Cryptocurrency enthusiasts and blockchain maximalists have long sought to build their own utopia.
Ideas on how this would take shape have changed as the crypto industry and its influence have grown globally. From small communes in Norway, non-starter crypto company towns in Nevada, and micronations in the Balkans.
In 2022, Balaji Srinivasan, an American entrepreneur and former chief technology officer of crypto exchange Coinbase, published his book The Network State. In it, he posited a new model for governance, namely “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 ideas have caught hold among prominent members of the crypto community and libertarian-minded tech moguls. Some have already begun organizing, with projects like the Bitcoin City in El Salvador already securing the tacit support of national governments.
But as the idea gains ground among the tech elite and the crypto curious, critics are emerging. Those opposed to, or at least skeptical of, so-called network states are noting concerning, familiar historical patterns and the possibility of a digital oligarchy emerging.
Building the network state
The network state presents a vision of a political body that isn’t necessarily all in one physical location, but rather consists of like-minded individuals using technology (read: blockchain technology and crypto) to form a society distributed across the globe. According to Srinivasan, you might be able to track it across a dashboard that looks something like this:
Is the Network State concept practical?
While the Network State concept intrigues many in crypto — who already work in an imagined community connected over the internet — it has been criticized in some quarters as “tech fascism” and by others as idealistic and impractical.
Erik Zhang, the founder and core developer of NEO, took aim at the Network State concept, saying, “No state can be held together by a single value alone.”
He wrote that “nation-states are messy because they must balance education, healthcare, economy, justice, culture, and conflict resolution.” Network states will eventually face the same difficulties once they scale. “Contradictions don’t disappear — they just explode later.”
Zhang also questioned whether the “one commandment” principle of the network state, that there is one unifying principle, is even possible beyond the startup phase.
The concept is yet to be proven in practice. Some 200 network state experimenters came together in Montenegro in 2023 to form an intentional community called Zazulu. Guided by Ethereum co-founder Vitalik Buterin — who is intrigued and inspired by Srinivasan’s ideas — the experiment was intended as a proof of concept for the network state.
The participants were meant to live and work together, engaging in healthy eating, cold plunges, and yoga to get a sense of what challenges might arise.
But in 2024, Buterin indicated it had not been an unqualified success and said it was “unclear what immediate next step Zuzalu implied.” He said that there needed to be a clear goal and mechanisms to address tribalism between network states, which he called “zero-sum and unproductive.”
Joel Garrod, a sociologist at St. Francis Xavier University in Canada, in a December 2024 paper, characterized the network state as a “a likely-to-fail libertarian exit project,” the foundational text of which “shares an elective affinity with a larger, and more generalized, struggle to make a global property regime.”
He said that the feasibility isn’t even necessarily the point. “While many of these texts, including The Network State, have been dismissed as outlandish or ‘batshit crazy’ […], their striking influence on contemporary politics and their widespread visibility make them necessary objects of critique and engagement.”
Liberland
Since the Bitcoin whitepaper was published in 2008, various cryptocurrency-aligned experiments with state-building have been attempted, albeit not exactly in the order outlined in The Network State.
In 2015, Czech right-wing libertarian politician Vít Jedlička claimed an island in the Danube River between Croatia and Serbia as Liberland. The piece of land was claimed by neither nation after the river was diverted in the 19th century.
Liberland has an engaged community online and uses blockchain technology to secure its governance tokens, Liberland Merit. Its main unit of exchange is another token, the Liberland Dollar.
While Jedlička has…
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