The Breakdown - Software Creates New Nations

Episode Date: July 5, 2024

A 4th of July reading and discussion inspired by https://www.wired.com/2013/11/software-is-reorganizing-the-world-and-cloud-formations-could-lead-to-physical-nations/ Enjoying this content? SUBSCRIBE to the Podcast: https://pod.link/1438693620 Watch on YouTube: https://www.youtube.com/nathanielwhittemorecrypto Subscribe to the newsletter: https://breakdown.beehiiv.com/ Join the discussion: https://discord.gg/VrKRrfKCz8 Follow on Twitter: NLW: https://twitter.com/nlw Breakdown: https://twitter.com/BreakdownNLW

Welcome back to The Breakdown with me, NLW. It's a daily podcast on macro, Bitcoin, and the big picture power shifts remaking our world. What's going on, guys? It is Thursday, July 4th, and today we are talking about software reorganizing the world. Before we get into that, however, if you are enjoying the breakdown, please go subscribe to it, give it a rating, give it a review, or if you want to dive deeper into the conversation, come join us on the breakers discord. You can find a link at the show notes or go to bit.ly slash breakdown pod. Hello friends, happy Independence Day. Now, technically the breakdown is off for major U.S. holidays, but I decided to move that off day to tomorrow instead, because July 4th is a fun one to try to connect to some pertinent themes. Obviously, Bitcoin and Crypto are technologies that are fundamentally about many of the same things that the early founders cared about. Sovereignty, rights, a vision of the future. And what I wanted to do today is actually do something like a long read Sunday, but moved up for a holiday. One of the people who talks the most about these types of themes that our U.S. founders might have been interested in is Bologi Shrnavasin.

Interestingly, of course, Bologi doesn't just talk about it in the context of America, but in the context of how the internet is developing its own types of politics. For the last couple years, Bology has been working on something that he calls the network state. It is all about this fundamental shift from the physical world into digital realms and what it all means where blockchain and cryptos fit in and what AI has to do with it. So what we're reading today, or rather what Eleven Labs Me is reading today, is a piece that shows for how long biology has been thinking about these questions. This piece comes from Wired Magazine all the way back in November 2013, and it's called Software is Reorganizing the world. In it, you can see the early conversations and arguments that would turn in ultimately to his idea of the network state, but in some of their earliest articulation more than a decade ago.

So let's listen to AIMe read this and then we will come back and discuss it. is reorganizing the world. For the first time in memory, adults in the United States under age 40 are now expected to be poorer than their parents. This is the kind of grim reality that in other times and places spurred young people to look abroad for opportunity. Indeed, it is similar to the factors that once pushed millions of people to emigrate from their home countries to make their home in America. Our nation of immigrants is tautologically a nation of emigrants. These emigrants, our ancestors, didn't bear enmity towards the countries they left. Quite the contrary. They weren't going galt or being unpatriotic by leaving, as they often left out of sadness and

melancholy, not anger. In many cases, they remained homesick for the rest of their lives, leaving only because they had to, not because they wanted to. Yet while our ancestors had America as their ultimate destination, it is not immediately obvious where those seeking opportunity might head today. Every square foot of Earth is already spoken for by one or more nation states, every physical frontier long since closed. With our bodies hemmed in, our minds have only the cloud, and it is the cloud that has become the destination for an extraordinary mental exodus. Hundreds of millions of people have now migrated to the cloud, spending hours per day working, playing, chatting, and laughing in real-time HD resolution

with people thousands of miles away without knowing their next door neighbors. The concept of migrating our lives to the cloud is much more than a picturesque metaphor, and actually amenable to quantitative study, though the separation between our bodies is still best characterized by the geographical distance between points on the surface of the earth, the distance between our minds is increasingly characterized by a completely different metric. The geodesic distance, the number of degrees of separation between two nodes in a social network. Importantly, this geodesic distance is just as valid a mathematical metric as the geographical. In fact, there are entire conferences devoted to cloud cartography,

