#1042 Balaji Srinivasan On The Network State

Balaji Srinivasan is the author of the new book "The Network State". In this conversation, we break down Balaji's thoughts on the Network State, the history of nation states, the decline of the United States, Bitcoin vs. fiat currencies, and how long the Network State will take to come to fruition. To see the video with the corresponding images referenced throughout the interview by Balaji, go to my Anthony Pompliano YouTube Channel. ======================= Bullish is a powerful new exchange for digital assets that offers deep liquidity, automated market making, and industry-leading security. Combining the innovations of DeFi with the regulated environment of traditional finance, Bullish empowers users to trade with certainty and earn passively at scale across variable market conditions, in an environment backed by multibillion-dollar liquidity contributions from the Bullish Treasury. Visit bullish.com/pomp today to learn more. Note: Bullish is licensed by the Gibraltar Financial Services Commission. Virtual assets and related products are high risk. Consult your investment advisor and trade responsibly. Bullish is available in select locations only and not to U. S persons. Visit bullish.com/legal for important information and risk warnings. ======================= Since 2018 Copper has been at the forefront of institutional digital asset development. From award winning custody solutions, to creating the first truly off-exchange settlement function, Copper pioneers technology, products, and services, in lock-step with a rapidly changing world. No other infrastructure provider covers as many assets, across as many exchanges, with the speed and security that Copper can offer. To learn how Copper helps the world’s largest institutional investors secure their digital assets, head over to copper.co Copper - the unfair advantage. ======================= Exodus is leading the world out of the traditional financial system by building beautiful and user-friendly blockchain products. With its focus on design and user experience, Exodus has become one of the most popular and loved cryptocurrency apps. It’s supported on both desktop and mobile, allowing you to sync your wallet across multiple devices so you can have access to your funds anywhere. You can instantly exchange around 100 different cryptocurrencies straight from your wallet. Interactive charts let you view an asset’s price history and your portfolio’s performance over time. And maybe the best part, Exodus is integrated with the Trezor hardware wallet - making advanced security easy for everyone. Visit exodus.com/pomp for your free download or search Exodus on the App Store or Playstore. =======================

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:02Anthony Pompliano?

  What's up everyone, this is Anthony Pompliano. Most of you know me as Pomp. You're listening to the Pomp Podcast, simply the best podcast out there. Now let's kick this thing off. Balaji Srinivasan, he's the author of a brand new book, The Network State. In this conversation, we do a little bit of a history lesson. We talk about the network state, how it works, why it's so important, and how Balaji anticipates this coming to fruition. I really enjoyed this conversation, and I could have talked to Balaji for many more hours. Before we get into this episode, though, I first want to talk about our sponsors. Today's episode is brought to you by Copper. Since 2018, Copper has been at the forefront of institutional digital asset development. From award-winning custody solutions to creating the first truly off-exchange settlement function, Copper pioneers technology, products,

• 0:47Anthony Pompliano?

  and services in lockstep with a rapidly changing world. No other infrastructure provider covers as many assets across as many exchanges with the speed and security that Copper can offer. To learn how Copper helps the world's largest institutional investors secure their digital assets, head over to copper.co. Again, Copper, the unfair advantage. Check them out at copper.co today. Today's episode is brought to you by Exodus, the world's leading desktop, mobile, and hardware crypto wallet. They offer beautiful, user-friendly blockchain products that sync across all of your devices, making it easier to send, receive, and exchange over 150 or more crypto assets in one place. And with world-class customer service available to

• 1:29Anthony Pompliano?

  you 24/7, Exodus always has your back. But the fun doesn't stop with staking and trading. They recently launched a new NFT marketplace where you can buy and sell your favorite NFTs on the Solana network. By partnering with the popular NFT platform, Magic Eden, they're offering the full Monty on verified collections, with more added every single day. Ready to check it out for yourself? Run, don't walk. Over to exodus.com/pomp for your free download today. Again, if you want the world's leading desktop, mobile, and hardware crypto wallet, go to exodus.com/pomp today. This episode is brought to you by Bullish. Bullish is a powerful new digital asset exchange built for institutions that delivers the innovations of DeFi in a ...regulated environment. The bullish hybrid order book pairs the high performance of a traditional

• 2:14Anthony Pompliano?

  central limit order book with the automated market making powered by deep bullish liquidity pools backed by the multi-billion dollar bullish treasury. So you can trade with certainty and at scale across variable market conditions. You can learn more at bullish.com or follow bullish on Twitter because the future belongs to the bullish. Now, this is not investment advice. Digital assets and cryptocurrencies are high risk products. Consult your professional advisor before dealing in them. Bullish's services are available in select locations only and not to you as persons. Visit bullish.com/ legal for important information and risk warnings. Go check them out at bullish.com or follow at bullish on Twitter. Let's get into this episode with Blaji. I hope you guys enjoy it.

• 2:55Speaker 01

  Anthony Pompliano runs Pomp Investments. All views of him and the guests on his podcast are solely their opinions and do not reflect the opinions of Pomp Investments. You should not treat any opinion expressed by Pomp or his guests as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of his personal opinion. This podcast is for informational purposes only.

