Erm -- a lot of you are confusing a small nation with a micronation.
A micronation doesn't require land.
Right now, I am an emperor of a tiny micronation, am working hard on converting my micronation into a full fledged nation.
It's been stated that a nation requires 3 things:
A government, a permanent population, and land.
Land is pretty easy to obtain, a private island. That requires but one things, money.
Second is a permanent population. Not that hard to obtain, just need a good leader.
Third and final thing -- a government. Without a proper government, you can have a permanent population -- people would leave.
Anyways, I planned on having a virtual currency, however, the foundation differed from bitcoin dramatically. I was planning on have 'credits' directly backed by gold, proportionality. I was thinking 1000 credits to each ounce of gold. Meaning in theory, you'd be buying an selling stuff with 'virtual gold coins'. Obviously, there's thousands of flaws in this system, but it seemed to me like it would be something nice to have.
Anyways, just my 2 cents
Quote from wiki:
"In international law, the Montevideo Convention on the Right and Duties of States sets down the criteria for statehood in article 1: The state as a person of international law should possess the following qualifications: (a) a permanent population; (b) a defined territory; (c) government; and (d) capacity to enter into relations with the other states."
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http://en.wikipedia.org/wiki/Micronation#Legitimacy
