important meetings,

quote-un-quarter get-together's gatherings, like weddings, right? You know, people are doing Skype weddings, you know? And right now that seems like, you know, kind of a sucky sort of thing. But I think that once you start thinking, okay, what could I do with a virtual reality wedding? Well, actually, it could be extremely fancy, you know. It could be extremely fancy and it could be extremely cheap. It could be better in some ways. Certainly, you know, like video games, whatever, you can have very interesting visuals, you know,

you have perfect control over every pixel. every guest can attend they can stay the whole time you know it's it's something where um you know look i'm i'm not arguing that people won't still want physical weddings but the digital wedding will be one-tenth or one-one-hundredth as expensive and pretty good and the physical wedding will be like extremely deluxe it'll be like the difference between saying oh my god they had a they had a wedding in you know that that that that destination wedding that really fancy location wow that must have been expensive it'll be like that. The physical version will be expensive, hence the physical divide. That's what you mean by the start of the internet being 2020. It's basically like,

and that's very weird for us to think about because most people think, oh, yeah, the internet, that's sort of old technology. I mean, that's been around for most of my life. But you're saying that previously it was not part of the fabric of our lives in the way it's about to be over the next, over the coming decades. Correct. That's right. So, you know, you can call it the internet flippening. It's like the internet was just learning to be what it could mature into up to the point we are getting to now. And that's kind of the legacy of COVID.

COVID is pulling that into the now. It's pulling the future into now at an accelerated rate. That's right. And I think, you know, social distancing caused more social networking. So Belagie, Ryan started off this asking about like, well, the COVID infections in BTC is at both are at an all-time high. And the reason why we wanted to start this podcast off is to talk about the juxtaposition, because there's not, not just only that is extremely juxtaposed, but it seems to be the fabric of society is moving into the extremes, right? We are, we are, the distrust in

institutions and the banding together of different ideologies is, is really a very, has created a very polarizing world. And we wanted to get you on the podcast to talk about, like, how you, you are seeing this distrust in institutions be filled. There's a void that is left by these institutions. How is society coming to terms with this void that is being left? What is scarce today is trust, but what's abundant is computation. And so the rapprochement that we're going to have is we're going to substitute computation for trust everywhere that we can. So what does that mean? Well, so, you know, an obvious version of that is like Bitcoin, right, in the sense that or Ethereum blockchains in general, where you have somebody who is, you know,

Democrat or Republican, they're Sunni or Shiite, they are, you know, Chinese or Japanese, they're Turkish or Greek, they're, you know, Protestant or Catholic. They're on one or the other side of some historical divide, right? But they, despite all the things they don't agree on, they do agree on the state of the Bitcoin blockchain, on the state of the Ethereum blockchain. And not just to they agree on the state of it. They agree on the state of it not just like in a, oh, yeah, you know, it's true that the sky is blue today. Okay. They agree on the state of something that is extremely materially and financially important, which is a kind of thing that people tend to have political arguments over. You know, scarcity is what causes conflict. So we have an example of

something where computation has sort of forced, you know, that's where global consensus is now feasible in this environment where everybody is kind of advocating for her own thing and they've got these politically constructed truths into the gap is coming crypto and over time that's actually where facts are all all facts are on chain if it's not on chain it's not true that's very deep point i can i can drill into that there's a lot i can say about that i want to dig into that for a second but just to to ask clarify one point that you made so you said computation is getting cheap. I think people understand that, of course, that are listening, right? Like Moore's Law, this sorts of things. We've observed this over our lifetimes. But you also said trust is becoming

more scarce. Why? Like what has fundamentally happened in the past like 30 years, let's call it, to shake our trust in the institutions that we as a society formerly trusted? I'm probably a little bit older than you. You know, I was a teenager in the 90s. And I remember, before like the internet became very mainstream. You know, probably some of your listeners are in their 20s and may not have that much of a memory of that. But essentially, you know, in that time, even in the 90s, you really didn't hear from that many people.

You heard from your parents. You heard from your teachers. You heard from, you know, the people who were on TV or, you know, you picked up the newspaper. But the number of different people that you heard from was fairly limited. And it was actually a big deal to, you know, be on TV. It was a big deal to have a broadcast license. I was like a regulated thing.

And so the thing about it was there just weren't that many voices online. Or not voices online. There weren't many voices contending for your attention. Because there were relatively few of them, they had come into some sort of consensus on their own. Now, you know, really, you can push it all the way back. 1950, I think, was peak centralization. And as you move forward and backward in time, things get more, quote, unquote, decentralized or polarized. So in many ways, it's sort of a mirror moment. You know, we're more similar to the 1800s than we are to the 1950s in many ways.

But, you know, so for example, you have like the advent of cable news and the advent of CNN and, you know, like the repeal of the fairness doctrine, all those kinds of things allowed for more opinions to be on, you know, on the air. And then, things, of course, started to accelerate with the internet, and especially, I'd say, blogs in the early 2000s, suddenly you started to hear from way more voices, way, way, way more voices, then, you know, microblogging in social media. And, you know, initially with Facebook and Twitter, those sort of started in, you know, like Facebook started at Harvard, you know, Twitter started in SF, and they started among social networks that pretty much agreed with each other. You know, Facebook, for example,

was basically taking colleges and then high schools and putting them online. And so there were implicit morays because you could only friend somebody who is at your same institution and so on and so forth. I think a critical moment was, you know, September 26, 2006, when Facebook networked the networks, okay? And that was a moment where growth really took off. It was a huge experiment. It was very not obvious that it was going to work, that people would friend each other outside of these institutions because people were sort of cautious about doing that. Oh, you know, with a little stranger impact me online. That was like there's a natural caution or sort of suspicion of strangers in the 90s and

the early 2000s. It was weird to do online dating. There's going to be weirdos online, et cetera. And then there's a period of about 10, you know, five to 10 years of like the open internet. Yay. And everybody was just online. And they're like, hey, this social media thing is great. Let's everybody connect with each other.

So like from 2006 to roughly 2015. And then, of course, what happens is. happen is by the early 2010s, a lot of people, you know, actually this happened even pretty quickly with Twitter. In the Middle East, voices had been even more constrained than they were in the U.S. So, you know, the impact of Facebook and Twitter was like, boom, gasoline, you know, on a flame, like all these people could speak where they never could speak before. And once you have multiple voices, that's actually what causes distrust. And the reason is if there's only one voice in it's broadcast, then no one can argue with the voice, right? But if there's an

and they're all arguing with each other, you know, like people start to be, you know, they look left, they look right, they look up, they look down, they're trying to figure out who to make sense of. Maybe they make sense of nobody. Maybe they side with one person. More voices, more people with the microphone, more distrust. So I think that was a fundamental thing that caused it. The other thing that caused it was once you network the networks, all of these mores and assumptions, I mean, you know, before some, you know, steel worker in in Pennsylvania, rural Pennsylvania and some, you know, like, I don't know, a graphic designer in L.A. could blissfully ignore each other's thoughts for their entire lives.

They would never know what each other thought about various things. You know, the press would never think of it as, you know, in the 80s or 90s would never think of it as an important thing to go and, you know, maybe once in a while they might do a lifestyle story, but they're not going to like take a live feed of this guy's thoughts and pipe it into the other guy's thoughts. It just wouldn't happen. There's scarce, you know, time on television. You had a 30-minute, you know, news segment or whatever, right? But now those people can find out what each other thinks,

and they can't stand it. They can't stand each other. And the implicit sort of boundaries that had been set up before were just totally collapsed. And it's as if, you know, you took these. three billion people and you just teleported them into a battlefield, you know, which is the internet. And you took down all borders and all boundaries. No one has a home. They're just, boom, just transplanted to the planes of, you know, Megito where, you know, Armageddon is arising, right? And that's kind of what happened in the 2010s. This is so, I find this so counterintuitive

because basically what you're, what you're saying is this open communication protocol that we call the internet that we think is so great, actually destroyed societal consensus. But, like, I think the way you're talking about it makes sense, Belagie, but like, is, is that a good thing? Because it wasn't, it wasn't that these people didn't have the opinions that they had necessarily. It's just that they couldn't express them. Is this move to decentralization from the 1950s forward a good thing or a bad thing? Or is it just neutral? Is it just a thing that happens? And we're just on a, you know, in the trend. Well, so I actually, so I do think much of it is good. I think, you know, my macro is the internet increases variance.

Okay. So that's a macro concept that you can apply to many, many different sectors. For example, you go from 30-minute sitcoms to 30-second, you know, TikTok videos and 30-episode Netflix binges. Okay. You go from a 9-to-5 job for the rest of your life to a fail son who stays in mom's or a 20-something-year-old tech billionaire. You go from, you know, the nightly news where everybody kind of has this normy mainstream opinion

to extremely well-researched things where people are reading Google books and PDFs from, you know, like scientific outlets where you can educate yourself to this incredible level or to the dumbest of online conspiracy theories, you know. And so in every area, what you see is, the internet increases variance, even in areas that you wouldn't normally think of. For example, if you look at the data on Uber and Lyft rides, relative to taxi rides, they have both much longer and much shorter rides than taxis do. Because it was more convenient to call an Uber or Lyft,

sometimes people will take it for a block where they wouldn't normally call a taxi. But also because you can calculate how much the cost is going to be, and people are sometimes used as a car replacement, they also tend to take longer rides. So it's taken that distribution and just pulled it apart and increased variance, right? You see this with book sales, you know, the, you know, with Amazon, you know, the long tail of books, the number of different kinds of books that people are reading, the number of different channels.

So why does that happen? You know, first there's the kind of empirical observation, the internet increases variance. Why is that happening? well, the answer is, whenever you disintermediate, you remove the mediator, right? And nodes can connect directly to each other. And that mediator is like an averaging, you know, force, right? It rejects some things. It forces things into like a middle of the road kind of thing, you know, like the person who used to decide who got on TV would de facto enforce a sort of normative consensus, you know? the person who would, you know, decide was on the front page of the newspaper.