• 3:18Anthony Pompliano?

  All right, everyone. I'm very excited about this. Blaji is here. The network state, I feel like I could just turn it over to you and you could give us a lecture, but maybe we could just start with this idea of the network state itself. Like, how does this happen? How do we go from where we are today to one of these being created and actually scaled on a global basis?

• 3:38Speaker 02

  Okay, great question. So, you know, the book's at thenetworkstate.com. And so I think one way of talking about it is first, how does this thing happen? And then, second, what happens after it happens? Right? So, how does it happen? Well, there's a bunch of, so first, what are we even talking about? So, the network state, you know, I've got both a short informal definition, then a longer definition. So, the informal definition is a network state is 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. Now, the thing about that is

• 4:20Speaker 02

  State does not yet exist. People, one of the points I make in this is, uh, there's a lot of adjacent things. There's a lot of things that are like similar to network states in a sense, but like Google is not yet a network state. You know, uh, Bitcoin is not, a DAO is not, um, they're adjacent, but they're not the same thing. And the reason is that they aren't, uh, there's various ways in which they sort of fall short of the definition. For example, um, Bitcoin has, you know, obviously it has, uh, you know, the reserve currency, but it doesn't have a government, doesn't have a, um, doesn't have land, uh, you know,

• 4:59Speaker 02

  Bitcoiners, you know, don't agree with each other on many things. Um, it doesn't have the national consciousness that is, uh, you know, what really defines a country, you know? Even the term, by the way, nation state, I talk about this a fair bit in the book. You've heard that term before, uh, but do you know what the difference between the nation and the state is?

• 5:20Anthony Pompliano?

  No, what is it?

• 5:21Speaker 02

  So most people don't think about that, right? In fact, there's a reason for that because nation comes from the same root word as like natality. So it's like common birth, right? Common descent, common ethnicity, like the Japanese have, are, the Japanese nation is a group of people, the Japanese people. And then, you know, by the distinction is the Japanese state is like a government that sits over those people. And, uh, you know, that, that Japanese nation could have many different kinds of governments. It used to have, you know, the empire, like imperial Japan, now it has like, you know, liberal democratic Japan. But it's like this very thin layer of like a government on top of this enormous body of people. And that is the nation, right? So there's the nation and the state on top of it.

• 6:07Speaker 02

  And the reason that we don't usually think about that distinction is actually our language and our culture tries to ally the distinction because the state, you know, it legitimizes itself as a representative, representative of the nation. For example, when you talk about national security or this is happening at the national level, right? Or international relations and whatnot, right?

• 6:30Speaker 02

  Much of that is really interstate relations. When you talk about a multinational corporation, it's really like a multi-jurisdictional corporation, because it's operating in multiple jurisdictions. And like, you know, just to clarify, what is a nation? For example, I mentioned the Japanese nation, but the Kurds are a nation, the Catalonians are a nation, right? That's a group of people with sort of a common language and culture and history. But notice that the Kurds and the Catalonians are stateless nations. They're, say, groups of people that are nations, but they do not have a state.

• 7:01Anthony Pompliano?

  How important is having a state for a nation? Like, is it?

• 7:06Speaker 02

  Oh, it's huge.

• 7:07Anthony Pompliano?

  Huge, okay.

• 7:07Speaker 02

  It's huge. I mean, the thing is, there's actually a funny quote, just to kind of go after this word nation a little bit. You know, you've obviously heard the proper noun, United Nations. Really, it could be called more like the selected nations or the selected nations that happen to have states. Okay. And when you think about it that way, you're like, oh, wow, there's a bunch of ethnic groups that are really legitimate and have a lot of culture and history behind them that in the game of musical chairs, that was sort of the mapping and settling of the world, they just kind of lost out. They didn't get a chair. You know, the music stopped and they didn't get a piece of land to call their own. And so they are stateless nations.

• 7:52Speaker 02

  You know, and there's a book called Invisible Countries by Joshua Keating that talks a lot about these kind of folks. And there's groups like this all around the world, and they're of varying sizes. You know, some are small, some are large. And the thing is that it was actually funny, like the president of Kazakhstan recently, he actually spoke against the concept of self-determination. You know why?

• 8:19Anthony Pompliano?

  No, why?

• 8:20Speaker 02

  He said, "If the principle of self-determination is endorsed, we will go from something like 190 UN member states to something like 600." Okay, so there's this enormous jack-in-the-box pressure for people who want their own state. And, you know, it would just go like this. And you just have this enormous energy of suddenly folks who were not able to self-govern being able to self-govern, right?

• 8:47Anthony Pompliano?

  Is this why you get like people like the Kurds and involved in such deep conflict, which appears to be over land and kind of the statehood that you're mentioning?

