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And what is the digital-native version of the Nation State?
Unbundling and Rebundling are among the most famous and recurring phenomena of the digital revolution. They involve breaking down institutions or technologies into independent parts and rebundling them into innovative new structures.
For example, music was once bundled into albums and records. Then, it was unbundled into millions of mp3 files over the internet. And finally, it was rebundled into playlists on platforms like Spotify.
News used to be bundled in newspapers. Then, it became fragmented into millions of blog posts on the web. And eventually, it was rebundled again into social media feeds.
Rooms for accommodation were once bundled in Hotels. Then, they were unbundled into dispersed listings on forums and online classifieds. And finally, they were rebundled into Airbnb.
Movies and TV programs were fragmented into mp4 files on Torrent platforms and then rebundled into video streaming services.
Universities and schools had their classes unbundled into online courses, apps, and private lessons. These parts were then rebundled into Massive Open Online Courses (MOOCs) like Udemy.
This phenomenon is even more fascinating when we realize that the properties of the main entity either seemed inseparable from the whole or were not even identified as such. For example, when we watched the news, we perceived it as a homogeneous entity. A single and inseparable process delivering breaking news.
However, in the digital environment, we have come to realize the diverse attributes that exist within the realm of media. These attributes encompass:
distribution platforms (social media, email, independent apps, podcasts),
production (journalists, experts, influencers, educators, academics, entrepreneurs),
formats (text, audio, humor, technical, visual, illustrated, children-oriented, etc.),
ownership (storage methods - social media platforms, self-hosting, cloud, blockchains - and ownership attribution),
sources (who defines topics and relevance, e.g., technological innovations, scientific discoveries, political news, coverage of violent events),
authenticity / fack-checking (based on authority, encryption, visual evidence, and decentralized context like Twitter community notes), and
business models (ads, product sales, direct subscriptions like Substack, revenue sharing with platforms like YouTube, etc.).
In other words, unbundling involves more than just separating the main item, such as news; it also entails breaking down various attributes of the ecosystem.
Constants become variables, which in turn transform into independent technologies.
Once these properties are fragmented into independent parts, innovators can experiment with solutions for each piece of the puzzle, turning what was once a single solution into a true innovation ecosystem.
Observing the ongoing process of digitization of society, we come to the realization that we have only reached the halfway point. Several industries and sectors of the economy still heavily rely on analog technologies.
Interestingly, many of these sectors are viewed almost like elements on the periodic table - institutions whose digitization, innovation, and subsequent unbundling are not even considered or debated.
Yet, recent years have proven exactly the opposite. even the most sensitive sectors are not immune to change.
For instance, we had Money. An indivisible, unique, atomic institution. A consolidated entity seemingly devoid of innovation. However, with the digitization of currency into cryptocurrencies, many of its hidden properties were fragmented and became independent axes.
When selecting a cryptocurrency, for instance, you consider various attributes such as its ability to function as a store of value, a unit of exchange, or a means of payment. You also take into account transaction speed and cost, the level of transparency and privacy, the degree of decentralization to ensure data neutrality and immutability, whether the code is open or closed-source, application compatibility, and whether it follows an inflationary or deflationary monetary policy, among other factors.
Money, once seen as a stagnant and fully established political technology, has, through digitization, revealed itself as a complex system with multiple interacting parameters capable of generating various solutions.
Similarly, consider Identity.
Identity was traditionally defined by one's name and basic numbers such as Social Security and Passport. But, identity is not confined just to these documents. It encompasses a series of interconnected information, including financial scores within banks, academic credentials, marital status, address, nationality, gender, and more.
However, all these attributes were tied to the same structure, the same legal identity.
With the rise of cryptocurrencies and digital-native id technologies, these attributes are being unbundled into different technologies like crypto wallets and on/off-chain credentials.
For instance, you could have a pseudonym identity (Blockchain account) that holds your financial history and score, another public identity showcasing your professional achievements, and yet another with proof of personhood (biometrics, etc.). Each of these solutions will also have distinct properties such as privacy level, system interoperability, programmability, etc.
Now, envision accessing a website of a financial application and logging in. Currently, the only way to do this is through the cumbersome process of verifying your legal identity, which indirectly and unnecessarily exposes all your personal information to that service.
Through a native digital solution using crypto, you could effortlessly connect to a platform and log in with just your identity that stores your financial score - which is not linked to your public id. For this particular service, that is the only pertinent information required. There's no need for it to know your name, address, social media profiles, or academic resume. All it needs to ascertain is that you possess a commendable track record of financial responsibility and, perhaps, some assets to utilize as collateral.
In the digital era, your identity transcends beyond your legal name; it becomes a set of technologies that enable you to sign documents, conduct asset transactions, exchange messages, and much more.
