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:
Let’s return to the present. Regardless, whether you consider my vision utopian or dystopian. No matter whether you agree with my analysis that totalitarian governments are the only possible alternative. There is likely one question burning in your mind:
“Why would states agree to this?”
The incentive structure for the bigger states is obvious. They can only gain by allowing citizens from other states to join. Especially as long as they can keep the monopoly on their heartland.
Why on earth should a small state allow its citizens to leave, though?
As Charly Munger once said:
“Show me the incentive, and I’ll show you the outcome.”
While not obvious at first glance, there is still a strong incentive pressure on small states to agree to the increasing digital citizenship invasion.
The first one is simply “might is right”. The so-called “rules-based world order” is only propaganda. If you speak privately to any politician in poorer nations, they are all aware that they serve purely on the grace of the United States and other big military powers. Whenever a leader tries to rise up against the US, he’ll either face assassination, invasion, or a coup. The only alternative for them is to ally with another nuclear power, e.g., Russia or China. Small and poor countries have no choice, but to accept a dictate by the superpowers.
Of course, other incentives exist as well. Already today, some countries offer services to ex-pat citizens. If you have a US passport, then you are liable to pay taxes, even if you live abroad. As a compensation, you receive all the freedom of movement this passport grants you and often, the US government will try to bail you out if you get in trouble.
US basketball star Brittney Griner is a prime example. She was imprisoned in 2022 in Russia for possession of marijuana. After 10 months in prison, US diplomats negotiated a prisoner exchange, freeing her.
Furthermore, the US already has tax treaties in palace with several countries, clarifying which portion of the taxes a US citizen pays will go to the United States treasury and which to the host state.
Such tax treaties are not simply brute forced on “third world” countries, but are voluntarily accepted by top 5 economies like Germany. The benefits of such tax deals are usually mutual. Germany has higher taxes than the US, so businesses and high net-worth individuals have a reason to hold their assets offshore. Thanks to the treaty, the US will report German citizens who try to hide their profits in the US of A, to German tax authorities.
The treaty is thus profitable for both governments, but to the detriment of the citizens.
As you can see, the first miles on the road to Bitcoin Nation have already been travelled. The next steps will likely happen purely out of governmental self-interest as well.
To put it in a nutshell:
State governments don’t plan to create Bitcoin Nations, nor to voluntarily give up their territorial monopoly. They will gradually progress to this end because they want to keep the wealth and power for their elites as long as possible. In a world, where the demographic bomb is making this exponentially difficult to do in traditional state structures, Bitcoin Nations are unavoidable, unless states are willing to commit horrific crimes.
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