• 8:57Speaker 02

  That's part of it, for sure. It's part of it, right? And, you know, many, many conflicts like this are over land. And that seems like impossible to solve. How would you, you know, fix this issue? And one of the key concepts behind the network state system that I'm proposing is, if you know enough history, see, lots of things today that we grew up with as constants are becoming variables, right? So, Pomp, you were born in early 80s, late 70s-ish?

• 9:23Anthony Pompliano?

  Late, late 80s. I just look older than I am.

• 9:26Speaker 02

  All right, okay, fine, fine. So you are, you know, basically my contemporary, I'm 1980.

• 9:33Speaker 02

  So the, so the thing is that the stuff that we grew up with, for example, just take the US dollar, right? That was a constant up until basically 2009. And suddenly it's become a variable with Bitcoin, right? And, you know, various things like, you know, the US world order, or, you know, the things that people thought of as apolitical, when they say it's getting political. Suddenly, there's like factions back and forth on something that you never even thought there'd be a different opinion on. You thought it was just so like fixed that no one would care. And that's now a point of contention, right?

• 10:14Speaker 02

  And so as, once you kind of realize this, that that order that was constant is becoming a variable, you apply that to the nation-state system itself. And, you know, this has been around for so long that if, you know, anything that you were born into is just kind of the way the world has always been. And you don't necessarily seek to question, especially if it stayed constant for 30 years or 40 years or 60 years or 70 years. But, you know, what preceded the nation-state system? There's a country called San Marino. You're Italian descent, right? Like, have you ever been there? Like, do you know San Marino? Ever heard of it?

• 10:50Anthony Pompliano?

  Yes.

• 10:51Speaker 02

  It's like this tiny little thing, it's almost like a duck-billed platypus, like a missing link between the past and the present. And San Marino, I may be getting the history wrong, probably an Italian is turning, right? Correct me, but when Garibaldi was unifying Italy, San Marino granted him refuge, and in gratitude, he kind of left them out of his unification thing. Right? And most people don't know that the French Revolution basically created France, and Bismarck created Germany, and Garibaldi created Italy, and these were giant feats of social construction. And in fact, nationalism was something that actually in some ways came from the left, at least with the French Revolution.

• 11:33Speaker 02

  Now it's identified with the right, but it came from the left as a way to make all people in this jurisdiction equal. And a lot of the people who we think of as, for example, speaking French, I think, gosh, what's his name, Eric Hobbesbaum has a stat, I forget the exact number, but it's like small double digits, but it was 10 or 20% or something of the territory of France actually spoke French, what we think of as a language French at the time of the revolution. And a bunch of other people spoke different dialects that got erased by the sort of imperializing campaign of the French Revolution to turn it all French. Right? Now, I don't know enough about the linguistic history to know how different those dialects were from French itself, or whether they're truly mutually unintelligible and so on, relying on Hobbesbaum's account.

• 12:16Speaker 02

  But I've seen similar things about the formation of Italy, the formation of Germany. So essentially what happened was that there's this whole thing you can look at called the German question on whether, you know, Prussia, who was to take the lead in a united Germany? Was it going to be like Prussia or Hanover? And all of this stuff happened well before people today were paying attention or alive. Right?

• 12:43Speaker 02

  Um, let me see if I'm getting that right on the, the German question, Prussia versus Hanover, right? Um, the best way to achieve a unification of all almost lands, uh, and, um, you know, like little Germany versus greater Germany, right? And, um, the, you know, I may be getting some of the details wrong, but the, the fundamental point is that all of these giant states, and they're actually pretty big, right? Like Germany's like 80 million people, like France is like, you know, 60 million people, like all of these giant states were constructed over the last few hundred years by, um, guys like Bismarck, like Garibaldi, um, the, you know, the, you could, you know, the, the French revolutionaries, uh, and, you know, you can argue that Napoleon consolidated that revolution. And, you know, obviously

• 13:28Speaker 02

  the American revolutionaries, the Russian revolutionaries, uh, you know, folks like Mao who unified China, even India was never a unified nation until basically living memory, like the, you know, late 40s, early 50s, like 1947, 1950, India actually, it wasn't just that they got independence from the British, there were 562 princely states that, um, got merged into India. Okay. Modern India.

• 13:53Anthony Pompliano?

  So I have, I have a question about this exact, uh, time period where a lot of this started to happen. Is it driven by individual greed and ambition? There was one person said, hey, I want to unify all of this because then I can control this land. Is there something around, uh, a piece of technology, the invention of corporations? Like, why is it that we didn't have this until a certain point in time? And then it feels like the entire world, uh, kind of got unified in these almost like subcultures or, or sub-states, uh, and it happened very sequentially and, and, you know, in the grand scale of things very quickly, one after the other?

• 14:29Speaker 02

  So, you know, the sovereign individual, which I think is a good book. Uh, I actually have, uh, one thing is, uh, you know, the book that I've released, The Network State, think of it as a V1. I actually have, you know, maybe under 300 or 400 pages of content that I've got, uh, you know, that I want to, that I want to put in the director's cut. Okay. So there's only 460 pages right now. So it'll be like a thousand pages. I'm, I'm actually, I've got graphs, I've got charts, appendices.

