The cryptocurrency movement has been wildly successful so far despite challenging many established power structures that would presumably seek to destroy it. I won't speculate on why they have been unable or unwilling to do so but from all indications they will not in the near future. Yet the cryptocurrency movement is hardly the first that seeks to provide alternatives to powerful and established structures. From the
Principality of Sealand to
Forvik the "micronation" movement has sought similarly to provide alternatives to existing state entities. They have almost universally failed, with some being raided by the existing authorities and most being completely ignored except for by hobbyists. Why the disparity between these two similar movements? Basic speculation suggests that it is because micronations have failed to adopt the most useful traits of cryptocurrencies. Below four of the most important features of cryptocurrencies that alternative states such as micronations should seek to emulate but have not are highlighted:
1. Additional value, particularly via the application of cryptographyThis is the most critical feature that existing micronations entirely lack. Cryptocurrency systems like Bitcoin add plenty of value to the concept of a currency, their most important feature being the assurance that they provide above and beyond traditional currencies. With cryptocurrency a holder can be assured that pure mathematics and cryptography will be used to protect their currency, to prevent its seizure or transfer without their consent, and to prevent the arbitrary creation of additional units of currency. Separate from the later speculation and interest due to the possibility of material gain, it was this added ideological value, the inherent integrity of cryptocurrencies, that fueled the movement in its earliest stages and continues to provide it legitimacy today.
Micronations meanwhile provide no such additional value. Even those that have managed to transcend the digital world and "claim" a small amount of territory more resemble vanity projects designed to glorify their creators or mere roleplays for their amusement. Furthermore they do not in any way explore the theoretical possibilities of government, with most clumsily aping the representative democracy systems of existing governments or being simple autocracies. They are all style and no substance.
Yet this does not have to be the case. Cryptography can provide as much additional value to the concept of governance as it has to currency. When a voter today goes to the polls in any country, they have no guarantee of the accuracy of the results other than their government's assurance.
Cryptographic voting systems can correct this. Cryptographically-enforced identities, using required cryptocurrency payments, webs of trust, or required proofs of work, could help reduce vote fraud. Alternative states allow individuals to explore the possibilities of alternative government systems such as
futarchy (government via prediction markets) and
liquid democracy, much like cryptocurrency allowed individuals to explore alternative forms of currency such as deflationary and demurraged currencies that were not like to be considered by the dominant authorities. Just as cryptocurrency has provided a solution for many to the corruption of traditional currencies, so too can these methods be used to provide a solution to the corruption of traditional states.
2. DecentralizationMany existing micronations that have made territorial claims have eventually had said territory raided or otherwise interfered with. Others exist solely as a centralized website, easily taken down and only saved by their own irrelevance. If robustness is sought, then alternative states must remain just as resilient against attack as cryptocurrencies are. Decentralization provides this. Protocols such as Bitmessage and Freenet show that the communications necessary for governance can be achieved in a decentralized manner.
3. GradualismThe worst failure of micronations is that they have refused to accept the nature of their task. The creation of a state, in its most fully realized sense, is a profound political change. Like all political changes, to be successful they must be supported by a larger number of people before their realization, not after. Most micronations attempt to function exactly as their more established predecessors from day one, seeking immediate diplomatic recognition from all of the other nations of the world, demanding membership in international organizations, and maintaining a fiction of equality with established states at all times. Cryptocurrencies have not suffered from this mentality. The creator of the first cryptocurrency, Satoshi Nakamura, did not seek a currency code from the ISO, recognition from the Federal Reserve, or listing on existing currency exchanges. He recognized that the adoption of an alternative structure was a gradual process. Existing micronations have put the cart before the horse in this regard. Any successful alternative state must support a governmental structure that allows for its gradual expansion.
4. Freedom of choiceIn the realm of cryptocurrency, a user is no more forced to use Bitcoin than they are Litecoin. This freedom of choice allows the best ideas to flourish. Alternative states can allow their citizens a similar choice, to perhaps renounce citizenship in one state and gain citizenship in another without changing out of their pajamas.
