Network States vs Blockchain Communities: Comments on an X Space with Balaji Srinivasan
On June 19, 2025, the Institute of Free Technology (https://free.technology/) hosted a Space on X (https://x.com/i/spaces/1mrGmPvrrlzKy), featuring Balaji Srinivasan (the author of The Network State) with Jarrad Hope and me (the authors of the forthcoming book, Farewell to Westphalia). The conversation was quite helpful and served to crystalize the differences between the views articulated in The Network State and Farewell to Westphalia. This note is my attempt to summarize that conversation, sharpen the remaining points of disagreement (in some cases “misagreement’), and provide my response. The views I am offering here are mine, and not necessarily (in some cases, definitely not) those of my co-author Jarrad Hope.
The key point of contention turns on the differences between network states and blockchain communities, and as a prelude, we can say that this question comes down to the issue of whether blockchain technologies are helping to usher in a new kind of state (network states) or whether it is going to usher in a whole new form of governance having little or nothing to do with states. My view is the latter view. Nation states, and for that matter all states, are dissolving before our eyes. Blockchain technologies are not here to prop up the age of states and keep it alive for another 400 years. Blockchain technology is here to offer a replacement.
What does that replacement look like? Balaji seemed to misunderstand our positive thesis. He thought we were offering a kind of blockchain-supported libertarianism, a path to individual sovereignty. But this is not correct, as a quick glance at our table of contents will show. We are advocating blockchain communities. These communities will have some degree of sovereignty. The blockchain provides the tools around which these sovereign communities can organize themselves.
The true point of contention then becomes this: Do we want to use these new technologies to replicate states? Or do we want these new technologies to support new forms of community-based governance? I vote for the latter.
Before we get into the arguments that Balaji offered in our chat, let’s review his idea of a network state. Here is the one-line definition that Balaji offered in his book.
A network state is a highly aligned online community with a capacity for collective action that crowdfunds territory around the world and eventually gains diplomatic recognition from pre-existing states.
The points I wanted to make were (1) that we didn’t need physical territory. And more importantly, (2) we shouldn’t care about getting diplomatic recognition from existing states. We don’t need it. We don’t want it. The old boys’ club is dead. It is time to move on to new forms of government.
In our conversation, Balaji took this to suggest that Jarrad and I want to exit from the social order, but nothing could be further from the truth. My view (I’ll let Jarrad speak for himself) is that the social order and the forms of government in our social order are much richer than just nation states. We want blockchain communities to interact with every level of currently existing governance. In the book, we talk about cities, homeowner associations (HOAs), condo boards, special economic zones (SEZs), transnational organizations, etc. There is a rich ecosystem of overlapping forms of human governance having different kinds and degrees of sovereignty. All of these can be organized around the blockchain and all of them will be forms of government that will be visible to blockchain technologies and with which they will interact.
Will contemporary nation states be among the governing bodies that blockchain communities will interact with? Sure, for as long as nation states last (not that long, in my opinion). But you can perfectly well interact with them without diplomatic recognition. Nation states interact with individuals and corporations and NGOs and all sorts of governing bodies all the time. You don’t need super special status for that.
Digging deeper into our conversation, here is a more detailed definition of what Balaji has in mind for network states.
A network state is a social network with a moral innovation, a sense of national consciousness, a recognized founder, a capacity for collective action, an in-person level of civility, an integrated cryptocurrency, a consensual government limited by a social smart contract, an archipelago of crowdfunded physical territories, a virtual capital, and an on-chain census that proves a large enough population, income, and real-estate footprint to attain a measure of diplomatic recognition.
In our Space meeting, I took issue with the idea of national consciousness, and this led to a very interesting discussion. Normally when we talk about “national consciousness” we mean something about senses of identity that extrude from where we were born and raised (‘nation’ having its root in the Latin ‘nasci’, which means “to be born”). So normally this would imply an identity built around language or race or some such thing. Balaji made it clear that this is too narrow of an understanding, and he suggested that we could think of a nation being organized around some proposition or some other way of people being interconnected (think of it as a graph of nodes connected in different ways). That’s fine, but my point in response was that this thesis is either clearly false or it is vacuous. It is clearly false if we articulate some clear property unifying a community — being English speakers, being Serbian speakers, being a certain race, being in agreement in religious belief etc. It becomes vacuous if we push the unifying principle to the limit, as every group of individuals is connected in some way or other, so obviously any blockchain community will have to involve people that are “connected in some way or other.” Maybe they are connected only in that they own a certain NFT or a certain number of FWB tokens. In that case, the underlying shared property is that they happen to belong to the same DAO or own the same NFT. At that point, just drop the word “national.” It isn’t doing any work. The word has been bleached of meaning at that point.