All of those, quote, gatekeepers basically were mediating things. And what they were doing was they were capping the upside, you know, because you'd read some, like, dumb, I don't know, Marine Dowd column, whatever. She's still, I think, you know, writing columns. But you'd read some dumb column, whatever, in the 90s. But it wouldn't be like a completely lunatic, you know, conspiracy theory. on their hand, it also wouldn't be extremely insightful. You know, it just be mediocre.

And so what's happened is we've gotten more downside and more upside. So everything I just described with everybody's sort of meeting, you know, for this Armageddon battle online, I think is absolutely real. But of course, at the same time, we have open source and we have Google and we have, you know, like incredible amounts of learning and content. and commerce and so on that's happened thanks to the internet, right? And, you know, just like yourself and myself or most of the people we've met on Twitter, you've met all of these really interesting, smart, intelligent, valuable people that enrich your life online, you know. So there's a huge win to it. There's also a huge loss.

And what I think happens is, you know, I have this concept that all progress actually happens, you know, on the Z axis. What I mean by that is, you know, for example, you start a company because you're, you're tired of some existing bureaucracy, right? You leave Google. You leave, well, you know, you leave IBM, okay, you leave Microsoft, then you leave Google, then you leave Facebook. And each time, what's happening is you leave the bureaucracy, you start something. Often it fails.

If it doesn't fail, you start getting more employees and, you know, you start building up, processes. And eventually what happens, there's a flip from burn. to bus number. Do you know those two things? Burn rate and bus number? Like burn rate is, okay. So burn rate is like how much money you're burning. Bus number is how many people can get hit by a bus, whether your company's still alive. And, you know, it's colloquial, whatever, right? But, you know, point being that early in a startup, every single person must be indispensable, okay, because you're just trying to control costs. They all have to be total killers,

unique, you know, amazing, amazing people. At a certain point, you know, once you've got, in the scalable business model where you're repeating it and you've got into 10 or 100 million revenue and you need to get to a billion. At a certain point, now having seen this many times, you know, as a venture capitalist and an angel investor and having done it myself a few times, what happens is you start having to go from burn rate to bus number where everybody goes from being completely irreplaceable to you're not doing your job as CEO if they're not all replace them. Because if one person can, you know, get sick or quit or something like that, it had crashed the site and you would not be doing your duty by your now millions of customers.

So that is when bureaucracy starts. And in the best sense, what bureaucracy is, is sort of scaling the founder's instincts. You know, the founder kind of writes down what they would do. and now you can kind of act as if you were Jeff Bezos or whatever, you know, doing customer service himself, you know, and that sort of scales themselves. And then eventually it becomes Jeff Bezos's designate scaling themselves. You know, that manager says how the manager would do it and on and on, right? So in a sense, a properly functioning bureaucracy is like a set of algorithms that humans rather than machines execute.

Okay. And it's meant to achieve a result and it's meant to sort of scale what that human would otherwise do themselves, but they can't anymore. And it's meant to sort of put a level of intermediation between, you know, this one unique person, rather than having a unique person, anybody or any one of a class of people can now come into the role and they can do this legal role or they can do the system enroll and Amazon.com won't crash of one person quits. Okay. Now, what happens is as you do this, this necessary thing, it's like the transition. from a single cellular to a multicellular organism, as you do this necessary thing, as you introduce this bureaucracy, you introduce stultification, you introduce deadening in a sense of individual initiative. How could you not? Because you're making everybody indispensable. Or rather,

you're making people dispensable. You have to do this. And as you make people dispensable, their alienation from their job increases because they realize, oh, someone else could do this. I'm not that unique. They don't really need me. I can go and do something else. this isn't that important and so on. And you can save this off to some extent as the thing keeps like growing, right? But that's sort of like a necessary thing that happens. And then what happens is you quit because of the bureaucracy. Okay.

Now, that seems at first to just be a loop where we just came back to where we started, where you quit from the bureaucracy and you rebuild the bureaucracy, right? I call this the libertarian founder rebuilds the state because you find that, you know, if you're a small L libertarian or whatever, you know, you find that you actually need to There's reasons that various progressive or conservative or whatever things are out there. The larger the organization, you start to realize you need to actually have some of these things. People want a bureaucracy. You know, the first or the 10th employee is simply not the same psychological mindset as a 10,000 in terms of risk reward.

Okay. This, this is why the pendulum swings back and forth, like throughout time, throughout history, from centralization to decentralization. But I think what you're saying is, right, like I think what you're saying is, if we talk about decentralization, is it good or bad? Well, what you're saying is there's going to be winners and losers because the 1950s were very good for someone who is average, right? Whereas this more decentralized world is not really built for people, for kind of the

average. It's not built for the bureaucracy. Centralization, even kind of the corporate example he gave. It optimizes for the average. But in this decentralized world, we can sort of optimize them as for the exceptional. And the exceptional people and the exceptional individuals, exceptional projects really stand out. Like someone in the crypto space, like Vitalik, you know, teenager, sort of created a white paper, right? Exceptional individual.

And his true talents were able to be fully expressed in this decentralized, permissionless world only possible by the Internet. Is that kind of what you're saying? Yeah. I mean, though I would say one thing that's very important is I think the right metaphor is not a pendulum because that sort of makes it seem like there isn't any progress. I think the metaphor I think about is a corkscrew. Okay.

So if you look down on, right, as you look down on the corkscrew, it looks like the dial is just turning around and around. You go, you know, 12 all the way to 6, back to 12 and so on, which is similar to the pendulum metaphor. It seems like you're just coming back to where you are, right? But if you think about, you know, IBM to Microsoft to Google, to Facebook to, you know, Bitcoin and Ethereum, you're making progress there, you know, like there, there is a stack of technologies you're building up where you can do more things

with more, you know, and as you go and you know, centralized, decentralized, you know, you've seen this within computing as well, right? You go from mainframes to personal computers to cloud to, you know, like, you know, now decentralizing with the, I mean, mobile is in a sense both centralized and decentralized, right? Because, you know, all the services are up in the cloud and the local thing is on your phone. And now, you know, back to crypto where, you know, you bring your private keys locally, progress is happening. So that's what I'd say there. On your other point, yes, absolutely, Vitalik's a great example of this. I would also note that there are folks who were sort of propped up by that existing system who are now falling as a consequence, you know. And, you know,

that's like the, you know, in the 1950s, what did you do? You went and you sat on an assembly line and you pushed the same button every day for 30 years. Okay. In 2020, what do you do? You're pushing a different key every second on your keyboard. Right. And so like the, you know, just the level of innovation and difference and creativity and novelty you need to put out each day is just very different. Now, something else to think about is the 20th century was exceptional in terms of how average making and homogeneous it was. That is, say, if you go farther backwards in time, okay, you know, like the idea of there being one telephone company and two superpowers and three television stations was actually a massive destruction of diversity of different ideologies,

of different cultures, different ways of thinking, leading into kind of the homogeneity of 1950 and these two just Geiger empires going at it. Okay. If you go farther backwards in time, you know, you go to the 1800s. You know, like there's Frederick Jackson Turner's concert of the frontier thesis. The U.S. frontier closed in 1890. And if you go further backwards, you have, you know, the time of the robber barons or everybody who's able to start, you know, companies. Robber barons, by the way, you know, today you'd call them entrepreneurs or founders because they, you know, they built oil, they built railroads, they built mines, they built all the stuff that that helped build a country.

And, you know, at least if you're in the U.S. And you also had private banking where people could issue currencies, you know, very similar to crypto. You had, you know, sort of these communes, which are sort of like the intentional houses. So people would just go out west and take a bunch of people and you'd start a commune. like the Oneida commune and whatnot. That wasn't actually out west was kind of upstate New York. Conceptually west, right? And, yeah, conceptually west.

Basically out to the middle of nowhere, pretty much. And so the thinking is that our future is really like our past. You go further backwards in time and a bunch of like pseudonymous people started a new government. That was the 70s, right? And one of the reasons for that is communications technology at that time imposed necessary decentralization. You had lags of when a message could get from point A to point B. The telegraph brought people closer together. But before the telegraph, okay, you had the lag of physical mail getting somewhere.

You didn't have, you know, if you go further backwards, you didn't have photos getting somewhere and so on. So the ability to coordinate people was just fundamentally limited. You had to build the whole thing as a decentralized system and your ability to enact a, you know, a very centralized thing was less. As you came into the 20th century, you got mass media and you got mass production. And so the ideologies that preponderated, you know, like nationalism and communism and, you know, like kind of the fusion that that was the U.S., right? democracy, you know, slash capitalism. These were all ideologies that sort of justified control of gigantic numbers of people. Okay.

And, you know, justified control in the sense that those people heard those ideologies, you're like, okay, that's legitimate for you to control me to at least some extent. It's sort of like a self-referential loop, right? But now I think what you've got, thanks to technology shifting, thanks to the fact that, you know, Instagram with 12 people can defeat Kodak with 12,000, thanks to fact that WhatsApp with 55 people can change text messaging for for billions of people. You have new ideologies that are becoming feasible and older ideologies that are really showing their age because they were built under a time when just assumptions were different. And, you know, this is the technological determinist thesis, by the way, which is every ideology you can think of has always been around. what's changed is a technology to make them feasible or in feasible.

Belagri, I want to take a step back and kind of make sure our listeners are following through the cycles of conversations that we've gone through because there's a through line here to everything. And I want to make sure that the listener understands how we got here. We started this conversation talking about how there was a in the 50s, you talked about how that was peak centralization. There was like one canonical newscaster. There was one or a few canonical sources of truth. And we didn't really have this distrust in institutions that we have today. And then you kind of cited how the Internet offers variance to the world. And you cited that it was a good thing.

The Internet is a democratizing platform. If you have a voice, you can get a voice on the Internet. You can create your own blog. Now you don't need to have to listen to the one canonical source of truth. There are new sources of truth that are perhaps different and alternative. And also right and then also perhaps not right. There's fake news and there's real news. But for better or for worse, the internet creates every version of everything.

