Citizenship in the Era of Blockchain-Based Virtual Nations

Digital activism is a not a recent phenomenon. Social movements increasingly leverage the power of digital technologies to coordinate themselves and communicate to a broader audience – as illustrated by the role played by social media during the Arab uprisings in 2011.⁴ But the internet also enabled the emergence of new communities of kinship, with a variety of online platforms (e.g Facebook, Twitter, Whatsapp) gathering people around specific interests or values, regardless of their political views. Some of these communities operate as tight social groups, providing members with a newfound sense of belonging and a collective identity.⁵ While they do not engage in what we usually regard as political activity, these online communities play a key role in shaping the way people organize and coordinate themselves, in ways that significantly differ from those of existing political institutions.⁶ Apart from the legal regime these communities operate in, they are governed by their own systems of rules and social norms – which members voluntary abide by.

In her book, ‘Social Movements and Their Technologies: Wiring Social Change’, Stefania Milan illustrates the different approaches of social movements in materializing their ideas into the world.⁷ Insiders adopt a cooperative attitude: they recognise existing institutions as a legitimate source of power and actively engage in their game, through advocacy and traditional decision-making procedures.⁸ Outsiders adopt a more confrontational attitude: they reject the rules of these institutions and choose instead to exert pressure from the outside, through campaigns, protest or other form of political resistance.⁹ Finally, what she refers to as beyonders are a wholly different bunch. Beyonders simply refuse to engage with existing institutions: they do not want to fight them nor do they want to change them, they simply regard them as a leftover from a past era – which they are trying to render obsolete by building new systems.¹⁰ Thus, relatively to the other two groups, beyonders operate in a way that is more autonomous or independent; they do not play for or against the established political system, they just decide to ignore it or bypass it.

Is it fair to conclude that beyonders do not play a political role in society? Clearly not. By creating an alternative to existing institutions, they exert an indirect pressure forcing them to adjust themselves to maintain their position. Perhaps more so than insiders and outsiders, who operate within a given political framework, beyonders are deeply concerned with social change. Their political action is the result of a constructive reaction to the current state of affairs. They are responding to their own needs using new schemes and methodologies, leveraging the power of communities to create new institutions that will help them fulfil their missions – through what essentially amounts to a new form of political organisation.

Today, in the shadow corners of the internet, a new group of beyonders is emerging, looking at blockchain technology as a means to replace many of our traditional institutions. While most of the attention was put, initially, on Bitcoin disrupting banks and other financial operators,¹¹ as people understood the full potential of blockchain technology, they saw it a means to implement new governance structures that could potentially replace some of our existing systems of governance.¹²

At the extreme end of this spectrum are those who envision the creation of new blockchain-based virtual nations, with a view to ultimately replace the nation-state. This is the case, for instance, of Bitnation: an initiative aimed at creating a new sovereign jurisdiction that operates only and exclusively in cyberspace, independently of any geographical boundaries. Founded in 2014, Bitnation describes itself as a decentralized borderless voluntary nation that anyone can join or leave as they wish:¹³ a transnational community of global citizens that spontaneously coordinate themselves, with no recourse to coercion.

To early internet pioneers, this might sound familiar. Already in 1996, in the ‘Declaration of the Independence of Cyberspace’, John Perry Barlow described the digital world as an independent space that simply could not be regulated, because – he claimed – governments did not have the right nor the capacity to exert their sovereignty over it¹⁴ (even though history has eventually taught us otherwise).

Barlow was essentially a beyonder – mocking the various governmental attempts at regulating the internet landscape, in ways that he considered to be ineffective in this new digital era. Similarly, Bitnation is mostly the result of a beyonders’ approach to governance, trying to create a new sovereign nation that ignores the rules and procedures of existing nation-states, regarded as obsolete in this new digital world. Because it operates on a transnational and decentralized peer-to-peer network (the Ethereum blockchain), Bitnation is not under the control of any one government. Indeed, by relying on blockchain technology, Bitnation is creating a system that not only tries to escape from the hegemony of nation-states – because it has no single point of failure, or control – but also tries to compete with existing institutions and governmental systems – by providing self-sovereign identities, notarization services, property rights and company registration, dispute resolution systems, etc. which are usually associated with the functions of the public administration. The Ethereum blockchain is particularly useful in this context, because – as a public and transnational blockchain – it provides the necessary transparency, verifiability, incorruptibility and trust that one would expect from these governmental services.