Alternative states that apply the above principles, particularly the application of cryptography, are aptly titled "cryptostates" by analogy to the word "cryptocurrency".
Why these should exist and would help cryptocurrenciesThe implications that cryptostates could have for human choice and freedom are obvious. One likely already either agrees or does not that existing states warrant alternatives.
What particularly deserves to be highlighted is the complementary nature of cryptocurrencies and cryptostates. Cryptostates, being of a similar nature to cryptocurrencies, would naturally be more disposed to them than traditional states. To the degree that cryptostates gain influence in lieu of traditional states, the holders and users of cryptocurrencies could expect profit and benefit in proportion to the amount of regulation biased in favor of traditional currencies that is eliminated or evaded. In addition, the noted danger that traditional states pose to cryptocurrencies is reduced.
Cryptostates could provide some of the stability and structure that is lacking in the cryptocurrency ecosystem, helping to eliminate the "wild west" perception plaguing cryptocurrencies. A cryptostate adopting a futarchist model could also give cryptocurrencies suitable investment markets (prediction markets) that they have been lacking, simultaneously spurring investment and interest in cryptostates via the profit motivation while aiding cryptocurrencies. The two are a natural fit. This and more should provide the economic incentive and justification for cryptocurrency users to pursue cryptostates.
TransitionThe primary intended purpose of existing states is to provide protection for their citizens, to resolve issues that disturb the peace or otherwise violate the rights of individuals. If individuals find that cryptostates provide a superior resolution to these issues than traditional states, then they will prefer to turn to them rather than traditional states. This could already serve to put a number of financial issues and other non-violent crimes under the jurisdictions of cryptostates, who from the perspective of traditional states would merely be perfectly legal private arbitration courts.
Some might think that cryptostates would be incapable of emerging into the physical world and remain a purely digital phenomenon. This is not necessarily true. Like all potentially superior alternatives, they could be adopted via a gradual process in all facets of life. The necessary component of a transition into enforcing issues that affect the physical world is a physical presence. Cryptostates are not necessarily incapable of providing this. Once they reach a certain degree of saturation, they may enlist average citizens to enforce their laws among their populace, providing some form of incentive or gameification to encourage this. Individual citizens of the same cryptostate that are close geographically may convene to form courts, watches, or whatever other service they deem necessary.
Eventually, via voluntary donations of capital, enforced taxation (which individuals would agree to by joining the cryptostate in the first place), lotteries, or other means of gaining revenue a cryptostate might be able to afford more professional law enforcement. Individuals, even non-citizens, may choose to turn to these alternative law enforcement structures if they find them exhibiting more integrity and less corruption and brutality than existing law enforcement agencies. The power of existing states will be reduced as less criminal issues are brought under their jurisdiction. These alternative law enforcement structures will serve to advertise the cryptostates, causing more individuals to join them and increase their revenue base, allowing them to employ even more people.
Existing law enforcement officers, either for ideological, personal (if citizens think more kindly of cryptostate officers than traditional ones), or financial (if cryptostates, which would likely deal in sound cryptocurrencies as opposed to less stable fiat currencies, can provide greater financial benefit than traditional states) reasons might prefer to join a cryptostate law enforcement agency rather than its traditional equivalent. With less manpower to enforce their edicts and less people voluntarily seeking their services, traditional states could slowly and gradually fade into irrelevance, via a purely decentralized process. From the perspective of existing states, most of these actions would be no more illegal than those of private security agencies. Cryptostates enable civil and bloodless revolutions.
Cryptostates could also act as a vehicle for the creation of
seasteads, and may be similar or complementary to
decentralized autonomous corporationsPunishmentTo have laws in any reasonable sense, a state must be capable of enforcing sanctions against those who violate them. Before cryptostates transition into the physical world, they must also have some means of doing this. This is not impossible via purely digital means. Some possibilities are presented below:
1. A citizen may gain more democratic influence in a cryptostate's government, such as more votes, as time goes on, or if they perform valuable services for the cryptostate. These may be taken away as punishment for criminality.