And some versions will be bad and some versions will be good. Either way, we have more people able to have voice. It's a democratizing technology. And as a result of that, we've lost the signal, right? To some degree, some people have lost the signal, right? There's the absence of one trusted source of information means that it's harder to find truth. It's harder to take trust in these legacy institutions because in some instances, the legacy institutions are being proven wrong and also they're also being proven right. But as a result of these democratizing technologies, we are losing our faith in previous institutions.

And you've gone through a number of iterations of how the world has responded to this. Like regardless of our lack of trust in institutions, there still seems to be some progress. And we can take an evolution in Silicon Valley tech companies to illustrate some progress forward into the point where you cited, like now we have these things called Bitcoin and Ethereum, and that is also on that same spectrum of progress, right? Like there's cycles of history, revolutions of history. These are all the same patterns. And so what me and Ryan want to get to is, okay, so we have this, we're in this period of

of there's a lot of noise and the people are looking for signal, especially now. And when we see ahead of us, perhaps we only see more noise. In the next revolution of history, in the next turning of the corkscrew, where do we get that signal? Like how do we as a decentralized group of people find consensus, find truth? Where does that come from in the future? Great question. So, you know, one of my sort of one-liners, which I think you also found interesting, is, you know, crypto-anarchy is interesting, but I prefer crypto civilization, you know. I thought that was clever. You know, right? Okay. So here's what I mean by that. If you were sort of to rank order states of being, right? the worst of all states is sort of tyranny combined with anarchy.

That's like Venezuela or to a lesser extent, you know, significantly lesser extent, but still not zero, like San Francisco. For example, in San Francisco, you know, you park on the side of the street and you're one minute over and you'll get like a $100 plus parking ticket. But you can like defecate in the middle of the street and nothing will happen to you. And so that's that's the tyranny on the law abiding, like the poor Uber driver or whatever, who is just getting crushed by these fines, you know. And it's actually a really big deal for them because it's like, you know, you can like take away their, it's very unfortunate. It can take away their entire day's earnings, one of those tickets.

But they see the guy who's not working at all, you know, just, you know, basically have, you know, doing drugs or attacking some of the Millis Street. nothing happens to them. So that's like, that's like the worst of all worlds. Then you have actually just pure anarchy where there's like no government. And that sucks as well, but at least you're not, you know, prevented from doing things by the state. You know, you can self-organize. This is a little bit like Russia in the 90s in some ways. There were gangs, what have you, but the oppressive state wasn't there to the same extent. And so the state was at least absent. It wasn't like actively promoting you know,

disorder and tyranny. Then you go up one level and you have crypto-anarchy. And crypto-anarchy is anarchy in the physical world in some ways, but you've got a digital order, you know? It's like the apocalypse but with intranet, okay? And, you know, in some ways, that's what COVID is, right? The apocalypse, but with internet, at least it was in early, early months.

And, you know, that's actually what Bitcoin's, like, disaster model is, crypto's disaster model is. So crypto anarchy is you now take anarchy and you put a layer on top of it, which is you have contracts, you have a realm in the cloud where there is order and there is logic and there are rules. And those rules are enforced by encryption and so on and so forth, even if, you know, the land around you is, if not Mad Max, you know, like the U.S. this summer, you know, and over the last few months, has certainly not been normal, you know? There's many shades of gray, of course, between like totally copacetic and mad max, but it hasn't been normal, you know? And yet, like, the internet still works.

Cell phones still work. There's still incredible degree of order in the cloud. And now you go up on a level and now you talk about crypto civilization where you say, look, yes, crypto-anarchy is better than anarchy, which is in turn better than anarchy, which is in turn better than an archa-terony, but I prefer crypto-civilization. Crypto-civilization is, I can bring a group of people together to get to Mars. Okay. I can bring a group of people together to build an integrated circuit or a hardware device

because it's actually still pretty hard to build those things, you know, like semiconductors, like the actual physical manufacturing still requires the coordination of fairly large numbers of people. Eventually, the robotics, maybe that goes away, but that's, we're not yet there. And so how do we actually, you know, build a crypto civilization? Well, there's a lot of pieces of this. I've thought about lots of pieces. I have a book coming out called The Network State.

You can, you know, if you want to get updates on, just subscribe at biologias.com, sign up. It's all free. But let me just touch on a few pieces of this. So the first thing you need is you need some sort of absolute truth. I give like one I shouldn't say one cheer that's not exactly right I give partial credit to the postmodernists who you know have essentially the logic of everything is a power relationship deconstruct everything it's all situationally or contingently you know true if you have power you can change what is true you can divide truths into a spectrum of political truths on one side and technical truths on the other side

So like a political truth is, you know, who is the CEO or where is the border or what is this money worth. Okay. And those are things where if you can write enough software to people's brains, you can change who is the leader of some organization or where the border is or what the money is worth. Because if enough of those people agree on it, that thing changes. Okay. On the other side of the spectrum are technical truths, which are truths about, you know, genetics or physics or mathematics, like, you know, what is the genome of this virus and, you know, how many microns in diameter is it and how quickly does it replicate? Okay. It's like social

consensus versus like scientific truth. Yes, that's right. And the thing about a technical truth, the fundamental difference is a technical truth exists independent of human brains, whereas a political truth can be changed by affecting human brains. COVID-19 was, was a huge shock to America because so much of the U.S. has been set up to simply assume that everything was about a political truth. It's all about lawyers and PR firms and politics and media and Hollywood. And, you know, it's all just like convincing other people to do things versus even finance, even Wall Street, like, is it's the best of the East Coast institutions or legacy institutions in some ways because it's at least zero sum, you know, right? And so it's all just

convincing people to convince people. And that's all fine until there's something that comes in that cannot be convinced because, you know, the coronavirus, and I mentioned this, it's highly noncompliant with regulations. It is willing to commit murder, you know, and, you know, it cannot be regulated. It's fully decentralized, blah, blah, blah, right? Crosses borders without the passport, right? Exactly. That's right. So you can't bomb it. You can't regulate it. It doesn't get demoralized by negative press coverage. It has no bank account to freeze or seize. It is just this pure force of nature, you know. And it's something where you realize that much of the U.S., much of the West is it's what I call founding versus inheriting. Much of the West is basically just operating on inherited institutions. you know, it's inherited names. It's inherited fortunes, but it's inherited institutions in the same way that someone who's like the 10th generation sign of a factory, they can collect a, you know, a check from their trust fund. Maybe they can tell the factory owner, hey, make t-shirts with this color rather than that color.

But they certainly wouldn't be able to like repurpose the factory to go from, you know, like task A to task B, let alone build a new factory from scratch. And that's kind of the problem that COVID presented to Western institutions is it had to do something new. They had to do something new, which they were incapable of doing. As opposed to folks like, let's say, Bezos or Zuckerberg, who have founded something from scratch, like gigantic multi-million person, you know, logistics operations or multi-billion person networks, you know, communication networks. Those are very difficult things to do. Those are from scratch. Wherever you may think of them, they are the kinds of people who can organize large-scale things from nothing. And so the point being that these inherited institutions not set up to deal with technical truths,

founders do have to deal with technical truths. And so one of the things to think about is how do you get people to agree on technical truths? Now, a big aspect of crypto is it took things that were previously wholly, meaning totally political truths, and starting putting them into the realm of technical truths. So like who holds what money? Well, now we've actually put some cryptography around that. And is that not just the inevitable march of humanity? Is that not the thing that we do?

We put things into technical truths and then we build off of that. I don't know if that's the inevitable march of humanity. I think that, you know, there's significant regressions, right? So if you, have you studied the Renaissance in detail? How much you know about it? Not since AP Euro history now. Okay. Yeah.

So like, I mean, this is, this is a little bit of an exaggeration or you might quibble with this. But, you know, imagine if, you know, like a server went down, like Google went down or something like that. And just all server copies were deleted. And someone had to sort of restore what they knew of Google from like one person's get checkout. Okay. that's kind of like, you know, after, you know, the Roman Empire fell, you know, people copied these manuscripts and it was like a big deal to find like, oh, another piece of source code from this ancient culture that was like way ahead of us. And it was like copying of those like old piece of source. It was like, whoa, they were so much smarter.

Man, I was able to recover this. We would never be able to do this one from scratch. Right. of what had been a great civilization, and then people were able to rebuild. But it really was like a thousand-year setback, you know, which is a big deal. Now, there's folks who will argue, oh, you know, the dark ages wasn't really dark. There was progress in the medieval era, et cetera. But, you know, there's a reason that the Renaissance was a Renaissance is that they were like,

wow, those old people were actually smart and more advanced in us in some ways. Yeah. So I wouldn't say it's a guarantee of civilizational progress. I do think there are ideologies that can crash a civilization and take it down. Hey, guys, there is so much left in this interview. Coming up next, Balaji gets into the differences between what he calls a crypto civilization versus what some people call crypto anarchy. We also ask him the question, is there room in the world for internet-powered coordination groups

that have the ability to grow to the size and the influence of a nation-state? how a national consciousness might develop among this group of people, how this new nation might generate GDP and revenue for itself, and also why virtual reality is important in the establishment of this new nation. We're going to get into all of those topics. It's such an exciting interview, but first we're going to take a moment to talk about some of these fantastic sponsors that make this show possible. Bankless Nation, do you want to go fully bankless, but in the real world, Monolith is the Defy account that you need. It wraps your ETH address in a bankless visa card, and it does so much more.

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So some in the crypto space, I think, are content with this idea of Bitcoin Citadels and crypto-anarchy, right? but you're advocating for something more, something that I think David and I in bankless have talked about often. We've talked about the purpose of crypto is to solve human coordination problem. Right. Particularly the difficult to solve coordination problems. So like what kind of things, like what is a crypto civilization? What sorts of things can we build on top of these trust machines? Like is there room for completely self-sovereign internet powered organizations that could even become, as complex and as interesting and as coordinated, maybe as powerful as a nation state.

