The Siren Song of Bitcoin Libertarianism

A deep dive into the thinking of Balaji Srinivasan, whose new book The Network State is inspiring a new kind of radical secessionism.

Hello dear readers! It’s been a while since I’ve done a deep dive at the intersection of tech and politics, so for those of you who come here for my coverage of threats to democracy or movement-building or grass-roots organizing, bear with me. I promise, it all fits together (at least in my head, somehow!).

Depending on where you sit on the spectrum of politics today, crypto-philosopher Balaji Srinivasan, the former chief technology officer of Coinbase and former general partner at VC firm Andreessen Horowitz, is either a madman or a genius. If you think we have big problems but the best path to resolving them is the hard work of democratic dialogue, engagement, and innovation, then he’s a madman. If, on the other hand, you think our governing systems are irrevocably broken, corrupt and unrepairable and that we need to do is blow them up and replace them with something else, he might be a genius to you. And if you are somewhere in the middle—frustrated by how hard it is to make meaningful change and attracted to utopian-sounding experiments—be forewarned. Srinivasan is a snake-oil salesman for the worst of Silicon Valley’s hyper-libertarian fantasies, and a very good one.

Why even pay attention to him, you might ask? Why did I spend the last few weeks reading his new book The Network State: How to Start a New Country (free to read at that link) and allow myself to almost get red-pilled over to his way of seeing things? Well, because he has a lot of interesting insights, even if his conclusions are problematic. But more importantly, his ideas are worth pondering because of his influence. For starters, he’s a long-time buddy of Peter Thiel, the far-right Silicon Valley investor who endorsed Trump in 2016 and more recently has poured millions into MAGA US Senate candidates like Ohio’s J.D. Vance and Arizona’s Blake Masters. Thiel so respected his thinking that he pushed Trump to make Srinivasan chair of the Food and Drug Administration in 2017. But apparently Srinivasan’s belief that the agency shouldn’t exist was too radical. He once tweeted “For every thalidomide, many dead from slow approvals” and also that he favored replacing the FDA with a doctor-run “Yelp for drugs”; tweets he later deleted. According to Max Chavkin’s excellent biography of Thiel, Steven Bannon, who was then riding high in the White House, brought Srinivasan to meet the President and interview for the job. “Balaji is a genius,” Bannon reportedly said. “But it was too much.”

Srinivasan has lots of admirers in the tech world. And his ability to vacuum up lots of information and spot new developments early isn’t for naught: On January 30, 2020, he tweeted, “What if this coronavirus is the pandemic that public health people have been warning about for years? It would accelerate many preexisting trends.” Specifically, he mentioned, “border closures, nationalism, social isolation, preppers, remote work, face masks, distrust in governments.” He can be prescient. But the most important reason to pay attention to his new book is how much it manages to distill and advance a simple, alluring and dangerous mindset: Bitcoin Libertarianism.

At first glance, the driving idea of The Network State isn’t a bad one. After all, people have been founding the equivalent of “start-up societies” for a long time. So much of what makes life on Earth so vibrant is the variety of lifestyles and communities one may choose from. Inside the United States, assuming you have some money and mobility, you can live in urban ethnic enclaves, college towns, rural militia compounds, gay Meccas, havens for spiritual seekers, co-housing, leisure resorts, retirement villages, gated communities, cosmopolitan neighborhoods or white-bread suburbs. So creating a new community around a shared idea—the heart of Srinivasan’s vision—isn’t new.

Nor is it strange to consider how far one could go today with that vision. Srinivasan imagines that with more and more of us living lives mediated by the Cloud, a “network state” could be built by 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.” He offers some benign-sounding examples, such as a Digital Sabbath society of people who agree that 24/7 connection to the Internet is bad, or a “Keto Kosher” society of people who avoid carbs, or, and here’s where the tell starts, “a life extension good” society that he says “leads to a post-FDA society” where anyone can buy or sell any medical product without interference.

Go to https://thenetworkstate.com/networkstate.gif for the full effect

In lots of ways, we already live in a world where the lines between our personal networks, the nation-state we live in, and the larger global system have gotten blurrier. So Srinivasan’s futurism can seem benign. Many ethnic diasporas, where people far from their mother country maintain intense communications and financial relationships with people back home, sound a bit like network states, right? State sovereignty is also somewhat flexible. A big diaspora community in one country can, in some circumstances, aggregate enough power to get its host country to tilt favorably toward home (think of US policy toward countries like Ireland, Israel, Greece, or India, for example).

And Srinivasan isn’t wrong to point out a nation-state doesn’t have to be big. Of the 193 UN-recognized sovereign states, he notes, 20% have populations of less than one million, including Cyprus (1.2 million), Estonia (1.3 million), New Zealand (4.7 million), Ireland (4.8 million) and Singapore (5.8 million). At a time when many individual influencers have more than a million followers, is it really crazy to imagine building a new startup society of 1-10 million people? Furthermore, if nation-states truly break down and stop being able to provide for the safety and well-being of their residents, and, crucially, if the current rules-based international order fails to step in with help, what is to prevent such start-ups from flourishing especially in the places where national governments are effectively disappearing?