‘Governance in the real world is so fucked. We have to start thinking about how to build it in the virtual world’ said Lawrence Lessig in an interview¹⁵, after he resigned from the 2016 presidential campaign. While Lessig was referring to the creation of a massive multiplayer online game¹⁶ inviting players to experiment with different forms of governances, it might be worth investigating whether initiatives such as Bitnation, and other attempts at creating blockchain-based virtual nations (such as Cultu.re) or even blockchain-based virtual worlds (such as Decentraland) could actually provide a new space of experimentation, allowing people to experiment with new political systems that operate outside of any defined territory. Indeed, these initiatives – which rely on decentralised blockchain-based systems – are not located in any given jurisdiction: they subsist in a transnational space, which has yet to be colonised by new governance structures and experimental political regimes.

Can these blockchain-based systems support the emergence of a new framework for global citizenship (as suggested by Liav Orgad, amongst others¹⁷) where people pledge allegiance not to an existing government or nation-state, but to a global community that transcends national boundaries?¹⁸ Can they support a new understanding citizenship as collective identity, providing new opportunities for collective action and civic participation in a post-national world?¹⁹ As with many things today, the answer is not a simple one. The concept of blockchain-based virtual nations is interesting because it is highly controversial. It is, in fact, supported by different groups, for very different purposes.

On the one hand, the concept of a virtual nation is appealing to many libertarians, who see it as an opportunity to reduce the room for governmental intervention, by creating new ad-hoc governmental structures aimed at creating a society governed by (unregulated) market forces, and nothing else. This is the vision brought forward most prominently by Peter Thiel, who envisions the creation of a new sovereign nation on an offshore artificial island²⁰, built 200 miles off the Californian coast. This vision is also shared by a number of crypto-libertarians,²¹ such as the team behind Bitnation, who believe that – since we have lost trust in our governments – we shall now rely on blockchain technology to create trustless systems (i.e. systems where trust is no longer needed) with a view to support and facilitate a series of atomic peer-to-peer interactions in a seemingly stateless environment.²²

On the other hand, there are people who see virtual nations as an opportunity to overcome the lack of trust in governmental institutions, through the creation of new trusted communities with a global scope. These communities can experiment with new institutional structures that operate independently from, or as a complement to existing institutions. They can support the emergence of grassroots initiatives intended to fill the gaps generated by the progressive shrinking of the welfare state – i.e. the provision of public services and shared infrastructure, the pursuit of the common good, and the protection of individual and collective rights.²³ Blockchain technologies could provide new mechanisms of social or political coordination, allowing for transnational communities and activist groups (such as human rights defenders, internet freedoms advocates and climate change campaigners) to gather around a newfound sense of identity and organise themselves as a collective.

The idea is not to replace nation-states with new or competing forms of sovereignty, but rather to provide new means for global communities to mobilise and experiment with new ways of engaging in civic life. If political participation no longer finds its place in the context of traditional governmental structures, perhaps these virtual communities – or cloud communities, as Orgad calls them – might be able to bring civics back to life. Indeed, if citizenship refers not only to a legal status, but also to an individual’s political activity and collective identity,²⁴ we might soon witness the emergence of new global citizens, who regard these new virtual nations as polities and self-identify as their members.

This is the vision supported by initiatives like Democracy Earth and Aragon, two blockchain-based platforms providing tools for small and large organisations to operate in a globalised post nation-state world, through their own governance rules and dispute resolution systems. Without trying to replace the role of the state as a political institution, these initiatives are exploring whether (and how) some of the functions undertaken by governmental authorities – e.g. the issuance of identity cards, recordation of vital records and maintenance of public registries, etc. – could be transposed into a blockchain-based system.

People are ideally free to decide, on a case-by-case basis, whether they want to rely on traditional institutions and governmental frameworks, or whether they would rather adopt these new experimental systems, whose values they might feel more attuned with. As a general rule, citizens cannot easily revoke their allegiance to a particular nation-state, because – as highlighted by Rainer Bauböck – the social contract described by Hobbes and Rousseau is not a negotiable contractual agreement entered into by consent (i.e. citizenship as a legal status is generally something that one does not chose and that, once acquired, cannot be easily gotten ridden of). Yet, to the extent possible, they could choose to acquire additional citizenships, becoming members of multiple communities based on affinity and consent. Insofar as they provide valuable services to their citizens, these virtual communities (or virtual nations) may be competing with one another – and potentially with nation-states – so as to expand their user-base.