One thing I just want to talk about with like citadels and so on. I mean, one issue is we've seen so many post-apocalyptic movies that people have this sort of romanticized idea of what that is, but all the actors in those movies have perfect hair and makeup and, you know, they go off set. They've still got a flush toilet and, you know, whatever. And the thing is that, you know, in real life, you have supply chains, you know, and lots of, you know, and lots of, you and lots of things that you just completely take for granted, you know, supply chains are very important. And supply chains in their own way are a social dependency until you have like robotic autarchy, which I do think can come. Okay. I'm not, I'm not against that. But you have to actually

realize that is itself a serious, huge 20 year plus technological project to have like robotic atarctic farms and mines, you know, where robots would mine and farm everything for you. That's becoming possible. Go look at like vicarious.com. look at Rio Tinto, look at some of the stuff that Boston Dynamics has done, of course. And you'll see how much robotics has advanced in terms of grasping and packing and, you know, remote mining and stuff. But it's a big deal, right? So supply chains exist. Citadels are still unrealistic for that, from that standpoint, because you have social dependencies.

So crypto civilization would basically mean using crypto to sort of rebuild civilization. And when I say rebuild, by the way, there's a saying, you know, know, that's very famous, you know, from the early age of the internet or the commercial internet, which is there's only two ways to make money online that I know of, unbundling and bundling. Okay. And so what sort of happened with social networks is we unbundled the nation state, but I think what's going to happen is we're going to re-bundle the nation state into a concept that I'm calling the network state.

And the network state starts, you know, a concise definition is, A network state is a virtual or VR social network with an integrated cryptocurrency, a sense of national consciousness, and a plant to crowdfund territory. Okay. And so there's a bunch of things there. I'll unpack them. But essentially it is, it starts with the observation that if you think about the emergence of BTC and ETH, right, 10 years ago, Bitcoin didn't even exist. It exists in 2009. I should say 12 years ago, Bitcoin didn't exist.

But basically by about 2013, it was listed on Bloomberg and CNBC. There's a price ticker for this pure internet phenomenon. And it was the first of its kind, like purely from the internet. Holy cow, you know, as opposed to something that had been uploaded from the offline world, right? This was a digital native object, like the thing we were talking about at the beginning, the primary in the mirror. this was primarily digital. It had no offline analog, right? And so being listed there was this huge win. And now, of course, we don't think of that as that remarkable, but it was a big deal. And in the same way, something I've thought a lot about is if you look at the list of, you know,

countries in the United Nations, there's 233 countries in the United Nations. Just on the top of your head, do you know how many of them have a population less than one million? I would definitely say most of the majority. But I'm not sure how many. It's about 30% have a population less than $1 million and about 60% have a population less than $10 million. So the reason that's counterintuitive is most people live in big countries. Okay.

So most people live in China, India, you know, the U.S., right? Even Russia, Germany, France, the UK. So you think, okay, yeah, most countries are kind of like that. Actually, no, most countries are small countries. And what that suggests is, okay, well, look, if, If a million people in one place, that's a nation state, it's got borders. We call it Estonia, right? It's got a seat on the UN Security Council.

It's got a flag. It's got, you know, like it's got recognition from these other governments. Could you take a million people online? And if they develop a sense of national consciousness, which, to be clear, could take years or decades, you know, or even longer, okay? You know, I'm not saying it's like an overnight thing. But if they do that, well, you know, there's a concept of national self-determination. Could they not crowd fund territory, right?

In the same sense that the, you know, Estonians can afford Estonia, right? Like in the sense of like probably, I haven't looked at the actual deeds and land records, but, you know, it is likely that those million Estonians own most of Estonia, right? a million people could crowdfund territory. And they could start by doing it with enclaves. So that is to say, they don't all have to be next to each other at the beginning. If you think about Google or Facebook, have you ever been to a Google office? I have not.

I have not. Oh, really? Wow. Crypto really is a different culture, you know? It overlaps with tech, but crypto is to intranet tech as internet tech was to desktop tech. Yeah, totally agree. So, you know, there's, it's interesting to hear you say that because, you know, I sort of straddle both worlds, right? And there's, you know, just like there are folks who made the transition from desktop to the internet.

But yeah, okay. So you have not actually visited major tech companies. Have you ever been to any of them? Nope. No. Wow. I came from a world of physical therapy. Oh, wow.

Okay. That's so interesting. And I'm glad to hear it. Okay. So I'll say something which you may not know. Okay. So if you have a Google badge, right, and you visit a Google office anywhere in the world, it's like a little piece of Google. It's a fractal polity. You walk in and the branding is just

so. The couches are just so. There might be some twist for like, you know, Google Spain or whatever. Maybe some of the signage is in the local language or something like that, right? But it's recognizablely Google everywhere in the world. Your login works. Your, you know, your internet connection works. You're allowed to be there. Yeah, you're allowed to be there. Exactly. Right. Like a we work. I do have that familiarity with we work. Okay, exactly. And in a same sense, you know, like to give one chair to defend the honor of the multinational, this is also why the frequent flyer actually likes Starbucks and McDonald's and so on. You know, it's like, okay, I've got a familiar experience. Yeah, maybe it's not going to be that great, but I know they're going to burn the coffee just the way that I know it's going to be burned. You know, it's a devil I know, right?

And so like my day is not going to get worse, right? So you just bound downside by going there and actually that's often a valuable thing to do, right? Plagie, it sounds like what you're talking about, right? So like going back to this funding and territory, that sort of thing, national consciousness, VR, I think those are the three things he said are part of a network stake. It sounds like you're proposing like the new ICO, but it's not an initial company, its initial country offering. We could actually fund one of these countries to be.

So I have a friend who is American. He found out that through his ancestry, he has a small portion Luxembourgian, actually, in his family relations. So he went through the process and applied to the country of Luxembourg. And now he and his family actually have a Luxembourg citizenship, which gives them access to Europe. And it seems very much to me, as I was hearing a

story, and I think Luxembourg has a population of like 600,000 people, that this is a country that almost like punches above its way class. It almost like acts like a startup in that it is looking to attract citizens. It's almost like, you know, Dave and I, and I'm sure you have Bellaji, you've read the sovereign individual, right, that whole thesis, that nation states, I think I probably I got a lot of people in crypto Twitter onto that, by the way, if you go back and look. Yeah, I'm sure you did. And like, but the idea is basically. I got from Teal.

I got from Teal, so, you know, that's legacy. Give credit to Peter. Yeah. And that, the idea, thank you, Peter. And the idea is basically that nation states would have to be competitive for population sets, essentially. And I see that in Luxembourg. But is that kind of what you're saying that a digital nation would essentially do is

attract some population? And like, I'm, I get kind of the VR part. I think the funding a territory part makes sense, right? Because we've seen sort of ICOs and what crowdfunding can do. What is this national consciousness piece? How do you get that? So one thing I'd say, let me just talk about a couple of things you said. First, just on the ICO bit.

The thing about ICOs is, you know, like I think they, I'm mostly negative on them, but not completely. The thing that's good about them is that you can do capital formation and so on, right? Instantly, all that stuff. The thing that's bad about them is it's a promise of fast money, you know? And, you know, venture capital has many flaws, but one of the things it evolved over time, which you sort of take for granted when you're in the space, is a mechanism to select for people who have ambition more than avarice.

Okay. And what that means is you give them $10 million, and the first thing they do is they don't go and buy a sports car or whatever, they're putting it into the business, right? This is almost like, it's incredible to the extent to which that sort of assumed that any deal that I refer to somebody or who is referred to me, we have already done sort of that pre-vetting mechanism to such an extent that you forget how important a vetting mechanism that is to some extent, right? When you just open it up to the whole world, of course there are crooks.

Of course there are people who just want to get money now, right? And so one of the big problems that ICOs is too much money like up front versus like, you know, like building it over time. Of course, some people who can, you know, obviously Ethereum's ICO was great. There's some ICOs that have been great. I'm not against it as a thing. What I think happens, the rapprochement that happens is you bring a lot of venture terms into ICOs to protect investors. So, for example, for your lockups and, you know, agreements on who can sell when. the equivalence of boards and all the type of stuff.

And that's entered into by all participants. So you sort of bring some of those structures, you know, in there. Okay. So that's kind of one thing. The reason I just wanted to push back on that is like starting a new country. It's not like a, it's not a money making endeavor per se. It is, it is something which is, it's meant to actually get to a level of stability. It's a civilization making endeavor, you know.

How do you build a stable civil civilization. that can get to Mars that can do brain machine interface, that can do limber generation, that can do reversal of aging and life extension. That's my interest in it. Okay. So is this goal to make, to perhaps like generate a community of online individuals and then somehow like crowd fund money to purchase real property somewhere, real land? Is this, is this a goal to answer one of the original questions that we started this podcast

with is where are we going? to look to for institutions into the future. It's like, well, our current institutions, our current governments aren't really doing their jobs. And so we will just make our own country and we'll do it ourselves. Is this the goal of this whole thing? Yeah. So the thinking is, I don't think many institutions that predated the internet will survive the internet. Ooh, interesting. Okay. Including the nation state? Including the nation state. Now, the thing is that there's two ways to get to a network state. one of them is like a retrofit of an existing nation state which sort of networkifies it in the same way that

buildings that that were existed in the 1800s got you know lighting and electrical power if you go to the east coast have you been to like like a boston or something like that or let alone Europe you see these old old buildings that have you know have been retrofitted for power and for lighting which weren't before right okay so one way of doing it and and you know some examples of network States, good versions, you know, coming from below, coming from the state up to the cloud, good versions would be like Estonia, you know, a bad, you know, like Taiwan, Singapore, fairly, you know, computer savvy and so on. A bad version, arguably, is like China and maybe where the U.S. is heading, actually, in some ways, where it's like, you know, the technology is using,

cruising to oppress and to track and to surveil. Okay. And, you know, China also does good things with technology. It's not purely dystopian. So, you know, I want to to give some credit to them. I know it's it's not that fashionable to do so. It's not like every single person there is like, oh, my God, get me out. But a lot of people are. A lot of people do want to get out. So it's not, it's not the ideal vision. The alternative is rather than having a retrofit where you take an existing state and you kind of retrofit it for the network, you start with the network and then you get the state. Now, how do you do that? Well, you know, that's going to be a process of degrees. But just to give you some proof points, if you think about HQ2, right, you think

about Tesla and the Geiga factory. So Amazon HQ2 negotiated, Amazon negotiated with New York and Washington, D.C. and other places say, hey, look, if we bring 25,000 people to your district, what can you give us? Right. Can you give us guarantees that we can build there? You know, can you, like, you know, tell us that you're not going to impose new regulations or fees on us in the next few years, right? And, you know, cities. bid on this, right? And, you know, some that didn't like it, but they did also bid on it. And, you know, Elon did this with Tesla, like his Geigafactory location, he got places to bid on it. Google did this with Google Fiber. And Boeing did this with its plant and eventually based

it in South Carolina. And an interesting question is, can we take that out to the confines of mere companies? It could do that for communities. Okay. Can we organize communities to do collective bargaining with governments. Fascinating. Fascinating. And so the thinking is crypto allows you to have binding online commitments. So if you have a million people who each put in $1,000, that is a billion dollars in provable hard currency. You could show to, you know, the government of XYZ and you say, hey, look, this district over here is totally unoccupied. What if we pay you a billion or you can see we're good for it or we pay you 100 million a year for 10 years, right? And we set up this smart contract, which is doing so on the condition that self-driving cars are

legal here and we can build whatever we want. Belaji, how reasonable do you think that this is? I think it's extremely, nothing I've described violates the laws of physics. Right? You're just talking about a large online crowd fund and not even that large because Amazon HQ2 is only 25,000 people. What are the layers of the stack here? So I'm trying to understand, right?