• 14:53Anthony Pompliano?

  I do not doubt it at all.

• 14:55Speaker 02

  Okay, so it's very much the V1, but one section I've got in there are, you know, arguments and counter arguments to the sovereign individual thesis, because sovereign individual thesis, I think, is quite good, but there's also counter arguments against it, which we can digress on or double click on, but just the sovereign individual thesis itself is that centralization increased, that is to say, technology favored centralization for several hundred years, and you had, you know, for example, like Join and Die and the French and Indian War, you had the telegraph, you had railroads, you had mass production, you had mass media, you had these gigantic militaries that came from these centralized bureaucracies, all this stuff up until like roughly 1950 favored centralization, you built

• 15:38Speaker 02

  these Geiger states, absolutely gigantic empires, the American empire and the Soviet empire, you know, the Nazis, the Japanese empire, all slugging it out over giant quantities of territory, because there are huge, you know, returns on scale. And moreover, because the communications networks were so centralized, people couldn't argue peer to peer, it became very expensive to set up a newspaper or to get a TV license, it was highly regulated, highly constrained, so the whole thing got choke pointed through, and a few people could basically control massive tens, hundreds of millions of people, and then they just slugged it out in these huge wars of the 20th century. And the ideologies they propounded were those ideologies that could basically script massive numbers of people, you know,

• 16:20Speaker 02

  and then put them into war, basically. And the best of those was democratic capitalism relative to, you know, communism and Nazism, but it was still a mass ideology that actually did, you know, blow up a lot of people, it was, you know, the least bad of them, I think, I think I would agree. But if you read like Human Smoke or something like that by Nicholson Baker, you'll see it actually, you know, had a lot of negative things, it's not just the Japanese internments, gold seizures, it's, you know, all the stuff that FDR did, all the stuff Woodrow Wilson did, blah, blah, blah. Okay, fine. So, point is, the sovereign individual thesis says that centralizing force, or centralizing technologies, you know, brought that together, and then decentralization has taken it down. I think that's true, I think it's also something where there's both sort of left and right wing forces that

• 17:05Speaker 02

  You know, as we would conventionally think of them that happened during this time that were aided and perhaps, you know, only even feasible because of technology, but had a feedback effect with it. And there was sort of the left egalitarianism of let us all be citizens, you know, in in the nation of France nationalism was egalitarian relative to the monarchy. And then later was nationalism as a right thing, which is we all need to band together in terms of defense. And basically, you know, German nationalism in part, you know, and again, maybe getting this wrong, maybe historical correct, but my understanding is the Napoleonic wars in part led to the rise of German nationalism because people are like, we need to

• 17:44Speaker 02

  band together against this insane, you know, French colossus like at the time, you know, under Napoleon, French was France was not considered the whatever the surrender monkeys or whatever. They were, you know, the military power of Europe and Germany was actually the one that needed to get its act together. So so there are various forces. It was, you know, it was technology. It was left ideologies, right ideologies. Net net is you had returns on scale for a long time. And now we are seeing with the advent, I think, I think technology is probably the primary driver of it. We're seeing just massive like negative returns on scale, diseconomies of scale. And the whole thing is decentralizing and it's sort of like much, much, much faster than it's centralized. So it's like a centralizing ramp up over multiple centuries.

• 18:29Speaker 02

  And it's like decentralizing over the span of like one century. Okay. So maybe five X or 10 X is fast.

• 18:35Anthony Pompliano?

  Is this the idea of like deglobalization is that's kind of how some people try to talk about this phenomenon, but you're basically presenting a different lens on it. But it's this idea that like, we're going to go back to a nationalistic viewpoint and there's less globalization.

• 18:50Speaker 02

  Yes, it's interesting. I think so. Deglobalization is interesting because I'm not sure it'll happen in exactly that way. So Zihan and other guys talk about that, right? And, you know, Zihan, I think, you know, I I probably agree with him like 30%, 20%, something like that. I'm very probably which disagree on other pieces, but. Here's my thesis on like globalization, deglobalization, etc. Um, first is I think globalization continues online, um, but it goes in reverse offline. So you have like physical nationalism, but you have digital globalization. And that's actually the tension of this century. It is the cloud versus the land.

• 19:33Speaker 02

  You have this global community of, um, you know, remote working. Cause on the one hand, you've got all these trends pushing towards total internationalism. Right. You have cryptocurrency, you have remote work, you have Starlink, you have this massive global community of startup entrepreneurs and folks who are more connected than they've ever been. You know, uh, you have encryption, which is cross borders. You have, uh, you know, you have all of those things. You have the metaverse coming, you have billions of people with smartphones. You have transnational companies. All of those are huge pushes on the digital side for continued globalization and accelerated, in fact, in some ways. On the other hand, you have the land pushing against that, uh, where various countries,