Say Hello to Afropolitan

Some African entrepreneurs who have built a following of more than 200,000 on Clubhouse called Afropolitan have now announced that, inspired by The Network State and frustrated by government dysfunction in their home countries, they want to build the world’s first “internet country.” Led by by Eche Emole (a former executive with Flutterwave) and Chika Uwazie (a former tech recruiter and investor), Afropolitan has raised $2.1 million in angel funding from people including Elizabeth Yin of Hustle Fund, Shola Akinlade of Paystack, Ian Lee of SyndicateDAO, Iyinoluwa Aboyeji of Future Africa, Olugbenga Agboola of Flutterwave, Walter Baddoo of 4DX Ventures, Jason Njoku of IROKO, Tobenna Arodiogbu of Cloudtrucks, Ngozi Dozie of Carbon, Dare Obasanjo, senior product manager at Meta—and Srinivasan. Several VC firms are also investing.

Emole told Tage Kene-Okafor of TechCrunch that a 2020 anti-police brutality movement in Nigeria was part inspiration. The government tried to cripple the movement by getting state banks to block donations from abroad, “But the only thing they couldn’t shut down was bitcoin,” Emole said. “So the idea then was if digital money is a weakness for the government, what more could you lay on top of that digital money? Can you layer a digital country on top of that, a country you can’t shut down? What would a new government look like if we can all tap into a new country, new passport, new currency enabled by web3 technology.” Afropolitan says its next steps are to mint 10,000 passport non-fungible tokens to activate its distributed autonomous organization and then grant its members access to events and physical spaces. Then it hopes to offer an app featuring a range of quasi-governmental utilities like remittances, corporate incorporation, and fundraising.

Not mentioned in its plans is how any of these services will be ultimately guaranteed, since the servers running Afropolitan’s tokens actually have to sit under some country’s sovereignty. But Emole skates past that problem, arguing that Afropolitan should be able to fund the purchase of property in various cities and then – poof – get diplomatic recognition. “The way to think about that is to understand embassies being sovereign territories in different countries,” he told TechCrunch. “And then you also have a Chinatown in major cities worldwide. If you can combine those two ideas, what you have is a sovereign city, and that’s how we’re going to look at the last phase,” he remarked.

Last I looked none of Srinivasan’s followers were looking to crowdfund land in Yemen or Somalia or the roadless Darien Gap between Colombia and Panama. They want all the benefits of secure property ownership with presumably only the obligations that they would voluntarily choose to accept. In other words, The Network State is really a stalking horse for secessionism, a way for a certain class of people to withdraw from the burdens and obligations of living in a larger polity that is filled with people and ideas they don’t like and carve out one just for their own goodies.

To his credit, Srinivasan doesn’t hide his intentions. He divides the world today into three blocs: NYT, CCP and BTC. That is, the world ruled by The New York Times (I kid you not), the world ruled by the Chinese Communist Party, and the world of new sovereign individuals being built by Bitcoin enthusiasts. Because Srinivasan is ideologically committed to inflating the importance of Bitcoin as the building block of a better future, he exaggerates again and again the power and supposed corruptness of The New York Times, to a degree that really undermines his credibility—or just makes him more attractive to rightwing populists. So, for example, he writes, “There are two kinds of state media: state-controlled media as in China’s Xinhuanet, or state-control media as in America’s New York Times. The latter controls the state, the former is controlled by the state, but both fight freedom of speech.” Or, here’s what he writes about January 2021, “when—at the behest of the New York Times Company and all of mainstream media—Google, Apple, Amazon, Facebook and Twitter combined to deplatform a sitting president and disappear his supporters’ app from the Internet.” Again, I kid you not.

In fairness, there is indeed an American Establishment (which is not run by or controlled by The New York Times) centered on the dollar economy and gigantic military spending. Think the Federal Reserve, Wall Street and the military industrial complex and the way we continue to prop up the latter and bail out the former. But somehow Srinivasan the polymath hasn’t read much about the national security state and he seems to have no awareness of what financialization has done to the real economy. Instead, he thinks power in America is centered on “Wokeness,” which Srinivasan hates with a passion and compares to Communism and Nazism.

He's also deeply aggrieved about the tech backlash, which he complains is just about “asserting moral control over a technological field. AI ‘ethics’ [sic] doesn’t really contest what is true or false, it contests what is good or bad. And what is bad? Anything that advances a politically unfavorable narrative.” So the fact that facial recognition systems fail to correctly identify darker-skinned faces more than lighter ones is, to Srinivasan, an ideologically biased claim, not a technological failing. Tech doesn’t fail in his world view, even though it is made by fallible humans.