So we've got VR, right? You get that, right? So like, but like the crypto. Let me explain why the VR component, by the way, is important here. Okay, do that. And I also want to, I also want to hear about kind of the crypto components, right? So from crypto, something like a Bitcoin or Ethereum, obviously we have some kind of a money or we have a stable coin.

And then with defy, maybe we get basically kind of financial infrastructure. And then like. So decentralized identity is going to be, get involved somewhere. Decentralized identity. I would, that seems to be part of it. But also like the smart contract layer can almost act as sort of a financial, you know, law system or a corporate law system, if you will. Like are those based components? Or maybe you could describe some of the components we have now that we didn't previously have that make this even feasible.

So very briefly, VR is important because VR architecture is important. This is something which people outside the field don't really know. But architecture has gotten into VR as much as like traditional finance has gotten into crypto. Like it's a fairly big thing in architecture for maybe the obvious reasons. You can walk around the building. You can have clients look at it. It's just way more real when you can see it in 3D. You know, oh, that's, you know, that beam is in a weird location.

Oh, the window sells a weird location. Oh, the light will come in this window weird. We should move the window. You can get, you can basically virtualize it. Okay. And what that means is what hasn't been done, but which I want to do is make that a social thing where, you know, John Winthrop in the early, you know, kind of pre-USA America had this concept of, you know, the city on a hill, okay? And the idea is that the city on a hill was, you know, how you'd build this amazing city up on a hill. That'd be a beacon for everybody and so on, right?

So the update of that is, I think, of the city in the cloud. Okay? We build this thing in the cloud, which is this amazing futuristic city. And we can debug it and argue over it and edit it and fork it. and whatever in the cloud. Yeah, because it's bytes, right? So if somebody disagrees with it, you could fork it and materialize a different version

in a different location. Because when I say materialized, by the way, you know, VR architecture, you can get it to auto desk quality, right? You can have the location of every pipe, every wire, every outlet, every, you know, like drop of paint can be fully special. in these VR environments. In fact, that's how things are constructed in Autodesk. You just need to, I'm not saying it's trivial, okay, but Autodesk does have stuff where you can upload to the cloud and see it in VR as well, right? So existing architecture firms have

software for this kind of thing. And there's already energy towards it in that space. It's not just like one person trying to do it. Point being, you can envision getting to a buildable blueprint in VR that you can walk through, not just for a single building, but for a community, not just for a community, but for a town, not just for a town,

but for a city. And then, you know, Songdo, for example, it is possible to build a city, you know, like there are contractors out there.

You know, in China, I don't know if you've seen some of these videos, they can snap together a train station in nine hours. You know, they can build a skyscraper in like a few days. You can also, by the way,

constrain your VR architecture for the purposes of rapid materialization. You know, for example, maybe you only use shipping containers or you only use these kinds of power outlets or these kinds of windows. You know, it's like your library of things that you can drag and drop into place is constrained in a certain way by cost or materials or weather or whatever, right? Okay. So that's a VR component. What's the crypto component?

Cryptic component gives you a lot of stuff. It gives you, you know, the currency, of course, it gives you smart contracts. for binding kinds of agreements, you can do crypto credentials. This is something I'm going to write more on, but I think it's a missing component for kind of online work is a provable, provable scarcity of credentials. That would actually remove a lot of interviewing time if you could just prove your new Python and how well you knew Python,

and then jobs just open up to you. You could just then qualify for GitHub tickets that you could do for $100, you know, if you knew Python, right? crypto is also something which allows people to crowd fund. It allows them to make long-term provable commitments. It allows them to do encryption. It allows people to do hosting, that sort of sovereign hosting, blah, blah, blah, all the things that we know crypto can do.

Perhaps most importantly, and I don't think people realize how important this is. Something like ENS is a crypto identity that allows you to earn and speak under one name. You can speak under, you know, one pseudonym, earn under another pseudonym. Your state name they use on official forms is yet a different one. And, you know, this is something you can use to log into websites. It's something where everything that you do under your online names, you can have it factored and organized and you basically own all of that digital property. And this lets you exit and move between network states as well because you've got the self-sovereign identity.

So it's like your identity and your wallet and your. private keys and so on all kind of coincide. And you mentioned, you mentioned, like, property, right? So we've often talked about Bitcoin and Ethereum, especially Ethereum being sort of like a digital property rights system that's independent of the nation state. Would you depend on something like an Ethereum, for example, for a property rights for a network state like this? Yeah, potentially. I mean, lots of small countries, by the way, they do what's called dollarization or harmonization. Have you heard that term? Yes. So dollarization is they peg their currency to the dollar, right? Harmonization is they outsource their regulation to the U.S. rather than doing it themselves, you know? Relatively

few countries actually have like their totally own sovereign military and sovereign currency and sovereign regulation and so and so forth. They actually outsource much more than people think, you know. And so that's in a sovereignty truly is a continuum. And you don't have to start, I mean, very few countries did start this way. You don't have to start as like, okay, I'm going to try and be like, you know, invading Iraq or whatever. You know, that's actually probably a stupid idea.

You know, what you want to do is start with mutual positive interactions with local governments where you are, hey, you know, we're just going to build a self-driving car zone over here in this swamp where we're going to take video of it with drones, nobody's living there. You know, it will pay you X dollars per year. We'll abide.

And this is critical. Initially, you're just building new towns or new cities, right? Your initial agreement is probably the first 10 or so that you do of these communities. You are abiding by all local laws. You might ask for one. The first one, you don't even ask for an edit. You just show that you can build a town from the cloud, which is amazing. Okay.

The second or the fifth or the 15th. through the 15th, you ask for an edit, which is, hey, let us do self-driving cars. Hey, let us fly drones here. You know, hey, let us, let this be a fintech regulatory sandbox. We can just start a crypto company here, sort of like, you know, casinos are allowed on some Native American land, right? Hey, let us, you know, do stem cells here, like stem cells are allowed in Germany, right? You start asking for regulatory breaks where everybody who comes into this special innovation zone is there for the regulatory break for the for the innovation and they've all gone in eyes wide open, right? And then with success in that, you push farther, right? And this is the same model, for example, of special economics

owns that the UN and World Bank and others are all very familiar rather than have endorsed, except you're not like, it's not focused on taxes per se. What it's focused on is regulation because a tax is a quantitative thing. It's like, okay, I would have got an X percent, now I got Y percent. But a regulation is a qualitative thing where it's literally, impermissible to do it in the first place, impermissible to use or drive that self-driving car, right? And making it permissible to do something that's impermissible is a binary thing, and that just unlocks something totally different. We've been talking about this network state, this sort of crypto nation, but two things in my mind seem to be missing. The first question is,

what is the economic engine of this thing? Is there some sort of incentive structure to contributing? And then let's get into the social layer of this thing. But first, the economic engine. What powers, every nation hasn't an economic engine of some sort. What is this nation's economic engine? So I think it's going to be digital labor for digital currency, where the digital labor aspect comes from a digital university. And so the idea is that, you know, cities in the past were begun on the basis of being near rivers or oceans or coal mines, you know, natural resources of some kind.

More recently, they've, you know, that's become more commoditized thanks to shipping and so on. You don't have to be next to a coal mine to get access to coal. you do pay some surcharge for being far away from it, but you can get a ship to you. And not just from one location, but from any of the locations where it's being mined, right? And so instead, what matters is the proximity of a university of some kind. So Stanford and Berkeley are one example, but certainly, you know, Oxford and Cambridge and other universities around the world have sort of catalyzed these sort of local tech ecosystems. And in the cloud, if you could build a digital university that issued what I call a

crypto credential, namely a provable certificate that shows that you have a certain skill, you know, and it could go very micro, right? It's like I can code a binary tree and rust. Okay. And the code, the source code that you have to do that is put on chain, as is the integration test that evaluates it. And it's maybe co-signed by a proctor who saw, you type it in and maybe it's encrypted so that it's not easy for somebody else to copy, but that you could easily give a view key to somebody so that they could run an integration test against it to confirm that you actually coded at this time, right? Maybe there's other features as well, but those are just some of the things.

That gives you something, which is like a very fine-grained qualification. You might say, okay, well, why do I care if they can code a binary tree and rust? Okay, well, now let's say they've got examples where they can code not just a binary tree, but a skip list and a B tree and, you know, like they've coded a compiler and an operating system. They've basically gone through the list of major algorithms and data structures, and they've done so well in Rust, and they've got like 70 different examples. Okay, that might be somebody who could contribute to the parity codebase. Right.

