Beyond democracy: could seasteads and cryptocurrencies replace the nation state?

Patri Friedman in The Spectator: “For the past 20 years I’ve been working to enable start-up societies: permanent autonomous zones on land or at sea intended to accelerate economic development and to serve as laboratories for voluntary political experiments.

For just as long (in fact since I first read The Sovereign Individual), I’ve been interested in the potential of digital cash, which is finally arriving in the form of bitcoin and the emerging cryptocurrency industry.

Start-up societies and cryptocurrencies have many parallels. Both grew from individualist movements seeking ways to take their philosophy from online message boards to the real world. Both seek to decentralise power in order to disrupt traditional institutions seen as having been captured by selfish elites. And both are critically dependent on ‘governance’ — the technology of designing and enforcing rules for collective decision-making.

Because of these parallels, people are often curious about how the two movements relate. Will seasteads — as manmade permanent dwellings at sea are known — use cryptocurrencies? Will blockchain projects such as Bitnation replace the nation state? In a world of competing virtual economic systems, do we even need to reform government in real life? (Answers: maybe, not soon and absolutely.)

There’s an old saying that we overestimate what we can accomplish in a week, but underestimate what we can accomplish in a decade. Similarly, I think people greatly overestimate the immediate impact of blockchain on startup countries, while underestimating the degree to which the fates of start-up countries and blockchain are ultimately intertwined.

In the near term, I don’t believe that blockchain will somehow enable start-up societies. The reason is simple: the hard thing about starting a new country is not the payment system. That’s why we live in a world with 1,000 cryptocurrencies but no sovereign micro-nations.

I’m also sceptical of the crypto-anarchy theory that rapidly evolving online institutions will somehow remove the need for improving offline ones. Physical space underpins virtual space, and most human activity still happens in physical space. Moreover, no matter how transcendently effulgent your networked life is, it can be ended by a single bullet. So the performance of your friendly neighbourhood nation state, with its monopoly on physical violence, still matters in the digital age…(More)”