Must there be a “recognized founder?” I think my co-author, Jarrad, agreed with Balaji on this one. But it seems to me that Bitcoin is a proof of concept that we don’t need a founder to continue to lead us after the initial founding. Jarrad responded to this with the idea that there is still the image of a founder, but my response to that is that everyone has their own image of what Satoshi is or was or would do, and these images are radically different. I guarantee that my image of Satoshi’s vision is different than that of @Luke_Jr. Jarrad brought up the example of Christianity as an institution that is built around the image of a founder. What I should have pointed out is that there is no coherent single image of Jesus or what he stood for or what he would do today. The example that is the point of departure for our book — the 30 Years War (and the subsequent Peace of Westphalia) was between two Christian groups — protestants and Catholics — each with very different ideas about what Jesus stood for or what he would have us do.
So, I guess my point is that I don’t think founders, or even images of founders, are all that helpful, and any images of what founders intended are not coherent organizing principles for anything. It is true that many crypto projects have visible founders, but are they better for having those founders providing direction? Perhaps ETH would be in better shape without Vitalik Buterin’s guidance and perhaps Cardano would be in a better place without Charles Hoskinson’s leadership. At this point, we just don’t know. But my MAIN point here is not that you shouldn’t have founders. My point is that founders are NOT NECESSARY to a blockchain community.
Should there be an “in person level of civility?” I once had a historian colleague who insisted that the Roman Empire was successful BECAUSE they were always fighting and in a state of civil war. History is full of examples of rock bands and sports teams in which the members hate each other. That doesn’t mean they can’t be successful, and it may well mean that one is better off with a “cabinet of rivals” rather than a group of like-minded individuals. Civility is important to some people and perhaps they want to live in a community where everyone is civil. I don’t want to be a member of that community. Why make it a requirement for a network state or a blockchain community?
This finally brings me to the topic of whether land ownership should be necessary to a successful blockchain community, or even for a network state. I don’t see the point. In chapter 5 of The Network State, Balaji bangs on about this quite a bit, but I don’t see it. Here is what Balaji says.
What happens if you don’t have diplomatic recognition? Then you aren’t in the club of legitimate states. That means any government can invade you at will, and the others will just shrug. It also means you don’t have access to things like sovereign debt markets. You can’t ink trade or passport deals. You likely can’t buy many goods and services that corporations or states sell only to other states, because you’re not considered a legitimate government by the rest of the market. You certainly can’t write new regulations for your jurisdiction, because others do not recognize your lawful authority over that jurisdiction, and can (again) invade you at will.
I don’t agree with any of this. Any government can invade any nation state at will now. In fact, they do it all the time. True, the nation state was invented to prevent this, but after the Napoleanic wars, the Franco-Prussian wars, World War I, and World War II, you should have figured out that this didn’t work. It didn’t work in Europe. It didn’t work anywhere.
More to the point, I don’t see why blockchain communities and diplomatically unrecognized network states are not in a much better position to defend themselves than traditional nation states are. In the first place, they don’t necessarily have an identifiable physical location. They are decentralized. They don’t have single points of failure. They are anti-fragile! Their wealth travels over the network, is protected by encryption, and the network is, again, massively decentralized. Blockchain communities are some of the most protected forms of human governance ever created.
It isn’t even the case that blockchain communities can’t punch back with kinetic force. If they have economic strength they can hire mercenary forces. They can even rent military and police bases around the world, just as the United States does today. (The US has hundreds of military bases that are not located on US territory).
This of course leads to the question of whether a blockchain community, or even a network state, needs physical territory at all. I see no reason why it would. You might want your community to own land, for whatever reason, but there is no reason why a blockchain community of a network state MUST have sovereign control over physical territory. Balaji’s desire for physical territory seems antiquated to me. Blockchain communities and network states will be built on a foundation of virtual goods and services. Supply lines for physical goods can be dynamic and need not be anchored to a specific territory — certainly not territory over which our community or state has sovereign control. Physical territory is a relic of a bygone age.
What members of a blockchain community need is protection — someone to have their back. But that doesn’t require physical territory. It just means that you belong to a club where your interests are taken care of. There is no reason that a blockchain community cannot defend its members all around the world.
This leads us to the point that is, to me, the most baffling statement in Balaji’s book — the claim that “you don’t have access to things like sovereign debt markets.” Why would that even be true? And even if it were, why are we limited to sovereign debt markets? If we have learned anything from the development of blockchain technologies and crypto, it is that crypto routes around the traditional chokepoints of finance, and it also opens up new credit markets and greases the rails for the flow of liquid assets and credit. Blockchain communities (and if you prefer, network states) will have access to all sorts of debt markets and sources of funds that traditional nation states can only dream of.
Just to be clear, I’m not saying that Balaji can’t or shouldn’t be allowed to build a blockchain community in which everyone is civil, in which land is acquired, and which gets recognized by the remaining nation states that aren’t failed states with representation at the UN. My point is simply that these are not necessary conditions for blockchain communities. Speaking personally, they are not the sort of blockchain communities that I would want to be a part of. This isn’t to say I would work against them. There is no need to work against them. They are going to collapse on their own, along with the traditional nation states, just one more example of a failed experiment in human governance. After 380 years of trying this strategy, I say it is time to stop propping up the old order. Let it stumble into the dustbin of history.
Onward.