If they've done the same thing, they've done it in Go. That might be somebody who's qualified to contribute to the Geith code base, right? And so now what you did is you just made the impedance matching from somebody's skill to their work much, much, much easier. And it could be something where, okay, you know, someone who has that crypto credential and they submit a pull request to your open source project, you're more likely to look at it. Or you just may, you know, merge it given that they, you know, you probably want to review it for security and other types of stuff. but you're much, much more likely to look at it. If they interview with you, you're much more likely to give them an interview. So basically, like, crypto labors, right?

And the crypto nation provides them credentials in this model of things. And of course, that's a powerful labor force. Of course, they're all a credential labor force, which is pretty interesting. Does the crypto nation get its cut? Does a percentage of the earnings go to some tax system as a, as a nation state might do, or is there some sort of, like, issuance fees, some sort of inflation that happens in the background? So, like, what is the economic engine that actually pays for the national infrastructure, if you will?

So the simplest is, and, you know, several thoughts on this. First is, if you build an economy, there's, like, 500 different ways you can take fees off of that economy if you need to do that, right? Right. But the simplest is you boost people's human capital and then you take a cut. One way of doing that is, you know, the Lambda school model where it's an ISA, right? You know, that is to say you take a worker at Walmart, you train them in programming, you place them in a programming job, and, you know, Lambda school, for some people, increases their income like $100,000 a year, and then they take a cut of that via the ISA, right? So you literally increase somebody's human capital, you take a cut of it.

That's a win, win, win, all around, right? Okay, so you educate the individuals. And then as a result of that education, they go out into the workforce and you've invested in them with an ISA, an income service agreement, I believe. And then you get your dividends paid to you by the labor of that person that you educated. Correct. That's right. And so they've made $100,000 more a year and they give you back $20,000 or $30,000, something like that, right? That's a Lambda school business model. Another business model is, you know, something like on deck where people pay to be part.

part of a community and they get mentorship and help out of it. Sort of like a, you know, like a, what's I'm going to call it? Sort of like a college alumni network if you can't get into a college, you know, or, you know, you can't attend remote or something, right? But it's much cheaper than that. Still, you know, reasonably priced. So that's another version where it's a membership base, a community base. You're part of a point aligned.

And then so the laborer gets credentials, access to these credentials. What other public services do they get from the nation state? So if I'm in the nation of the United States, I get a pretty robust legal system, for instance. You know, generally a nice place to live. Good rule of law. You know, there's geographic, I guess, you know, weather sorts of advantages. There's economic advantages if I'm close to a place like York City that's, you know, financial hub of the world, these sorts of things. Those are the network effects that the United States has and the benefits of being a U.S.

how would such a nation state or such a crypto nation attract these types of laborers? What would be the perks or the public goods? Yeah, so good question. Well, first, I would sort of contest your premise, which is I think that the value proposition of, you know, if you separate out into physical America and digital America, okay, and you say physical America is, you know, being physically present in the United States and digital America is, you know, having access to internet services, not all of which are American, but many of which are. So that's Amazon.com and Google.com and Wikipedia and whatnot, right? I argue that much of the

value proposition of being physically in America has been uploaded to the cloud over the last 20 years. in the sense that you can live an American-grade life in Thailand or Poland or, you know, like big swats of Brazil and, you know, so on and so forth. Right. In good chunks of world, especially in Asia, much of Asia, you can live in Eastern Europe, you know, Western Europe, much of the Middle East or at least parts of the Middle East that aren't, you know, in war. but like Dubai, for example, pretty nice place to live, Israel, you know, and good chunks of South America as well. You can live an American-ish life, sometimes American plus because it's better, you know, the streets are cleaner in Asia, you know. And your email is the same. You know, you log in and boom, you're in the same Gmail no matter where in the world you are, right?

Do you mean irrespective of whether you have an American citizenship or not if you're using sort of these, quote, unquote, like American. That's right. That's right. I mean, the thing is that, you know, 20 years ago, you know, 30 years ago, there wasn't even the concept. Like 30 years ago, you had to come to America to get Starbucks and McDonald's and, you know, clean streets and so on and so forth. Over 20, 30 years, the world has dramatically changed and lots more places have become livable. You know, it's like the sort of things that you take, the reason I just say Starbucks is it signifies a certain level of sort of consumer affluence that you can have. afford to pay $4 for burnt coffee or whatever. I like the particular way they burn it, by the way, but, you know, it's just sort of a

signal. You've got a Starbucks. You've got an Apple store. You've got high-speed internet connection. You've got food delivery. You've got grocery delivery. You've got Amazon delivery. You've got printers and, you know, your plugs work, your power works, water works, all that

type of stuff, right? The basics. Plus, you know, a little bit more than the basics. you know, you can get in much, much more of the world now than you could 30 years ago, 20 years ago. So, Belaghi, one question that I have with the formation of this whole nation is why the incentives are there. But what about this? How does a social fabric cohere? When the American Revolution established America, there was like a very similar shared set of values that people wanted to see instantiated. And I don't think that while there's plenty of incentive to move to this new theoretical nation,

which has intrinsic advantages and intrinsic incentives to be there, it seems to be missing a social purpose, a social coherency. How does a community arise in this new and like nation? Well, so actually, that's a huge part of what I talk about in the book. A short version is absolutely, you know, when you think about France, the first thing you think about is not the French. stock market. God bless them. Okay. The first thing you think about is not, you know, the valuations of their tech companies or anything. You think about the Louvre. And you know, I know I'm pronouncing that wrong. The Louvre. Yeah. You think about, you know, the Eiffel Tower and you think about baguettes and and le frommage and all this stuff, right? And,

and you think about their culture because they really do have an amazing culture. They've got some, they've done some amazing things. And that's what kind of defines them as as a country. It is their art. It is their food. It is their, you know, architecture. It's all that stuff, right? And, you know, what's interesting is whenever you have large assemblies of people, there's sort of a default culture forming process.

We don't usually think of this, but, you know, the 100-something million person social network called Japan created sushi. And, you know, 300 million person social network called Reddit helped create keto, you know. And, you know, keto came out of. of credit, it is absolutely a diet of the internet, you know. And, you know, you can argue it's a subculture. It's not the entirety of 300 million. I would agree with you, right? But it's not the cuisine of any country yet, but I think it will be.

Okay. And so in the same way, once you start thinking about nations as just large collections of people with a shared culture, you should, one should also realize, well, actually, the U.S. is unbundling, right? Certainly people have talked about it. it as, you know, like blue versus red or whatever, and that's an important aspect. But it's unbundling in lots of other ways. You know, it's got cloud people versus land people, you know, who are working remote versus working with their hands. It's got, you know, like folks who are

secular versus others. Just the commonality that bound the U.S. together is just less there. And so you do have to rebuild that online. And, you know, I think it's a gradual process. it's not going to happen overnight, but, you know, things like, you know, articles that you agree with, piece of art that you like, generating culture together, hanging out together, socializing together. I think, you know, video games are underrated because they're remote play as opposed to remote work. You don't normally think of it this way, but, you know, for example, there's a company, which I respect, and they do like a Zoom coffee, right?

And look, Zoom coffee is fine, you know, but you're sort of inventing a ritual. you know, to do that you wouldn't normally do, right? You know, it's a little unnatural to come and drink your coffee in front of the monitor, right? You know, it is natural is to get on call of duty or fortnight, you know, with your friends and blow something up, right? What's also natural, I think, would also be, like, finding people via Facebook or Twitter, right? That's a large part of how communities are established. That's right. But in this podcast, we've talked about how Facebook and Twitter kind of right.

represent in Google, kind of represent their own internal nations. Are these nations invited to this new nation, or is that against the ethos? Is that against the purpose of this whole thing? So what do you mean? Are Facebook and Twitter nations invites this new nation? Is that what you're asking? Yeah. Like, is the social fabric of the nation established through a Twitter medium? Or is that like antithetical because it's using an alternative Twitter, it's using Web 2 technology when it could be using a more decentralized medium. Oh, well, I mean, the technology is certainly one aspect of it, but I think the fundamental thing is that Twitter and Facebook are utilities, not communities. Okay. Right. So the whole point is basically that, you know, Twitter in particular is just the

public war zone, right? Right. People there, look, I mean, you're on crypto Twitter. I don't even need to tell you what that means. Right. Like people basically, you know, for a number of reasons, Twitter has set it up to optimize engagement. Guess what? A significant number of humans do things that I would never have thought to do, which is like run up to strangers and just say F you at them, right? And, you know, I remember like a year or two ago I had a thread which was like Twitter is not real life yet, but it will be. It's just before Corona actually, I think, right?

And the reason is, I think the question I wanted, what was getting at is the, what holds the social graph of the network. Ah, that's right. Of the, that's what I think that's what I really meant to ask. So good question. So the answer is different network states are held together by different things. So I think the first network state, you know, the one that like, you know, I may build is held together by the goal of immutable money, infant frontier eternal life. Okay, so that is to say, you know, Bitcoin, digital currency, of course, I respect Ethereum, you know, but like immutable money, infinite frontier like Mars and eternal life, meaning reversing aging, right? And that kind of stands for a sense of, you know, of progress, technological progress, and really pushing the frontier, the great acceleration, as opposed to the great stagnation. And it's sort of something, it's a little bit of a shibboleth. Do you know the shibleth is? It's like it's a term from religion, which is like a seemingly insignificant, you know, customer tradition that distinguishes like one group from another. Okay. So if you like, you know, Peter Thiel's zero to one, if you like my book, if you like my Twitter feed,

if you like Mark Anderson's, it's time to build. If you like Elon's SpaceX, you know, feed, if you, you know, can do physics, if you are willing to fight back online, not necessarily to start a fight, but certainly to fight back if necessary, and so on and so forth. There's a bunch of these sort of cultural checklist items. And I'm not saying every single one of them is critical, but all of those things together, that's like a particular kind of person, you know? It's like the pro-tech, you know, pro-future kind of person. And I think that's like, that's a network state I'm interested in building, something which is,

it sort of restores what Western civilization used to have, which was the arrow of progress. right the sense of not manifest destiny like conquer someone else but um you know to to get to space right to transcend the sense of transcendence you know to overcome our limitations to advance mathematics to uncover the secrets of the universe you know that that's the the sense of the explorer the pioneer to reopen the frontier right that's the kind of spirit that i'm looking for for the first network state. And the interesting thing about this, Balachi, is right, so somebody could take all of the open source that is built through the network state that you're envisioning, fork it, and instantiate their own network state with, say, a different set of values, right? Something like that's like super,

like conservative or super regressive or like they're really passionate about the keto diet, right? Whatever. And then it's almost like a kind of survival of the fittest sort of, you know, which economy, which network state is going to attract the most sovereign individuals to live there and to grow its economy. That's right. So that's right. So basically, you know, I think the first network state, we will set up for forking in much the same way.