2. A citizen may be required to put up a certain amount of money as collateral (that would be returned to them in the event of their exit) to become a citizen of a cryptostate. This amount could be taxed as a penalty.
3. A citizen could be expelled from a cryptostate, or added to a "blacklist". This blacklist could prevent other citizens of the cryptostate from transacting or even acknowledging the blacklisted individual indefinitely or for a period of time, with possible additional penalties applied to those who choose to do so.
Mechanisms such as futarchic prediction markets could provide more alternatives.
Starting a cryptostateTo start a proper cryptostate, the following would likely be required:
1. A means for citizens and government officials of the cryptostate to communicate in a decentralized manner
2. A means for deciding which proposals are to be adopted
Futarchy seems to be the most promising system in this regard. The "welfare metric" (as explained in Hanson's paper about futarchy) of the system could be the number of citizens in the cryptostate, the number of citizens multiplied by their respective satisfaction with the cryptostate, the same metric weighted by the amount of time a citizen has been in the cryptostate (encouraging citizens to hold on to their citizenship long-term and causing the value of a citizenship to increase over time, much like a deflationary asset), the amount of tax revenue received by the cryptostate, or any other reasonable metric that encourages prosperity and expansion (with changes possible via democratic processes). If prediction markets are as successful in determining information as existing results suggest, then a cryptostate adopting this approach would already have a major advantage over any traditional state.
3. A means for deciding legal cases
4. A means for applying sanctions to criminal citizens
How to do the above could be decided by prediction market.
5. A means for enabling citizenship
A citizenship in a cryptostate likely would merely be a cryptographic identity, much like ownership of currency in a cryptocurrency is merely a cryptographic key. In the future, cryptostates could possibly invest in offering more traditional citizenships based on biometric markers. The expense involved in acquiring a citizenship, in terms of time, effort, computational proof of work, money, or other resource expenditure required could be decided via the same process as everything else.
None of these requirements seem technologically prohibitive given the success of cryptocurrencies.
Cryptostates and anti-statismSome who consider themselves anti-statists might be opposed to the idea of a cryptostate, believing that we don't need any states at all. It is true that there is nothing inherent in the idea of a cryptostate that prevents them from adopting policies as repressive as traditional states. It is also true that given the processes they would likely use and the communities that they would emerge from that they are far less likely to do so. A cryptostate may make it a basic, immutable rule that exit from it must be voluntarily available for all of its citizens, and refuse to associate with other cryptostates that do not. If this were the case, a cryptostatist world would more closely resemble a
panarchy than a traditional hierarchy, and not be incompatible with anarchist theories. Cryptostates may provide the means for an orderly transition to an idealized voluntaryist world by adopting and then modifying existing institutions.
A cryptostate federationTo aid in the development of the cryptostate movement while not impeding freedom of choice for cryptostate citizens, cryptostates may choose to belong to a cryptostate federation. The point of such a federation would be solely to promote the cryptostate movement, and not the interfere in any individual cryptostate's affairs. It might do things such as provide for legal fees and support for those who ever run into legal problems with traditional states due to their involvement with cryptostates, support the jurisdiction of cryptostates above traditional states, and other such similar things. Cryptostates might also contract and create treaties in more traditional ways.
I hope by now I've convinced somebody out there that this is a worthwhile subject of speculation. I'm sure it's not a wholly original idea but I couldn't find any discussion on it. The above represents simply some of my preliminary thoughts upon the issue. Any thoughts?
These are some good ideas and my thread compliments this one.
The problem with most states as we know them is that they aren't very good at certain things. For example providing social programs or basic income is something the traditional states suck at. A cryptostate or decentralized autonomous community would be better at this because there would not be a need to have a debate in congress, there would not be a need to overcome political barriers, it's just a matter of writing the code and then people who agree with having a basic income exist would use the cryptocurrency and join the community which enables it.
