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How to Start a New Country, Concretely

How to Start a New Country, Concretely

Context

This post expands on How to Start a New Country, an article by Balaji S. Srinivasan where he outlines his vision to start a new online (at first) country.

In particular, I'm interested in what it means to build such a country, in concrete terms, and how we might get there.

Balaji envisions such a digital country eventually transitioning to the physical world. I think this is possible —  and that is the only thing that should concern us at this point. Such an endeavor lies necessarily farther ahead in the future, and hinges on the success of the digital country first, which is what I'm concerned about here.

Indefinite Motivation

I like the idea of making a new country. It's exciting. It's aesthetically pleasing. It speaks to us being able to beat the status quo and doing better.

As Balaji himself puts it, clean slates are exciting:

The financial demand for a clean slate is clear. People buy millions of acres of vacant land and incorporate hundreds of thousands of new companies each year, spending billions just to get that fresh start. And now that it is possible to start not just new companies but new communities and even new currencies, we see people flocking to create those as well.
The societal value of a clean slate is also clear. In the technology sector alone, the ability to form new companies has created literally trillions of dollars in wealth over the past few decades. Indeed, if we imagine a world where you couldn't just obtain a blank sheet of paper but had to erase an older one, where you couldn't just acquire bare land but had to knock down a standing building, where you couldn't just create a new company but had to reform an existing firm, we imagine endless conflict over scarce resources.

I do not doubt there would be a lot of optimism to start such a project. (I'm optimistic!) But to perdure and amount to something, the project needs an object. A reason for people to care and remained involved, even after the initial hype has died out. A reason for people to build.

As such the vision strikes me as indefinitely optimistic. We're expecting good things to come out of this country project, but it's not quite clear what.

On the other hand, I don't think we should demand too precise a vision. If you take many moonshots, and only a few succeed, that's pretty good. We shouldn't get lost in the details, but we should aim towards something. Let's try to figure out what that could be.

What's a Country, Anyway?

What characterizes a country? My answer is: the legally sanctioned ability to use violence to enforce a set of rules.

Violence is not very chill. But let's try to understand why it is needed, and why we might not need it in our cloud-based utopia.

A country provides services to citizens, in exchange for them respecting the rule of law (yes, including paying some taxes). There are a whole lot of services being provided, but let's highlight two particularly important ones. First, the state (attempts to) guarantee your physical safety, and enforces your ownership rights. Second, the state upholds legal decisions and agreements, including contracts concluded with your fellow citizens.

You can't easily opt-out of the physical state. That's because doing so would make it impossible for the state to enforce its duty to its citizen. How could the state protect the private property of the citizens if you're not subject to the law and you think it is your right to take that property?

Fortunately, we do not have these issues in a cloud-first country. Everybody can opt-in or opt-out at any time. Citizens still live in a physical country, which protects their physical integrity and assets. And finally, we can rely on smart contracts enforced by the blockchain instead of on the state apparatus.

This is also our challenge. If our country does not provide physical safety or legal enforcement, what does it provide?

The Value-Added Network,
or the Country-Platform

I think the answer lies in the networks, plural. First, the network of peole in this brave new country. Second, the digital network, or digital infrastructure, that leverages these people through better (financial, societal, governmental, ...) systems.

The main motivation to join the country would be access. Access, first of all, to the network of people within it, and second, access to the shared infrastructure.

This is a trickier proposition than it seems. We can easily conceive of an exlusive club where elite members form mutually beneficial relationships — these have existed since the dawn of time. But how does this scale to thousands (or even millions) of people? What to do with the people that can only, for now, offer their potential?

This is where the indefinite vision comes in — we provide value by fixing the inefficiencies of the old world, by providing people with better opportunities in the digital world than in the physical world. I don't know what can or will work, but here are a few ideas, for flavor:

  • We could build a better job market, for instance by tying digital identities to certifications and a reputational system. If you're a programmer, no need to write fizzbuzz for every company you apply to. If you're a translator, no need to write to translate a text every time. If you're an employer, you can filter candidates on the basis of required certifications. You can submit paid homework to evaluate candidates without the complexities of drafting a real-world contract with them.
  • We could improve knowledge and practices, and further bolster the reputation system, by having professionals (lawyers, doctors, designers, ...) contribute their documentation to a national database. Imagine how valuable a corpus of such documents — detailing research, procedures and decisons —  would be.

    How would this work? If you contract a lawyer on our country-platform. You could, by mutual agreement, decide to publicize all the research that went into the legal work. You would do so for a financial gain, which would accrue by letting people pay for accessing the database, or be financed by the state through some form of fees (it could be a participation fee, or it could be a transaction fee for using various pieces of infrastructure).
  • We could build a better education system, by financially incentivizing the best educators to focus on educations. The current system is very wasteful: there is one Econ 101 course per university, most of which are, by definition, not the best. These are given by professors that are mostly professional researchers, not professional educators, as per their incentives.
  • etc... I'm sure you can come up with many more ideas, and probably better than mine too.

The idea is that our country will be the everything-platform. The country-platform. It is every start-up all at once, build by the citizens, for the citizens, connected together.

We could dig deeper. Our country probably needs its own currency, which is a key instrument into setting the right incentives to foster the country's prosperity (see next section). There needs to be a way to finance globally-beneficial pieces of infrastructure, etc. These are fascinating discussions to have, but they will have to wait for another time.

Bootstrapping a Nation

To succeed, our country needs two things: infrastructure, and people. Both of these things have their own network effects, but they also boost each other.

This is the same story as with any kind of platform. Think for instance about Facebook, Twitter, iOS, Windows, the internet or the Ethereum blockchain. The more people use the platform, the more other people want to use the platform (particularly true for social networks), and the more people want to build on top of the platform. The more featureful a platform is (more infrastructure), the more intersting it is to use and to build on top of.

People drive people, people drive infrastructure, infrastructure drives infrastructure and infrastructure drives people!

Network effects are neat, but the challenge is always the same: how to get the people and/or the infrastructure there in the first place? In other words, how to bootstrap?

Well, it's all about incentives of course. It always is.

Here, we can take a page from the crypto playbook. One of the under-appreciated aspects of the crypto boom is how it created entirely new ways to leverage incentives into momentum. Some example include initial coin offerings, governance tokens as well as particaption in interest from exchange/lending fees. All of these provide financial and decisional incentives to contribute to the growth of a blockchain-based system.

I think Balaji gets this. His 1729.com newsletter pays people to complete tasks, with the goal of fostering a community of tech progressives. The simple financial incentives gets you to do learn new things, practice your hustle muscle, and grow the community. It got me to write this article! It also shows that incentives go beyond money — I could have earned more money doing other things than these tasks, but it was fun and I liked the idea.

If we use the power of incentives correctly, and capitalize on the initial optimism and financial demand for clean slates, this might just lead to the founding of a great nation.