• 20:16Speaker 02

  various politicians want to retain their control over their jurisdiction. They want to use the state against the network. Right. And so it's actually more complicated than simply deglobalization. This is a political axis of, um, you know, state versus network. And what's interesting about this is centralization and decentralization. You can actually cut that where in some sense the state is decentralized because you have lots and lots of little pieces around the world. If you deglobalize, on their hand, within any jurisdiction, it's centralized. It's a centralized power. Right. Conversely, the network in a sense is, uh, you know, globally centralized because you have a central administrator of a Google or something like that, that goes across

• 21:00Speaker 02

  the whole world, but it's also in a different sense decentralized because you can have Bitcoin or Ethereum or something like that where your private keys are local across different countries. Right. So there's like an interesting aspect of this where you can start slicing this. And I think it's more complicated than simply the world deglobalizes. One other aspect of this, which I think is quite important is My mental model is a centralized east and a decentralized west. And then what we want is actually a recentralized center. Okay. And why do I say it that way? So a centralized east and decentralized west. The sovereign individual thesis is quite good, but you know, anything that's that's like a huge piece of the future, people often tend to just extrapolate that trend out and they don't

• 21:45Speaker 02

  account for the Soros concept of so-called reflexivityivity. Have you heard about that concept? Do you know what that is?

• 21:49Anthony Pompliano?

  One of the key concepts of finance, yes.

• 21:52Speaker 02

  It was key. Okay. Why don't you, why don't you explain it then?

• 21:54Anthony Pompliano?

  Yeah. The whole idea basically is the further that things can move in one direction, they basically can reflexively move back in the other direction just as fast. And there's a balance, I think, and human psychology becomes a huge component of that balance and kind of the reaction, there's a reaction to every action in some way. And especially in financial assets where right when people are ready to sell, to walk away, to give up, that's usually the time where there's a snapback, if you will, of those assets.

• 22:26Speaker 02

  That's right. And you know, the thing is, of course, sometimes things really just do go to zero. Sometimes things, you know, actually like venture capitals model, if you think about it, is buy the all time high and hope it goes higher. Right? That, that's what it is to be a series A or series B investor. You're basically in a sense, buying the all time high of that stock.

• 22:48Anthony Pompliano?

  Yes.

• 22:48Speaker 02

  And then hoping it's, it goes even higher. And you can make money that way, frankly, you can. But it is, it is something which is, it's certainly atypical relative to how a hedge fund person will think about it. The reason I just bring up reflexivity is especially when it's a human trend, it may not go to infinity. Right? The fact that it's rising often arouses bandwagoning against that trend. Right? And so with respect to the sovereign individual, I think there's at least three counter trends and those are, you know, what I call the individual sovereign, the sovereign collective, and the autonomous robot. Okay. So the individual sovereign is like somebody like Xi Jinping or Putin or somebody, you know, Elon, somebody like that who has like enough influence.

• 23:31Speaker 02

  Over the future that they can turn, you know, even if the trend is towards, uh, you know, decentralization, it's also a trend towards individual empowerment and something like Xi Jinping has pushed the entire country towards centralization of a billion people, right? So paradoxically, the sovereign individual talks about how individuals get super empowered and here's a super empowered individual who is pushing the disempowerment of other individuals, which is very meta. Okay. So that's like, you know, the, the individual sovereign is a fly in the ointment. The second is the sovereign collective because I think it's challenging for, I, I do think that the size of groups that you need to get something done reduces, but it doesn't like,

• 24:15Speaker 02

  um, it doesn't mean that you don't need other people for anything. It just means it gets smaller. Um, you can do more things with autonomy. You, you can have things like Minecraft or Bitcoin with like one person or Instagram and WhatsApp with double digit numbers of people. That's all true. And I do think the size of groups, you know, shrinks and you have many more CEOs and many more smaller companies and so on. We're already seeing something like that, many smaller countries as well. But that doesn't mean it goes to like, I think everybody is just one person or even that there's a group of people that are just like one person. I think people want community and so on. So I think the sovereign collective is another important counterweight to that because, um, you know, the, the state will push back on you if you're just an individual on your own. You represent no constituency.

• 24:58Speaker 02

  The smallest minority is, is one person, I think, is like Rand would say. And that's actually why a prag, a pragmatist realizes, hey, if I can group with other people, I can probably achieve objectives, maybe by sacrificing some individual autonomy. But, um, I think the sovereign collective is going to be a big thing, is a big thing, right? And that's crowdfunding, that is, uh, you know, Facebook groups, that is, um, Signal, but it's also a big part of the network set. And the third is the autonomous robot because a lot of the logic of Bitcoin and of the sovereign individual is, well, um, you know, the, the 20th century was about these gigantic wars where, you know, the states could seize all the money and they could seize the money and they could use that for these, you know, planes and tanks.

• 25:41Speaker 02

  And kill each other and you know, they could also inflate the currency and all of that goes away. When you have cryptocurrency, right? You've heard, you've heard this thesis.

• 25:50Anthony Pompliano?

  I have.

• 25:51Speaker 02

  Okay.

• 25:52Anthony Pompliano?

  And along these lines, one key piece, I think that people don't quite yet.

• 25:55Speaker 02

  I have a counter argument.

• 25:56Anthony Pompliano?

