My new book “Bitcoin Nation” was published on the 15th anniversary of the Bitcoin Whitepaper, October 31, 2023. You can read it below, one chapter per week. Or buy it here:

State, country, nation. These words are often used synonymously in modern English. An unfortunate circumstance, created by teachers emphasizing creativeness over precision when teaching to write and grading essays. Combined with the fact that some encyclopedia writers seem to have mistaken the warnings in Orwell’s 1984 for instructions, modern English and most other languages have been mushed to the point where precise communication is nearly impossible. Thus, any discussion must necessarily devolve into an argument about definitions. So, since every word nowadays means everything and its opposite, let’s try to agree on differentiating definitions for the remainder of this book.

With “state”, I mean a territorially organized country, with a government that claims a monopoly on violence.

With “country”, I mean any territorially organized form of governance, not necessarily with a monopoly on violence.

And when I write “nation”, I refer to any group of people that voluntarily bands together under a governance structure, regardless of whether it’s organized territorially or with a monopoly on violence for a governing body.

Based on these definitions, you may understand why I posed the question in the first chapter, whether a state on a bitcoin standard still deserves to be called a state. While I am not opposed to a nation organizing as a state per se, in the following few chapters, we will discuss why I think a nation should organize neither as a state nor a country. In fact, we will discover that there seem to be only two options for the long-term future. Either nations without states, or states, where the rulingclass is its own nation, suppressing the citizens whom they consider inferior to themselves.

While writing these lines, I can almost physically feel the discomfort my definition of nation will give some of my readers. Nationality is something people deeply identify with and consider as immutable as the color of their skin or who their parents are.

Especially in my home state of Germany, this discussion about “true nationality” can take grotesque dimensions. When foreigners migrate to Germany, they, their children and often even grand-children, will be considered and commonly consider themselves foreigners, no matter if they have a German passport or don’t even speak the language in their supposed home country.

If I consider my own family, some of it migrated from Eastern Prussia after WWII, an area that is now and historically mostly was Polish. So, is this branch of my family Polish or German?

The bulk of my bloodline has been in the same area for centuries. Still, just the last five generations had four different nationalities. They were considered Austrian, Bavarian, citizens of Salzburg and lastly German.

In essence, the concept of conflating nationality with country of residence is the underlying issue. As mentioned previously, humanity started as family groups that were not necessarily bound to a single territory. So that a nation had a strong component of shared bloodline, shared values and interests is natural. After nations settled in countries and later even became states, people who most accurately can be described as one nation, were spread over different states and countries. With the loss of distinction between these words, the nationalist conflicts arose. In essence, nationalists weaponize the emotional bind one has to their nationality and home turf to confuse people into killing their fellow nationals on behalf of a state.

So, how can we detangle this dilemma and properly define our own nationality?

In a nutshell, I think nationality always is and always was a choice. You decide who you are and with which group of people you identify. Bloodlines are for biological reasons a common ground often chosen, but not necessary in my opinion.

As Balaji explains in “The Network State”, a nationality can be any group of people that bind together out of a shared interest. This overlap of interests can be very broad or very specific. Maybe everybody who considers Bitcoin the best money can be part of a giant “Bitcoin Nation”. Perhaps this nation will split into sub nations because the “Atheist Vegan Bitcoin Nation” cannot stand the “Christian Carnivore Bitcoin Nation”. And perhaps people can belong to several nationssimultaneously, just like myself, who currently considers himself European, German, Bavarian and a Bitcoiner.

How such a nation based on shared interest could get started, is explained thoroughly in “The Network State”, so I will make it very short here. Essentially, Balaji’s thesis is that thanks to the internet, people with shared interests can easilyorganize and band together, regardless of where they primarily reside. If such a group gets large enough, it can lobby itself into being recognized as an entity in international diplomacy, maybe even acquire land and create a sub-state in an area of a host state.

I agree with the first portion. People can organize easily via the World Wide Web and possibly even get recognized as a nation by the UN. What I don’t understand is why this nation should become a state. Quite the opposite, a globally organized nation turning itself into a new Venice or new Hanseatic City, will likely suffer the same fate as these small states did.

Much preferred, in my mind, would be that such a group gets states to recognize it as a decentralized nation. Whether this is possible and how economic incentives and game theory may strongly favor this option shall be discussed in the following paragraphs.

The legal basis for people splitting into their own independent nations is clearly stated in the UN resolution 1514 of 14 December 1960. People have the right to self-determination, including ethnic groups and nationalities in colonial or amalgamated states (e.g., Yugoslavia) being able to vote for their independence. In practice, this right has been applied rather arbitrarily, unfortunately. While the Scottish people were able to vote on independence, Catalans were refused to do so, or rather their vote was not recognized.

The underlying issue, for this right, lies in what I explained above. The words “nation” and “ethnic group” are not well-defined. And for any given geographic region, you will always be able to say “This is a mixed population, not one nation, they have no right to vote”. Thus, the only real path to getting recognized as a nation, is by getting a group big enough, to be too big to ignore.

Over the internet, this shouldn’t be a problem. The more authoritarian states turn, the more people will want to opt out. No matter, if these people want to create one giant new nation or many small ones. Initially, they all share the interest in getting this wish recognized. The best strategy for them seems to be a unified fight to get recognized as a new, decentral nation. Then, once this nation is officially recognized by major states, to sort out the details and split further if necessary, or organize the big nation into smaller federated nations.

This is only one part of the road to success for new, decentralized nations. They might also arise from existing states, for self-interest reasons of these states’ elites.