in which research groups from Stanford to Carnegie Mellon to MIT present the first maps of online social networks, mapping not nation states but states of mind. Perhaps the single most important feature of these states of mind is the increasing divergence between our social and geographic neighbors, between the cloud formations of our heads and the physical communities surrounding our bodies. An infinity of subcultures outside the mainstream now blossoms on the internet. Vegans, body modifiers, crossfitters, Wiccans, deers, pinners, and support groups of all forms. Millions of people are finding their true peers in the cloud, a remedy for the isolation imposed by the anonymous apartment complex or the remote rural location.

Yet this discrepancy between our cloud subculture and our physical, physical surroundings will not endure indefinitely, because the latest wave of technology is not just connecting us intellectually and emotionally with remote peers. It is also making us ever more mobile, ever more able to meet our peers in person, and so these cloud formations of mind are beginning to take physical shape, driving the reorganization of bodies. In the technology space, we have already seen this transpire at small scale, a cloud formation of two people coming together for 10 years facilitated by Match.com comma, a formation of 10 people for a year in a hacker house. a formation of 100 people for a few months at a startup incubator,

and a formation of 1,000 people for a few days at an open-source gathering like RailsConf. More recently, we saw the thousands that occupied Wall Street for a month, the 10,000 Redditors involved in John Stewart's rally, and the tens of thousands that took Tahrir Square at the height of the Arab Spring. Those trivial photo-sharing apps seem far less trivial in this light. But while these large rallies command deserved attention, something else of significance is happening more quietly. Cloud formations are starting to take physical shape in the form of

long-term friendly communities that are geographically collocated like campus embassy network and the Rainbow Mansion. In some ways, this isn't anything new. The twin ideas of co-living in the same house or co-housing with separate houses in a shared community have been around in Denmark since the 1960s and the U.S. since the 1860s. What is new is the ease of finding compatible peers via web search, online forums, and social networks. And so the concept is spreading around the world, with hundreds of co-living and co-housing locations now accessible through the internet in the U.S., Canada, United Kingdom, and across continental Europe. It is not yet clear how widespread this phenomenon will become, but few humans are truly so solitary that they would shun the very idea

of shared communities. And from email to mobile phones, what technologists experiment with on the weekends has frequently foreshadowed what everyone else will be doing during the week in 10 years. And from there, it is simultaneously straightforward and radical to note that when cloud formations take physical shape, neither their scale nor duration has an upper bound. There is no scientific law that prevents 100 people who find each other on the internet from coming together for a month, or 1,000 such people from coming together for a year, and as that increases to 10,000 and 100,000 and beyond, for longer and longer durations, we may begin to see cloud towns, then cloud cities, and ultimately cloud countries materialize out of thin air. At first, this sounds rather implausible.

Perhaps the internet will spur a wave of internal migrations as online communities begin gathering in person, but could this process really lead to a new city or country? The future of technology is not really location-based apps. It is about making location completely unimportant, yet the technical prerequisites are already well underway. Machine translation of signs, text, and speech brings down language barriers and facilitates ever more cross-cultural meetings of like minds. Immersive headsets, input devices, and telepresence robots further collapse space and time, allowing us to instantly be alongside others on the other side of the globe. Mobile technology makes us ever more mobile, increasingly permitting not just easier movement around a home. home base, but permanent international relocation. Technology is thus enabling arbitrary numbers of people

from around the world to assemble in remote locations without interrupting their ability to work or communicate with existing networks. In this sense, the future of technology is not really location-based apps. It is about making location completely unimportant. When physical goods themselves can't be digitized, our interface to them will be. But could everything really become that mobile, that portable? What about transportation, infrastructure, food, shelter, the clothes on our backs? Consider transportation first. Car ownership is already declining, and the combination of Uber, Lyft, their public transportation analogs, and new shareable car fleets will greatly reduce traffic and emissions.