  Yeah.

• 25:57Speaker 02

  Yeah, go ahead. Sorry.

• 25:57Anthony Pompliano?

  Okay. Uh, but, but just to kind of hit home on this. So in the physical world, obviously, if you have the most powerful offense, you are the, you know, military dominant, uh, kind of nation state group, et cetera. Uh, when you push up into the digital world, um, there's still a lot of people who say, hey, atoms matter, right? It's not all just bits. Obviously, if somebody comes and takes your computer or puts you in jail, whatever, uh, that, that's a, a problem. But there is this concept of like, actually in the cyber world, defense, the strongest defense means that you are more powerful. How do you evaluate offense versus defense in the physical world? And then does that change the evaluation in the digital world?

• 26:35Speaker 02

  Yeah. So I think the way I kind of connect the two is I've got a section in the book called rubber hoses don't scale. Okay. So, you know, people always say, oh, the rubber hose attack, ha, ha, lol. You're just some moronic crypto guy who doesn't understand that I can find and beat you up and take your private keys. And then my counter argument against that is, okay, but can you do so at a profit? What I mean by that is, uh, the state is not, you know, doesn't have infinite resources. It needs to first take that Bitcoin address or whatever address, and it has to map it to a physical person and then find that person's current location and then have, you know, the, the search warrant or whatever that is valid in that jurisdiction, because they might be in, you know, whatever country. Uh, they have to be able to then land the SWAT team.

• 27:20Speaker 02

  They have to go kick in the door. They have to find that guy's private key. And they have to hope it's got enough money to pay for that entire process. Then they have to repeat that over and over again, right? And if that, you know, like a SWAT team is actually kind of expensive. It costs, I don't know how many, but like certainly tens of thousands of dollars. And, um, you better hope that like that coercive seizure is making you more money than it's costing you. And that it's not resulting in film that will actually make a lot of people think, okay, screw these militarized police, abolish the police, you know, defund the police, you know, resist the police, whatever, whatever, right? And, uh, because if you do use force, sometimes it's, the use of force is really complicated.

• 28:03Speaker 02

  Because often the use of force, if it's considered illegitimate. Can arouse significant backlash that is more, you know, it's just stupid to use force, you know. And so that's why, like, that's why rubber bullets exist. That's why nuclear bombs just didn't grow to infinity. Why did, you know, for example, a while back, there's this guy, Eric Swalwell, he is like, talking about how the US government has nukes. And so therefore, nobody can fight back against it. Do you remember, remember this post or tweet from a few years ago?

• 28:32Anthony Pompliano?

  I don't, but that sounds like something that would be on the internet as an argument and detached from reality.

• 28:37Speaker 02

  Yeah, yeah. So, so the reason that's actually a really bad argument is if you actually think about, like, the point is not to just, like, randomly kill lots of people. If you nuked, just to take this stupid thought experiment, but it's actually useful as a thought experiment in this sense. If you actually went and like, nuked Dallas or something like that, you'd kill lots of his tribe as well. Right? And it's not a surgical tool. Because it's not surgical, it can't actually be deployed. Because his goal is to try and bring the other tribe to heal. And that means, you know, basically going and killing or, you know,

• 29:19Speaker 02

  attacking or censoring or deplatforming their guys without hitting his own guys. And so in fractal America, where if you look at the map, it's all these red and blue cheek by jowl, one side can't really like go and strafe and bomb the other side, because in physical space, they're so cheek by jowl that anything is going to hit the other person. Right? And so that that won't get political support from that side. And so instead, the warfare is online. You know, it is, it's very different than the 1860s. In the 1860s, you had these two tribes, and they weren't just ideologically separated, they're geographically separate. North and south were, were separated, right? You can look at the map. Whereas, here, let me actually, let me show you some visuals. So maybe you guys can. The first is, that's

• 30:04Speaker 02

  a map of blue and gray, how they're separated in 1861. And if you go to the second one, That's how it looks in 2016. So physically, there's no way you can invade or bomb the small little tweet on nuking. Nuking just doesn't work. You're killing too many of your own guys, whatever tribe you're in. And then you go to the third, in the digital space, they're separated. That is actually now that looks like the 1861 map again. And that's why it's so insane online, because you have, you know, this, this front of two groups that are ideologically separated. But because the physical space is so fractal, any kind of conflict is going to look like, you know, a network war, net war, as opposed to 20th century or 1900, you know, 1800s war. So what does that mean?

• 30:46Anthony Pompliano?