While this might sound speculative at best, we are already seeing glimmers of this new world. For several years, the republic of Estonia has been trying to create a ‘digital nation for global citizens,’²⁵ as illustrated by its e-residency program, which provides a government-issued digital ID to all individuals requesting it. Inspired by the notion of government as a platform,²⁶ e-Estonia is trying to become the hub for every governmental service, providing all of its electronic residents with a secure identification system, notarisation services, and even the ability to run a company or open a bank account, without ever putting foot into Estonia. With over 28,000 e-residents from all over the world, today, the state of Estonia increasingly operates on a digital layer, enabling people to interact with its governmental platform independently of their country of citizenship or residency.²⁷

Competition between nation-states, trying to collect new members by providing more efficient or reliable governments services, has already begun. If Estonia can collect e-residents on a global scale – in spite of its national boundaries – what would prevent virtual nations from doing the same, without a physical territory? Are we actually moving towards a world in which multiple nations are competing to attract more citizens, in the same way as companies are today competing to attract more customers?²⁸

Of course, things get murky when we move from purely administrative tasks – like identity, property and company recordation – to more political tasks, involving policy and decision-making. If people could choose to become citizens only of the communities with whom they agree, they would essentially engage in a generalised version of nation-shopping, constantly trying to find the jurisdictions that seem the most advantageous for them. When brought to an extreme, this would ultimately mean the end of politics.

Politics is all about compromises, in order to accommodate different viewpoints without entering into a conflict. An opt-in or exit-based political system essentially eliminates the notion of politics, because it removes the need for compromise. People with different values or opinions would no longer need to argue and deliberate in order to reach consensus, because if they’re in disagreement, they can simply leave.

I am, however, more pessimistic than Bauböck when it comes to the way nation-states will adapt to these technological changes. Given the progressive disengagement of citizens in local politics, and the growing distrust in existing institutions – whose legitimacy is increasingly put into question – it might not be surprising to see a new wave of nationalism emerging all over the world, with nation-states drawing on nationalist and anti-immigration narratives to reinforce their hegemony over the territory, essentially redefining on-going relationships between citizens and non-citizens.²⁹

At the same time, due to the increasing trends towards globalisation, large internet corporations, like Google or Facebook, are progressively taking on some of the functions that were once specific to the nation-state: from the task of supporting the discourses in the public sphere to their role as identity providers.³⁰ With several billions of users on their platforms, these corporations are slowly turning into de facto corporate nations, with their own system of rules that they unilaterally define and impose on their ‘citizens’. Traditional nation-states might, therefore, soon have to compete not only with virtual nations, but also with these new transnational corporate nations – similar to Neal Stephenson’s franchulates as science-fiction fans will certainly point out.³¹

It is in this convoluted (and daunting) context that I see the rise of blockchain-based virtual nations as a positive omen. Perhaps the reference to virtual nations is not the most accurate one, because the term has a strong political connotation and somewhat gives the impression that these communities are assuming the role of traditional nation-states. While some of these communities do intend to replace the figure of the nation-state (e.g. Bitnation), others are simply trying to experiment with new and allegedly apolitical governance systems,³² which nevertheless play a crucial political function.

Because they rely on voluntary association, virtual communities might well remove the need for compromise within a single community, yet they do not eliminate the need for compromise between multiple communities. Hence, politics are not gone, they are simply moving into a different layer. By aggregating people with similar values and opinions, these virtual communities could in fact strengthen the voice of certain minorities – usually stifled by the majority’s opinion – and create a more lively debate and political discourse at the outside (rather than on the inside) of these communities. As such, they could end up participating in conventional politics, along with other real-world interests groups.

To conclude, let me take the stance of a beyonder for a moment. As a member of Creative Commons,³³ I have always been fascinated by its solution. Instead of trying to reform copyright law from the inside or fight it from the outside, Creative Commons introduced an alternative legal regime for creative works that coexists with the existing regulatory framework (in fact, it is based on it) for authors to experiment with new business models that do not rely on the exclusivity and artificial scarcity of copyright law.

Today, with the advent of blockchain technologies, a new wave of innovation is underway in the realm of governance. This innovation is one that will benefit everyone: the insiders, i.e. governmental authorities like Estonia, relying on blockchain technology to increase the transparency and accountability of public administrations; the outsiders, like Peter Thiel, trying to create new self-sovereign nations with the intention to escape from the laws and control of existing nation-states; and, of course, the beyonders, like Bitnation et al., eager to use the technology to support the coordination of transnational communities of voluntary association that operate independently of traditional nation-states, but are capable of peacefully coexisting with them. It is the latter which I am the most excited about, and which I believe could contribute to developing new governance models that might help us build a real global democracy.