On-demand rental will ultimately become more convenient than the burden of outright ownership, especially in an autonomous car world, and will make us vastly more mobile as a result. And many more things can be transported on-demand once we have the on-demand car. With respect to infrastructure, projects from neighborhood pothole repairs to bridge changes are being crowdfunded or driven through private public sector partnerships. In fact, entrepreneurs built roads for most of American history. And with autonomous cars coming, technologists are going to need to reinvent roads again. Google's Vannevar is moving construction to the cloud. Much of shipping logistics and the supply chain is going there as well, and robots can already

build small buildings and operate autonomous mines. The net result is that both core infrastructure and many of the mechanisms for building and funding it are becoming computerized, and thus deployable in new locations. And from the road, we turn our eyes to the sky. Next up will be a carbon-friendly computerized infrastructure for safer air traffic control to guide the emerging fleets of drones doing everything from photography to surveying to delivery. As for the physical items used in daily life, the present, let alone the future, is already a time where everything from food to shelter to clothing to transportation to your very wallet and keychain can be accessed on demand from your mobile phone in more cities every day.

So when it comes to the constraints on mobility imposed by the physical world, the rule is simple. When goods themselves can't be digitized, our interface to them will be. The benefits of such high mobility are much more than convenience to the people who supply these goods. For example, with online food ordering, an owner of a small restaurant is finally able to prepare meals in batch, order ingredients in bulk, and reach repeat customers without wasting valuable limited resources in guesswork. With the advent of mobile microtasks, we are seeing the emergence of new digital assembly line jobs that offer greater flexibility, less risk of injury, and hourly wages comparable in some cases to those of new hires at GM. And with autonomous mines, workers can extract needed minerals without risking black lung. lung disease. This is why location is becoming so much less important. Technology is enabling us to access everything we need from our mobile phone, to find our true communities in the

cloud, and to easily travel to assemble these communities in person. Taken together, we are rapidly approaching a future characterized by a totally new phenomenon, the reverse diaspora, one that starts out internationally distributed, finds each other online, and ends up physically concentrated. What might these reverse diaspras be like? As a people whose primary bond is through the internet, many of their properties would not fit our pre-existing mental models. Unlike rugged individualists, these emigrants would be moving within or between nation states to become part of a community, not to strike out on their own. Unlike would-be revolutionaries, those migrating in this fashion would be doing so out of humility and their ability to change

existing political systems. And unlike so-called secessionists, the specific site of physical concentration would be a matter of convenience, not passion, the geography incidental, and not worth fighting over. Today, one of the first and largest international reverse diaspras has assembled in Silicon Valley, drawn by the internet to the cloud capital of technology. In fact, an incredible 64% of the Valley scientists and engineers hail from outside the U.S., with 43.9% of its technology companies founded by emigrants. But the geocenter of this cloud formation is only positioned over Silicon Valley for historical reasons, as the semiconductor manufacturing that was made easier by the temperate climb of the South Bay has long since moved away. Nothing today binds

technologists to the soil besides other people. In this sense, Silicon Valley is nothing special. It is best conceptualized as just the most common XY coordinates of a set of highly mobile nodes in a social network whose true existence is in the cloud. And this global technology cloud truly stretches over the whole earth, touching down at various locales both in the U.S., at SendGrid in Boulder, Tumblr in New York, Rackspace in Austin, Snapchat in L.A., Zipcar in Boston, Opsco'd in Seattle, and outside it, at Skype in Estonia, Tencent and Shenzhen, SoundCloud in Germany, Flipcard in India, Spotify and Sweden, Line in Tokyo, and Ways in Israel. Cultural connections forming between people in this cloud are becoming stronger than the connections