Imagine if Bitcoin was set up to fork at the beginning, right? Completely different world if that had been like a design decision from the beginning. I don't think Satoshi could have envisioned what happened with it, you know, like he or she or they figured out a lot of things, but it's pretty hard to predict the craziness of crypto over the last, you know, 10 years, right? But had you set it up to fork, which I would intend to do, yes, you could build a vegan network state. You could build one that was focused on, let's say, Latin, right? You know, for example, the Israelis were able to revive Hebrew, which was a dead language, you know. You could have a Latin network state that wanted to revive Latin and Greek, which is, I mean, Greek is obviously a live language, but you know what I'm saying? Those used to be studied, right?

You could have one that focused on like shipping container housing. And, you know, there's various subcultures and communities where they're full expression. The reason I mentioned veganism, for example, is there's a whole supply chain associated with that, right? It's everything from food preparation to, it's something where if all the people opt in, you know, and they know it's all vegan by default, you don't have to ask people's dietary preferences, et cetera. You just know they're all vegan, right? And you're in the vegan zone. Yeah, you're in the vegan zone. That's right. And so, you know, somebody doesn't have to ask. They don't accidentally eat meat by mistake. They don't accidentally eat eggs by mistake. You know, none of the pots and pans, if you're really religious about it, you know, some people are literally religious. religious vegans. You get it. You get, there's a certain benefit from flipping all the switches so you can go full stack on something and the assumptions are just baked into the firmament, right? So is this reorganizing the world from, like if we take this experiment, this

experiment out to the nth degree, is the borders of the world reorganized by shared, but shared sets of values in all particular forms? Yeah. So I wrote an essay on this actually in 2013, called Software is Reorganizing the World, where essentially I predicted that because your actual community, it's not about your nation state or your state of mind, right? Actually, to go to something very fundamental, right, the whole piece of Westphalia, you know, 1648, which established what we think of as a modern nation state, you know, what preceded that was, you know, the idea that the Catholic Church could have influence anywhere. And, um, Instead, what happened was it was like, okay, this is our turf, that's your turf.

We've got a government. It is the sole, you know, holder of the monopoly of violence over this territory. That's your territory. Catholic Church, you're not a sovereign here, right? All of those assumptions actually were not things that just came out of nowhere. They were fought over and negotiated for a long time. There's a fundamental presumption behind that, which is that people in the same geography, people who are close to each other in physical space implicitly share the same culture and therefore

can be bound by the same laws. Okay. But now when people live in anonymous apartment complexes and don't recognize each other, you know, people live in these huge apartment buildings and literally wouldn't recognize somebody who's living 10 feet away from them, you know. But what they do is they recognize somebody who's 3,000 miles away from them via Snapchat or WhatsApp or whatever, right?

And so that's a different distance metric. You know, the distance metric in physical space, you can think of it as a so-called great circle distance, which is the distance between two points on the face of the surface of a sphere, okay? Whereas the geodesic distance is the number of degrees of separation between two people in a social network. Now, the great circle distance is an approximation because in practice, you know, you're going to be constrained by oceans and by, you know, mountain ranges and deserts and so

and so forth. but roughly speaking, it's like the transit time overland between two people. Okay. Whereas the geodesic distance is, you know, it's basically the speed of light, so it's the distance in a social network. And increasingly, that's the one that really matters because that's where you're spending much of your time. That's where your trade is happening.

That's your social network. Those are the people you're talking with. And you're just a totally different headspace than the person next door, who themselves is a totally different headspace than the person next door to them, right? And that's the state of affairs we're in right now. But I think that because humans are still fundamentally physical beings, you know, that's like a rubber band that's going to snap and it's going to snap in such a way that it pulls people up into the cloud and then down into an area where they can all coalesce together, right?

And COVID, because it just pushed remote everything because of COVID because of Starlink, crypto is a big component. All of this stuff is going to, you know, especially in the, if a VATTS, vaccine is deployed, right, which would be wonderful, obviously. But if a vaccine is deployed, the world doesn't just go back to what it was. It is a fundamentally remote world now, right? Digital nomadism spikes, right, because anybody can work from anywhere. All the stuff we've been talking about for the last decade just goes totally vertical. And it becomes more feasible to just go and live with the people of like mind. You know, it's a plane ticket to go over there. Now, of course, it's harder for people with

families, it's harder for people, you know, who aren't as mobile. And one of the things you want to do is you want to bring down that cost of exit. But here's the thing, even if only a relative. Does some of that cost of exit come as a result? Like, I would imagine the legacy world, if you could embody the legacy world into one like Leviathan, the legacy world doesn't want that to change. Like the nation state isn't interested in this new future world. What are the frictions coming from the legacy world that's going to like kind of slow this progress down. Not everyone who is ready for this kind of change. It's going to be interesting.

I think that it's one important thing is that, you know, the world is no longer the United States, you know, or China, right? That is to say, you know, the U.S. is 300 million people. China's 1.1 billion. 80% of the world is neither American nor Chinese, right? 96% is non-American. So I think a lot of this is probably going to be done outside the U.S. in various ways, number one. Number two is, you know, it's not illegal to leave a country.

In fact, it's a UN human right to be able to leave, you know, to like the right of people to emigrate. It's funny. All the stuff I talked about in terms of right to exit. years ago, I think people appreciate that more with lockdown and with planes being shut off and so on and so forth. When that's taken away that you're like, oh, wow, the right to exit is actually pretty important, you know. Now, the right to exit is not the right to enter.

A country may not decide to let you in, maybe due to corona, maybe do other things, you know. But I think that we're in for an age of much more global migration than was previously possible, and many more nations are going to become nations of not just immigrants, but also emigrants. What's funny, by the way, is, you know, for Ireland, for India, for China, for other countries, those, you know, Mexico, those countries all encouraged their citizens in different ways, or at least certainly didn't extremely discourage them from leaving. The countries that have discouraged citizens for leaving tend to be the ones that are really bad, you know, like Cuba, like East Germany, which set up the Berlin Wall and shot people for trying to leave, like Russia. The U.S. actually passed something called the Jackson-Vannock Amendment. Do you guys know what that is? No.

Jackson Vannick was passed to allow Soviet Jews to be able to get out of the USSR because they weren't able to practice. They were, you know, particularly oppressed, you know, there, right? And so that's the kind of country which you can't get out of. Do you, by the way, do you know why the Berlin Wall was set up in the first place? So people couldn't get out. Yeah, but the context of it was after World War II, you know, the allies, you know, the U.S., Britain, France, and the USSR split up, whereas the U.S. and Britain and France on one side, really,

the U.S. coalition and the Soviet Union and their side. And Berlin was set up in this odd way. You can look at a map where West Berlin, or rather the West Germany controlled part of Berlin, was part of East Germany, okay? And it was behind enemy lines. Okay. It was in this weird enclave kind of thing. Okay. And so because of that, what that meant was that it was a weird loophole that you could walk out of East Germany into West Berlin. Here's actually, I'm going to paste this into our little document or whatever, so you can just kind of get a visual of it. So you could walk out of the Eastern block into West Germany and GTFO out out of this horrible. communist dictatorship, right? Now, of course, that was quite a loophole, and East Germany did not like that,

especially once all the professionals started doing it, because those were the people that the communist regime was giving the worst deal to. So they came with a term called Republic, which pathologized anybody who left. And it was something which was basically like, oh, you're a traitor for leaving. Here, I'm just pacing it in over here. You're a traitor for leaving. I can't believe you're doing this.

From the moral standpoint, as well as the interests of the whole German nation, leaving the GDR, meaning the German Democratic Republic, is an act of political and moral backwardness and depravity. Those who let themselves be recruited objectively serve West German reaction and militarism. Is it not despicable when for the sake of a few alluring job offers or other false promises about a guaranteed future? one leaves a country in which the seed for a new and more beautiful life is sprouting for a place that for over is a new war and destruction you know that kind of tone right um and basically um republic fluked was this thing where uh you know the country that sucked everybody wanted to leave it and they started to put up barriers to leaving it and then eventually a wall

where they shot you for trying to leave and that was there for 40 years uh so I mean, it's something where, actually, you know, 40 years, not exactly 40 years, it's 38 years, okay? But that is something where, unfortunately, I think some countries will go down that route. I think other countries are going to be more favorable to migration, either A, because they're net winners, or B, because they're just more enlightened about it. Okay, so another question I have. So say the right to exit, like citizens start exiting. countries in various ways. But what about the idea that countries still can use the threat of force to make lesser countries, smaller countries, less powerful countries, sort of their satellite

state, right, almost subjugate them? Do you think that basically in geopolitics, it's sort of the rule of the jungle blotjee? Or do you think that there can be a more peaceful coexistence. Like for a crypto nation, would a crypto nation have to have a military, for instance? I mean, as crazy as that sounds. Well, I think that, you know, we're getting to, so a few things. First is, India managed to get its independence nonviolently, right? So did Singapore.

So it is possible to do. So that's kind of one major concept. It's an important inspiration. I think also that, you know, you don't have to go to full sovereignty right away. you can, I mean, just getting a special innovation zone where you're building a new city where you have dispensation from the powers that be, you know, there's 233 countries in the world. Some of them will want entrepreneurs to come near and build, you know, the self-driving car Detroit, right?