  Balaji, one of the things that I think is really interesting about this is, when I think of, just from personal experience, right? So in Iraq, in 2005 through like 2010, there was a program called Sons of Iraq. And what they essentially did was, it was partially in the analog world of, we need physical soldiers, we need people to kind of patrol their local communities, etc. But there was also a psychological aspect of it, which is you are an Iraqi citizen, you probably have some sort of military experience, or you have some sort of, you know, combat training, or whatever it is. And we, as the United States, said to these individuals, we cannot patrol your whole country, we cannot be in every single local community, you have to take responsibility, you have to have pride

• 31:31Anthony Pompliano?

  in your country, you have to have a feeling of kind of responsibility for your local community. And so what we're going to do is, we're going to try to empower you, we're going to empower you in the analog world. But in some ways, that program was never recognized for the psychological component of trying to say, hey, if you don't want these people who you deem to be bad in your local community, you, as the Sons of Iraq, you are responsible for, you know, setting up checkpoints and keeping people out of your communities, etc. And we, as the United States, will help. Now, people will argue over the efficacy of the program, but it was trying to combine the analog, we will give you weapons, we will give you training, we will, you know, do all these things, kind of in the physical world. But also psychologically, there had to be a, kind of a step function

• 32:16Anthony Pompliano?

  change, if you will, in the way that people thought about. Their responsibility or their interaction in their communities. And, you know, the proponents of this program would argue it was the turning point. Right. It literally changed the kind of battlefield. Because now all of a sudden, you were able to multiply the number of soldiers. And it goes back to this idea of they weren't necessarily enemies coming at you. Right. Because they were kind of more so agnostic and just saying, hey, like, I just want to live my life. I'm not on either side. But the United States was able to use these individuals to then be helpful for their cause. Which, you know, I think is a past example. But now you're making the argument that that's going to happen on the digital front, not just in the physical world. We understand kind of what's happened in history. Right. In terms of how we've kind of got here.

• 33:01Anthony Pompliano?

  Some people understand it better than others. But where do we go from here in terms of what these network states? Like, what do you anticipate will happen?

• 33:09Speaker 02

  Sure. Okay. So fundamentally, what we are having is a situation where because in part of the internet, but also because of trends that predate the internet, this broader decentralization thing. You have people in physical jurisdictions where that latent difference is now popping up. Right. America is no longer really just a, it's not a nation state. It's a minimum, a bi-national state. Right. Because you've got red and blue. But you've also got lots of sub ethnicities and so on under that. We're not used to thinking of red and blue as ethnicities. But if you look at marriage patterns, for example, people will now marry outside their race. It's actually, you know, very, very common, at least as expressed to pollsters.

• 33:54Speaker 02

  But they won't marry outside their party. Okay. Democrats won't marry Democrats and Republicans increasingly, or Democrats will only marry Democrats. And Republicans increasingly will only marry Republicans. That's been trending way up. And the thing is, in a generation, that kind of ideology becomes biology. It becomes, at a minimum, Democrat, Republican becomes like, you know, Protestant, Catholic, or Sunni and Shiite. Right? The ideology becomes a biology if you're only going and finding a spouse within that group and telling your kids I only married within that group and so on, right? So that happens very fast. And then that becomes like ethnic, right? And that becomes like, I shouldn't say intractable, because it can be, it can be solved, but it's difficult, harder to solve, right? It's more, it's not really about policies, tribe versus tribe.

• 34:35Speaker 02

  And so the thing is that that is like happening in a lot of places worldwide. And a lot of people don't realize that, you know, they don't know Garibaldi, they don't know Bismarck, they don't know what happened with the French Revolution. They don't realize like how much centralized force in different ways and propaganda, okay, the combination of both right and left in that sense, you know, was required to like flatten out these huge regions and centralize them under certain things. They kind of think that's the way the world always was. There's an enormous amount of force and enormous amount of propaganda that leveled all that out, that kind of erased all these other dialects in favor of official French, or, you know, wiped out all these other small jurisdictions in favor of what

• 35:17Speaker 02

  we now know as Italy, right? And that was obviously cataclysmic in some ways, but it also resulted in what we think of as a modern world. And now we're getting, I think, the V3, right? So I mentioned San Marino, and it's like this, it's like this duck-billed platypus. It's like this missing link, where if you look at the history of San Marino, it actually shows why we exited the city-state age and went to the nation-state age. And a big thing, by the way, is city-state, nation-state, network-state, is a progression that's sort of similar to like gold, you know, fiat or dollars and digital gold. You know why I say that? Should I explain that?

• 35:54Anthony Pompliano?

  Explain.

• 35:55Speaker 02

  So the key thing is that like Bitcoin is, is a V3. We talk about it as digital gold, and it has some of the properties of gold, like the immutability and so on. In fact, it improves on some of those properties, the custodial aspect and whatnot. But actually, and we sort of take this for granted, has many of the same properties as fiat. You can send it electronically, you can represent it on a screen, you can write programs with it, all that type of stuff, right? And if it didn't have those properties, it wouldn't really be a contender. It would, it would not be, see, it's not a throwback. It's not V1. It's a V3 that combines aspects of both V1 and V2.

• 36:31Anthony Pompliano?

  And the idea there is if it only had the aspects of V1 in a digital form, you would either miss parts of V2, which wouldn't make it competitive, or people would view it as inferior, given that they could send it digitally fiat. But if Bitcoin was somehow physical in nature or something, then obviously it wouldn't work in this digital world.

