LeoGlossary: Network State
This is a concept that was articulated by Balaji S. Srinivasan in a book by the same name. It conveys the idea of a new mode of governance as we advance down the digital path. There is no doubt the digital world is becoming a larger part of society. This is going to change many facets of human life. To the degree this changes is debatable but technology appears to be on a massive slopping curve.
The *Network-State is in contrast to the nation-state. Here we have a governance system that is based upon where one is geographically born. That is how citizenship is established. The rules of the land are based upon where one is physically.
Centralized versus Decentralized
A case could be made that we already operate in a world, to a large degree, of network-states. When we look at the social media platforms, the users outsize the population of the countries of the world. The Meta (formally Facebook) family of applications has near 3 billion users. That is larger than both China and India combined.
We can see a similar situation with YouTube. That has well over 1 billion users, rivaling the aforementioned countries in size. We then can look at Twitter, Amazon, TikTok, and WeChat as platforms with hundreds of millions of users.
A major part of the concept we are discussing is the view this is only a transitory state. In other words, it is part of the evolutionary process. We started with nation-states that replaced the feudal ones. Then, with the introduction of the Internet, the centralized-network state came into being and exploded.
Now we are working upon the next stage in the cycle: the decentralized network-state.
Web 3.0 is a term that is thrown around a great deal. At this point, it is not properly defined. That said, there are some base level characteristics that are important. All of this ties into the idea of a network-state.
Blockchain is a major breakthrough in that it introduced the world to distributed ledger technology. While Bitcoin, the first blockchain network, is only a ledger of financial transactions, subsequent innovations now allow for the creation of decentralized databases. This is what is putting things on par with the centralized network-states.
One thing to keep in mind is the front and back end concepts. Websites are just front ends, allowing users to access the database. All data is housed on servers running behind the website. This is the back end.
The question, as it pertains to this conversation is who controls the back end?
Web 3.0 is a much different model in that nobody is in control. Since it is a decentralized public blockchain, the node system is run by unrelated parties. Contrast this with the corporations mentioned, who control their networks completely.
Here is where we see the advancement to the next stage of the network-state.
We are omitting a major piece of the equation if we did not mention cryptocurrency. The present social media systems are powerful yet they are not economies. They can have commercial aspects tied to them yet truly lack the economic component without currency.
Cryptocurrency brings money to the Internet. This is a radical transformation and fills one of the major holes in the original protocols. At the base level, there was no commercial aspects to the Internet. Cryptocurrency solves this by making money native to the digital realm.
One of the major evolutions is expanding economies further out into the digital realm. This is where cryptocurrency allows for the movement of money without the intermediaries we are accustomed to. This is a major blow to the banks and other financial institutions. It also removes the counterparty risk we presently see by having the network as the counterparty.
Naturally, there will be a blending between the physical and digital. This means that the different states, network and nation, will have to interact. One of the views is that decentralized autonomous organizations (DAO) will become a crucial component going forward.
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