So I don't think you need a military to do a lot of this stuff, number one. Okay. Number two, though, you ask, you know, could it be possible that somebody, you know, that governments will get very oppressive and so on. Unfortunately, that is possible. However, I would also say, you know, there's this sort of toy problem in differential equations where you've got two armies and you have the assumption that, like, the first army is N soldiers and the second has M soldiers and the N soldiers can kill the M soldiers at a rate K1 and the M soldiers can kill the N soldiers at a rate K2. And so what happens is each side is shooting the other and knocking down at soldiers, which knocks down. the ability other guys to kill this group and and vice versa, right? So, you know, basically

blam, blam, blam, blam, and who wins, right? And, you know, if you've got more firepower, but fewer people, you might, you know, take them to zero faster than they take you to zero, right? Okay. And so in a sense, you know, you're losing power even as you're fighting better guys. There's a, there's a modification of that, which is, it's not the, or guy is shooting you and therefore reducing your firepower. It is one where using your firepower causes enough public backlash that it reduces your firepower. Okay. So hard power, the use of hard power, especially if it's filmed, depending on how it's filmed and how it's put out there, potentially reduces the support for further ruthless measures of hard power. It very much depends on the context and so on, but it can be delegitimizing.

Okay, so for example, when the USSR went and did, you know, the invasions of, you know, Hungary and of Czechoslovakia, like in 1956, you know, when the Soviets rolled tanks in there or when in 1968, when they rolled tanks into, you know, the during the Prague Spring, both of those were things where the Soviets put it down, but they did say. would just brute force, right? And those, you know, like, they caused people to know that they were not free people, you know. And it did take 20 years. It wasn't something that happened overnight. But they paid a price for that, which was de-legitimization among people, at least behind closed doors. You know? And, you know, I think that that price paid for the use of.

a very coercive hard power is faster in the internet age with encrypted, you know, end-to-end messaging and so and so forth. It's, you know, if you're brazenly, you know, attacking or censoring or, you know, doing something in a way that's non-consensual, you might try to suppress it and it might be partially suppressed in mainstream channels in, in, in, you know, the U.S. and whatever country. But it will, it will ultimately erode support for that regime. At least this is the, that's a positive take, right? The negative take is you have a regime that's so efficiently totalitarian that it can actually reprogram people's brains enough that they don't even question it. You know, I think that's going to be hard in the age of the internet for lots of

reasons, but I can't say it's impossible. So we have to work towards that, or against that, rather, towards a better future instead. So, Blaji, this has been so incredibly fascinating. I've I think it's obvious to many who are listening that, like, you know, maybe coming to this podcast thought they were in like the end stages of the internet or the technology is over that this is the very beginning. But to kind of pull this full circle and wrap this up, we talked about COVID at first and the world becoming more decentralized and even more variant leading to this distrust in institutions and trust being the scarce commodity.

And then we've got crypto as this trust. substrate. And then we started talking about how crypto could be used not just for anarchy purposes, but to build actual civilizations, even network states, as you call them. But remind us, put a bow on this for us, why is this all good for the world? Like, what problem would this sort of thing solve? It would solve the problem of how to address regulatory harmonization. I know that seems like it's out of nowhere, but I think of that is actually the most important problem in the world. Okay, let's say, what? Huh? Okay, I've never heard this term. Okay, let me explain. Harmonization is the process by which small countries outsource their regulation to

the United States of America. Okay. So this is in the same way that a small company might outsource its login to Facebook, right? A small country might outsource its regulation. to the USA, right? And when it does so, that means that the American bureaucrats at the FDA or the FBA or the SEC or what have you basically have a global hammerlock on regulation. That's to say they are able to just quash innovation worldwide because they're the police. You know, they can literally order raids and fines and seizures. They can get banks to pull your account. Usually, it doesn't come to that, but lots of threats happen beforehand. Usually, when they just point the finger at you in the press, everybody just scurries away because they're so scared of

getting hit, right? And the issue there is that, you know, when's the last time you elected a federal regulator in the U.S.? They typically have career tenure. There's so-called Plum Book appointees, which are the folks who are appointed by a new administration. and those are the most senior officials. But the rank and file, including fairly senior people, just one notch below like the commissioner or the director or whatever, the rank and file, including the relatively senior managers, often have career tenure, which means they can't be fired and they're not elected.

So they're not subject to either, whether you have an electoral or market theory of accountability, they're not subject to either. But they also have a hammerlock on worldwide innovation through this process of harmonization. Now, cracks have started to form in this, for example, like, you know, in different ways, like Brazil has more liberal drone laws in some ways. Singapore has been doing self-driving car zones. Germany's experimented with stem cells and, you know, allowing people to do stem cells. The UK has a fintech regulatory sandbox.

And, you know, Russia and China kind of have their own regimes for technology in many ways. So the hammerlock is sort of breaking, you know. And of course, you've got Uber, you've got Airbnb, you've got crypto. the U.S. stranglehold over worldwide regulation is breaking. I'm going to say stranglehold. It's like a few unelected, unnamed, unaccountable, unfirable people who have this hammerlock. But it hasn't fully broken. And in particular, for physical innovation, it hasn't broken yet.

And what you really want, because here's the thing, the naive person, I mean, look, I'm sympathetic in some ways to Ron Paul or what have you. But Ron Paul was like, end the Fed, right? And the reason that's like laughable is, you know, the Fed is at the center of a thousand, a million different things. It's like it's like this extremely important hub node. It's like saying end Google or end AWS. Okay, if you just did that without a replacement, the whole system crashes. However, exit the Fed is much more reasonable.

Exit the Fed is BTC. exit the Fed is build something up over time, which gains backlinks in a gradual opt-in fashion and gets through a thousand different proof points and a million different tests. And it gradually becomes the next financial system as opposed to trying to do this overnight switchover, just end it without a need replacement. Okay. You can't just end it. You have to replace with something better.

So in the same way, I think exit the ABCA. agency, exit the FDA, exit the SEC, exit, you know, the FAA, etc. Comes when the 96% of the world that is not American realizes that harmonization may be holding them back. I mean, Corona has really taken the bloom off the rose, right? If you thought that the FDA was like this competent regulator, the fact that it held back the tests that could have prevented the pandemic in the U.S. from becoming a pandemic. Like, I don't know if you remember this in February.

emergency use authorization was denied to academic labs, preventing them from rolling out coronavirus tests. So that's why the country was flying blind for weeks, not knowing how many people actually had disease, so he was able to grow exponentially out of sight. Okay. And, you know, that's a very concrete, undeniable, very large-scale consequence example of what, you know, bureaucratic inertia can do, It was something that had the cost of trillions of dollars and hundreds of thousands of lives that was in part on FDA, certainly in part on the White House and part on, you know, like the state of New York and every other state. But it's definitely something where had we had better biomedical technologies, had we had better quantified self, had we had better, you know, in faster genomic testing, there's many innovations I can point to that were held back by FDA over the last decade. For example, your Apple Watch would have had way more sensors in it, had FDA not nerfed it, right? 23 and me would have been at, you know, hundreds of millions of people, so you might have been able to get pharmacogenomic analyses of, you know, individual drugs and vaccines and immunogenomic analyses of, you know, which particular immune things affected your disease response.

If Uber and Airbnb, if you saw the taxi and hotel regulations were holding back hundreds of billions of dollars, and that's just taxis. taxi and hotel regulations. What is the FDA? What are the FAA? What are the SEC holding back? What are these ancient alphabet agencies holding back? It's going to be in the trillions of dollars, but even more than that, it's going to be in the millions of lives. The only way we can demonstrate that without crashing the system, you can't just end those agencies, though, because they're at the center of everything. Like every approval goes to them, every company is hooked into them. You have to create new opt-in regimes outside where everybody opts into them. They take the risk. They deal with the bugs because there'll be lots of failures at the beginning,

and you have much faster innovation. And over time, enough people gravitate towards that, that it proves itself or not, in which case it's just like a shit coin or whatever, so to speak, it fails, right? And then, you know, the failure is limited to the 100 people who tried it out, rather than, you know, trying to impose that new regime on everybody, right? Makes sense.

So this solves for a bunch of things. For those people who are what I'd call technological conservatives, they have an intact regulatory system. If they like the regulations, they can keep them. For those folks who don't, your body, your choice, right? You get enough people together, and now you can get a jurisdiction where you actually have bodily sovereignty because, you know, we can do bunch of jumping, right? We can do skydiving.

Euthanasia is legal. Many people believe, you know, like marijuana, other kinds of drugs, recreational drugs should be legalized. When you add all that up, it doesn't make sense. as to why you should be so restricted in terms of other kinds of medical procedures that could help you. And getting new regimes for doing this, I think that's the most important thing we could solve for biomass and for other technologies. Belaji, it's very clear that you have spent a lot of time thinking about this.

We speak often on the bankless program about how these crypto economic systems are social scaffolding for organization. right, Bitcoin as a money is a tool for people to coordinate around. Ethereum as a property rights management system is another tool for people to coordinate around. And we often speak about the logical conclusion of where this goes. What happens when we find new institutions to coordinate around? And so tip of the hat for being 10 years ahead, a decade ahead of everyone else with how these things can actually manifest themselves as, organizational tools in the real world. So thank you for coming on the bankless podcast and sharing your ideas with us. They have been already extremely valuable to me. And I look forward to listening

back on this episode in the future as some of these ideas begin to manifest themselves in the real world. Thank you. Guys, action items, you can go to bellagie s.com slash signup. I think he is going to be sharing more about his new book, a network state that is coming out as well as other items of interest if you enjoyed this conversation. We will also include in the show notes hyperlinks to all of the references that Bilaji made during the show. There are quite a number of them, so we will include that. Check those out. Lastly, five-star reviews on Apple Podcast.

Guys, we are moving up the charts with those five-star reviews. Just a reminder, if you love bankless, give us a five-star review. Tell us what you like. And we will pop up the charts and get bankless and crypto up into mainstream. Risk and disclaimers, everyone, none of this was financial advice. Eat is risky. So is crypto. As is Defi. You could lose what you put in. But we are headed west. This is the frontier. It's not for everyone. But we're glad you're with us on your bankless trade. Thanks a lot. You know,