Identity, which we might have perceived as monotonous and unchanging, is, in reality, a multi-faceted entity with numerous complex attributes that can be fragmented and independently innovated.
Unbundling The Nation-State
Although the economy has been digitized more rapidly due to its decentralized and open nature, politics will not remain untouched.
The nation-state, which appeared to be indivisible until now, is gradually undergoing fragmentation into independent and highly innovative components.
The culture of a country, once predominantly shaped by geography and influenced by state borders, is now digitally molded through internet communities. Emerging communities like Crypto/Web3 enthusiasts, TikTokers, memers, open-source developers, gamers, and more have emerged and primarily exist on the internet.
Laws and regulations, which were once bound to specific geographical locations, are now shifting to the cloud. For instance, the rules governing the transfer of bitcoin to another person are not tied to any particular jurisdiction or political entity. Instead, they exist as code on a sovereign global computer network, solely on the internet. Similarly, numerous services such as marketplaces or exchanges now operate through immutable and open-source smart contracts on Ethereum, enabling users to interact without the necessity for any legal arbiter.
Security, which traditionally relied on the state playing a crucial role, is progressively transitioning into the digital universe. In contemporary times, most thefts occur not on the streets with weapons but through hacks or online scams. You probably know more people who have fallen victim to online scams via messaging apps than those who have experienced home burglaries or muggings in the city. As a result, the significance of cryptography and its relevance, in comparison to state military and police forces, is on the rise. Safeguarding your most valuable assets, ranging from money and social media accounts to electronic locks on houses and cars increasingly depends on technology rather than relying solely on the state. For instance, Bitcoin and Ethereum are financial platforms that secure and provide safety for the equivalent of hundreds of billions of dollars in digital private property for hundreds of millions of people worldwide. There is no military or police force protecting almost $1 trillion in assets on these platforms; it's just cryptography.
As mentioned earlier, Identity is no longer solely within the realm of the state. Accounts on blockchains, ENS (Ethereum Name Service), NFTs (Non-Fungible Tokens), World ID, all contribute to the significant fragmentation of the state's version of identity.
Furthermore, your personal and professional Network is no longer confined to neighbors and colleagues in the physical world. It has undergone a transformation into a digital network completely dissociated from physical constraints. Even if someone in your network relocates to another city or country without notifying anyone, you can still communicate and collaborate with them as usual. Geographical distance, once tied to the nation-state, has substantially reduced in relevance when compared to geodesic distance—the number of degrees of separation between two nodes in a digital social network.
Money and the financial system, which have historically been under the control of the state, are now being removed from its purview and unbundled into various technologies such as Bitcoin and other cryptocurrencies, as well as decentralized financial systems.
Similarly, Energy is undergoing a transformation with the gradual adoption of residential solar panels, and efficiency is being enhanced through energy tokenization using blockchain technology.
Furthermore, Healthcare is experiencing fragmentation into numerous digital innovations. Patients now have the opportunity to receive remote medical consultations, monitor their health with wearable devices, and access personalized health information through artificial intelligence. This shift drastically reduces reliance on traditional state healthcare systems.
Even Education, which has been historically monopolized and controlled by the state, is experiencing fragmentation due to the internet's influence in the form of apps, online courses, communities, and diverse platforms.
In summary, Culture, Laws, Security, Identity, Social Graph, Education, Money, Energy, Healthcare - every aspect is unbundling from the traditional Nation-State institution. The digital era is reshaping the landscape, allowing several technologies and innovations to decentralize and disperse the once tightly-held control of these domains by the state.
This phenomenon explains much of the instability and chaos we have witnessed lately. One of the most powerful and omnipresent institutions in the world is witnessing each of its properties being replaced by new digital entities.
This process can be extremely chaotic and painful for many adjacent institutions and incumbents who depend on these analog entities. However, it is important to note that digitization is not solely about fragmentation; it also entails the emergence of new grouping structures.
This is where the Network States come into play.
They serve as a new, digital-native backbone to accommodate the numerous entities that were born in the digital age and are still trying to fit into outdated structures like round pegs in square holes.
The movement of startup societies and network states is dedicated to establishing native digital political institutions that bring together all the fundamental elements necessary for a city or a country to function.
These novel "political operating systems" are designed to be compatible with the new "applications" that have emerged in recent decades, reflecting the evolving nature of governance in the digital age.
Nation-States are experiencing a decline, but in their place, a new structure is emerging.
Similar to how every company has transformed into a software company in the past few decades, we will witness all countries undergoing a similar transformation into software-driven entities in the coming years.
It is within these digital institutions that we will live, embracing a new era of governance that adapts to the rapid technological advancements, shaping the future of our societies.