Like past utopians, Srinivasan makes a lot of assertions that require a suspension of disbelief, such as his blanket claim that the Bitcoin blockchain “is the most rigorous form of history yet known to man, a history that is technically and economically resistant to revision.” Since all of human behavior has a digital component now, he writes, “in theory you could eventually download the public blockchain of a network state to replay the entire cryptographically verified history of a community.” (And I can start flapping my arms here at my desk and fly to the moon.) After the billions that have already been scammed out investors by various blockchain scams, only the most gullible think that code can defeat human venality.

America, the most left-wing country in the world? (From The Network State)

He is also incredibly disconnected from political reality in ways that make me worry about the sanity of his whole peer group. To Srinivasan, China’s Cultural Revolution, where cultural and religious sites were ransacked by Red Guards and tens of millions of people were driven into the countryside and forced into hard labor “bears too close a resemblance to present day America.” He also thinks that America is today “the most left-wing country in the world” whose core premise is “ethnomasochism, which can be paraphrased as ‘white people are the worst.’” He sees no difference between people who question the sanctity of George Washington, who was a slaveowner, and the marauders of January 6th—arguing that both trends, one from the left and one from the right, have the same basis: the loss of respect for authority. Search his book for the words “Rupert Murdoch” or “Rush Limbaugh” and you won’t find them, but he’s highly respectful of Christian conservatives like Rod Dreher, another tell. Climate change gets passing mention, but only as a worry promoted by the Woke in order to attack Bitcoin.

Still, some of Srinivasan’s notions are usefully provocative, such as his claim that “social media is American glasnost and cryptocurrency is American perestroika.” He is right that our more open media system is better than the one we had back when just a few white men told us the news every night. But he’s also too glib by half, for if crypto is perestroika, then a revolution led by the crypto bros would likely deliver us into an American version of post-Soviet kleptocracy. He also has a lovely way with words. For example, he writes, “we can apply all the techniques of startup companies to startup societies. Financing, attracting subscribers, calculating churn, doing customer support—there’s a playbook for all of that. It’s just Society-as-a-Service, the new SaaS.” But again, Srinivasan’s glibness also papers over a lot of shallow thinking. To him, making a new community is just like making a sale. A lot of his writing reminds me of a satirical book I read called How to Run a City Like Amazon And Other Fables, which is a collection of essays each imagining how a city might work if they were run according to the business principles of companies like Uber, IKEA, Tinder and so on. It’s all great fodder for late-night bull sessions, but likely to be about as popular in real life as those robotic dogs the New York City Police Department tried deploying last year.

And yet, here we are. Powered by huge sums of speculative capital and a new generation of hustlers, Bitcoin Libertarianism is already a political force with reach into several big city mayoral offices (NY and Miami for starters) and at least one wannabe third-party presidential candidate. It’s seductive enough that other wierdo billionaires are using its language to launder their past foibles (I see you, Unfinished Live) and some well-intentioned people are trying to co-opt its energy (see The Blockchain Socialist or Nathan Schneider’s collaboration with Vitaly Buterin). Those of us who seek a more multicultural social democracy ignore it at our peril.

Odds and Ends

—Speaking of Unfinished Live, none of the problems I wrote about last year have been resolved. But big-foots gotta big-foot, right? They’re got a great array of speakers again this year, making it the sort of event the whole tech-politics-media-democracy needs to show up at because, well, so many peers are there. One thing I am curious about is how many speakers at this year’s Unfinished are getting paid for their time. Two people told me they are getting between $1000-$2000. While I’m all for putting the money of billionaires in the pockets of the sort of speakers Unfinished is highlighting, I do hope they disclose the relationship. From what I understand, nothing in the speaker agreement prevents them from doing so.

—For good reason, The New York Times front-paged the news that online trolls employed by Russia’s Internet Research Agency targeted the 2017 Women’s March inflaming existing fault lines in the movement and slandering key leaders like Linda Sarsour. It’s outrageous that foreign adversaries, like American intelligence agencies in the past, have exploited the openness of our democracy to destabilize political organizations. But we should also admit that movement structures like the Women’s March are especially vulnerable because they have no formal system for electing their own leaders. Maybe the next time we get a movement moment like the one that led to the Women’s March, we can insist on by-laws and elected leadership?

—The recall of San Francisco District Attorney Chesa Boudin was touted as proof of an anti-crime backlash even among liberal cities, but as Chloe Cockburn points out, last month Memphis voters threw out a terrible DA in exchange for a civil rights attorney in a county of one million and that got almost no attention. PS, I may have to go check out this group in person, which was part of the coalition that won the fight. (h/t Robert Greenwald)

—Dozens of colleges are using a social media monitoring tool called Social Sentinel to surveil student protests, Ari Sen and Dereka Bennett report for the Dallas Morning News. Supposedly the tool is for spotting potential self-harm or threats of violence, but internal company emails show that it is also marketed to universities for “mitigating” and “forestalling” protests.

—Here's a very interesting chart from Rachel Kleinfeld on a range of immediate and longer-term tactics we can employ for defending democracy in the US. Lots of gaps to fill.

—Speaking of filling one of those gaps, finally, someone is selling schwag for defending democracy!