NETWORKS ARE EATING THE STATE

Socrates feared writing would destroy human memory, making us dependent on external marks rather than internal recall.

He worried what technology would do to our minds. Yet even he missed the bigger picture.

Writing wouldn’t just change how we remember, it would reshape who rules, and how.

Historically, technology reinforced state authority. The Wright Brothers' planes became democracy's air force. The Manhattan Project split atoms, split Axis powers, and pulled Washington deeper into science—leading to DARPA, NASA, the works.

For centuries, breakthrough tech came from states or their coronated monopolies.

Like art in the Renaissance, tech served power.

DARPA was our Medici, NASA our Vatican commission.

The state was the patriarch, tech was the dutiful daughter. 

Then tech eloped with the internet.

There was a time Silicon Valley and Washington actually liked each other. 

Jobs unveiled the iPhone to mainstream applause and featured on eight Time Magazine covers; Eric Schmidt joined Obama's transition team after Facebook helped elect the first Black President (twice).

Then something shifted.

The internet dissolved newspapers, radio, and cable into open competition on shared screens, cratering newspaper revenues ~90% over two decades. 

Local broadcast licenses, geographic monopolies, FCC regulations became meaningless when anyone could create and stream anywhere.

Writers who once begged for ink by the barrel could launch newsletters from laptops. beehiiv, founded in 2021, already reaches 7% of global internet users monthly.

The media collapse was just the canary in the mainstream media. 

Soon every gatekeeper would discover they were charging tolls in a ghost town state. 

(PS I predicted beehiiv would grow an alicorn while The Information was still explaining Substack to its readers, proof here).

What the internet did to media, networks would do to every state-protected industry. Along the way, converting network users into constituencies (and voters).

Uber conquered 75 countries without a single taxi medallion.

Netflix rose to 300 million subscribers without broadcast licenses. 

Airbnb assembled 5x Marriott's inventory without a single zoning permit.

But the real divide came in 2009.

On January 3, 2009, Bitcoin's genesis block carried a message: "Chancellor on brink of second bailout for banks." 

In doing so, it became the first network explicitly designed to replace a state function: money.

Networks would go from eating state-protected industries, to building parallel systems to the state, to being welcomed by the very states they once disrupted.

And this revolution didn’t need any guns, just code.

Before Zuckerberg's metaverse wet dreams, before Elon treated sovereignty as a software update, The Vatican was arguably history's first transnational network state.

Its architecture:

At its peak, the Church controlled 30% of European land and extracted tithes globally.

Yet, even a direct line to God required permits from His earthly middle management.

The Vatican was an ideological network, but other proto-networks emerged.

Corporate networks like The East India Company commanded an army twice Britain's size.

Technological networks like Western Union strung a million miles of telegraph wire to create the first electronic nervous system by 1900. 

Both needed state blessing.

Every network was created, blessed, or negotiated with states.

Enter the Internet.

For the first time in human history, networks could form, scale, and accumulate power without asking permission from any territorial authority.

Negotiation was replaced with deployment.

Said differently, what took the Vatican a millennium to build was surpassed by the internet in thirty.

Everyone's obsessed with the US-China rivalry. Classic Thucydides Trap of rising power threatening declining one.

(I explored why the US might win that cage match here, but that's yesterday's war.)

But they're arguing over who gets the throne while the palace burns. Whether America or China “wins” ignores that networks are already winning against both. 

China has “banned' Bitcoin 18 times since 2013, yet it only grows stronger every crackdown. America “bans” TikTok, but over 150 million users keep scrolling via VPNs.

Enter The (Other) Thucydides Variant™: 

Rising networks threaten declining states = inevitable conflict.

Not state vs state, but networks vs states.

The iconoclass (yes, a word I just invented) erupted this week when Balaji, polymath-in-chief of the Network Age and author of The Network State, dropped ten thoughts on AI. 

Thoughts that I'd first heard nearly a year ago from the Protocol Prophet’s mouth at Network School – the Venice of techno optimism he’s building where I was among the founding cohort.

(If interested in NS, ping me)

His point?

AI won’t crown one god. It may mint thousands.

He argues that AI is polytheistic: thousands of specialized intelligences, no single digital God. 

Each network raises its own deity, like Bitcoin's consensus as incorruptible priest. 

But here's what matters: every AI faces trade-offs. Which ones it makes reveals what its network worships.

Bitcoin sacrifices everything for trustlessness. Others optimize for speed, profit, or control. 

Each deity mirrors its network's deepest ideals.

The Vatican served one God and needed kings' permission. Networks spawn many gods and need none.

Welcome to protocol polytheism.

Power follows prosperity, prosperity follows freedom.

Amsterdam invented capitalism, then grew complacent. 

London took the torch, built an empire, then chose welfare over wealth. New York dominated the 20th century, then regulated itself into sclerosis. Silicon Valley created the future, then lost itself in politics.

Now, as Balaji points out (and enables), liberalism's baton floats in the cloud. 

People used to vote with their feet, pack wagons, head west. But geography is expensive, good land taken.

British subjects fled to America for freedom; global citizens flee to networks for sovereignty. 

From pound to dollar to Bitcoin, each reserve currency shift brings more decentralization than the last.

Said differently, the new foreign policy is the cloud; and the new migration is cloud-first, land Mars last.

As I wrote in "How Elon Flips the Bird into Earth's Most Valuable Company," Musk isn't assembling companies as much as he's architecting the first sovereign network state.

Three pillars, one (modular) empire.

His ideological north star, "making life multiplanetary," attracts talent like salvation drew believers while modular empire attracts capital like BlackRock attracts hedge funds masquerading as colleges.

Together they power the stack:

Tesla turns bits into atoms, Starlink routes around nations, X the (multiplanetary) solvent of media, xAI the mind behind the machine, Neuralink the (eventual) solvent of screens.

Less vertical integration, more vertical sovereignty.

China learned manufacturing from the West in the 1980s. Three decades later, they deploy autonomous drone swarms while we debate pronouns.

But here's what everyone misses: both are still playing yestercentury's game. 

The smart states aren't fighting networks anymore. They're auditioning for them.

Singapore draws talent with low taxes. Dubai iterates on regulatory sandboxes like software. Estonia offers e-citizenship without soil.

Tax rates as features.

Old regulations as bugs.

Citizenship as subscription.

We’ve entered the age of Platform States^TM. 

Once tech was the platform. Now (some) states are becoming the platforms.

One where networks force states to compete for citizens rather than command them.

One where countries behave like startups, compete like apps, and iterate like software.

The real question isn't whether networks will eat the world, it's which networks you'll pledge allegiance to as they do.

Stay sovereign,

Daniel

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