between their geographic neighbors. Palo Alto's Excel invests in India's flip cart, Estonia's Skype is folded into Seattle's Microsoft, Israel's Ways is merged into Mountain Views Google, and the SoundCloud engineer on a laptop in Berlin builds a deeper relationship with the VC in New York than the nearby Bavarian Bank. Today, the geocenter of the global technology cloud is still hovering over Silicon Valley. But in a world where technology is making location increasingly less important, tomorrow the reverse diaspora may well assemble somewhere else. Of course, it would take some time for a reverse diaspora assembled in a new location to advance from small communities and existing buildings

to the infrastructure for towns and cities, let alone to starting new countries. If history is any guide, it took almost 170 years to go from 1607, James Town, to 1776, America, 90 years to go from 1857, Sepoy Mutiny to 1947, India, and 52 years to go from 1896 Hertzl to 1948, Israel, though at internet time, things could happen more quickly than

that. And we can't know from today's vantage point where that first reverse diaspora might assemble outside the U.S. or what those cloud cities or countries will be like. They could be countries formed by internationally recognized processes similar to the ones that created 26 new countries over the past 25 years. A pattern noted by Mark Andresen.

They could be regions of the world set aside by global agreement for experimentation, as discussed by Larry Page. They could be floating cities in international waters, as put forth by Peter Thiel, or one of the more ambitious 80,000-person colonies on Mars desired by Elon Musk. The specific location is still unknown. In a real sense, it matters far less than the people there. What we can say for certain is this. From Occupy Wall Street and Wycombinator to co-living in San Francisco and co-housing in the UK, something important is happening. People are meeting like minds in the cloud and traveling to meet each other offline, in the process building community and tools for community where none existed before. Those cloud networks where people poke each other, share photos, and find their missing communities are beginning to catalyze waves of physical migration, beginning to reorganize

the world. Will this ultimately end in a cloud country of our own? As Page, Thiel, and Musk propose in different ways? We can set this as a long-term goal, like the kind of dream that propelled so many millions to exit and come to America in the first place, but it's unclear what the future holds. We do know this, however. As cloud formations take physical shape at steadily greater scales and durations, it shall become ever more feasible to create a new nation of emigrants. Hello, friends, before we get back to the rest of the show, I want you to join me at Permissionless. Permissionless is a conference for Cryptonatives by CryptoNatives. And the reason it's so important this year is that despite regulators' best attempts to push industry,

industry founders, devs, and executives out of the U.S., the U.S. remains the beating heart of crypto. Today, the tide is turning. Policymakers have pivoted from fighting crypto to embracing it, which will lead to the creation of new financial products, new applications, and ultimately new adoption. Permissionless is a conference for those using and building on-chain products. It's home to the power users, the devs, and the builders. And what's more, I'm going to be there. The location is Salt Lake City. The dates are October 9th to the 11th, and right now tickets are just $199. Towards the end of the month, they're going up to $499, and if you want 10% off, use code breakdown 10 when you

check out. If you go to the Blockworks website, blockworks.com, there will be lots of information about how to register, and again, use code breakdown 10 to get 10% off. All right, back to Real NLW here. What's clear 11 years on from when this piece was written is that all of the trends that Bologi identified here have done nothing but got more powerful. Along the way, more infrastructure has been built for new types of novel organization. The interesting question is what will truly be the catalyst, if one ever happens, that pushes people from alternate modes of organization and operation, into true digital polities, something very distinct and different from our terrestrial governing systems. For a while, I think many people thought that the Metaverse was a third leg of this

stool, but belief in that is probably lower today than it would have been two years ago. Is AI the big factor? Perhaps, but I think many people are waiting to see how the agent era of plays out before they really try to understand how that's going to interface with digital realities as well. What's certainly true is that AI will force a set of societal conversations around the social contract, around things like universal basic income that will dictate the next generation of terrestrial politics certainly, and in so doing, will impact how people think about these alternative realities as well. It's going to be a fascinating time, if nothing else, and I intend to be here narrating it for you as it happens. For now, though, that is going to do a

for today's episode. Until next time, be safe and take care of each other. Peace.