• 36:51Speaker 02

  Yeah, so let's say it was just V1. Let's say it's basically like, you know, by the way, I have nothing against Peter Schiff. I respect him for calling the mortgage crisis and so on. But he does like to troll Bitcoin. Okay, fine. So let's say it's gold, it's Peter Schiff's beloved thing. And actually, by the way, gold may have its own little boomlet or what have you. Okay, but the thing about gold is gold was defeated by the state, right? Executive Order 6102, gold was seized. Gold is something that you can detect with metal detectors. Gold is something that is very heavy to transport. Gold is something where you can't easily like chip off a flake and just use it at Starbucks, right? Gold is not a very easily negotiable instrument.

• 37:33Speaker 02

  It has lower liquidity than BTC, which is actually quite liquid, you know? And so because of that, like, you know, is Bitcoin as liquid as fiat? And can you pay with it as easily as you can a dollar? Not really, because of trends, you know, there's various constraints on that. Like there's transaction limits and block size and all that type of stuff. Yes, you can use Lightning and what have you, and there's workarounds, I agree. But point is that like gold, V1, if you just tried V1, you wouldn't get that far because literally physical blocks of gold are hard to actually pay with. You can use them as emergency storage mechanisms, but they're hard to transport, they're heavy. You know, if you wanted to transport a million dollars of gold, I don't know how many pounds that is off the top of my head,

• 38:18Speaker 02

  but it would probably be a fairly large amount of weight to carry, right? So V1 has a lot of downsides, which is why people go with V2. And so before Bitcoin, when people would just sort of be like, we need gold, we need to go back to sound money and so on. It's just, it was like, it was directionally accurate in some ways. You know, there was a solid critique in some ways of the problems of the present. But there wasn't like the practicality of how does this new thing account for the fact that the present beat the past? If you have, you know, the present beat the past, so whatever you propose as a future needs to be able to beat the present.

• 38:56Anthony Pompliano?

  It's almost like combining, in some ways, the policies of V1, right? Or kind of the structure of V1, but the technology of V2.

• 39:03Speaker 02

  Yeah.

• 39:03Anthony Pompliano?

  And you put those two things together, you get V3.

• 39:05Speaker 02

  Yeah, exactly. The specific fusion may differ in different domains, but the V3 has to be kind of better than both, right? And often, you know, so I'll give several examples of this, and then let me talk about the network state itself. So, you know, you have physical paper, and then you have a scan document, like a scanner. Then you have like a digitally native file, which never even exists in the physical world, right? Or you have, you know, in a different way, you have a paper currency. Then you have like a bank interface, like PayPal, or really that's a layer on top of a bank interface, but you see your dollars in a bank interface. Then you have cryptocurrency, which is natively digital.

• 39:46Speaker 02

  Or you have, you know, you have a movie that you see offline, and then you have like a Netflix, you know, streaming thing where, you know, you've got a film that's in Hollywood. Then you have Internet native content that was authored on the Internet, and it's not like streaming from some like Hollywood library, right? And you can kind of think of a lot of things have this progression where there's like physical, there's a physical-digital hybrid, like a scanned version, then there's a purely digital version. And so, you know, so that's like, that's a progression just within the Internet. If we take a longer timeframe, we say city-state, nation-state, network-state. The reason that city-states, the V1, were beaten by nation-states is that nation-states had scale, right? That's why San Marino is this duck bill plow, but nation-states, like, they just scooped

• 40:31Speaker 02

  up all of these small principalities into this huge thing because it had massive scale. And the problem with people who are like, you know, "Go back to city-states," or, you know, "I want my small liberal land, like my sealand, my small country," and so on and so forth, it's sort of like the appeal to gold, where I understand why they want it, you know, "Hey, let's have lots of small governments," and so on. But those small governments, the past was beaten by the present for a reason. The present has scale, those nation-states have scale, they have offensive capabilities. City-states were defeated by nation-states. Network states, though, are a V3, in my view, and why? Because... They combine some of the aspects of both nation and city-states. So they have the scale or potential scale of a nation-state, since in theory, you could have an international

• 41:15Speaker 02

  network that had, you know, millions of members. In fact, take a look at, I've got a little gif here, because sometimes a picture tells a thousand words.

• 41:25Anthony Pompliano?

  What you're basically talking about here, it's fascinating, because even if you look at something across industries, it really is, the analog world was a game of scale. And so naturally, people would push into the digital realm. And if you take, I don't know, books, right, there's physical bookstores that usually were mom and pops, then there got scale by then going to the chains of the Barnes and Nobles, whatever. Then Amazon came along and said, hey, we have a digital version that gives us more scale. And then eventually, what people realized is like, we don't even have to create the actual physical book. We can just literally have a digital file. And so you can kind of see this progression across industry after industry after industry. And whoever basically gets to the end state the fastest, and does it in a sustainable way, they tend to have the advantage, it appears, you know, over the long run.

• 42:09Speaker 02

  Taking a look at this, right, let's keep this gif on loop for a second. So this probably tells a story, like in a few, you know, frames faster than I could in words. So this is an example of a hypothetical network state that starts with one person in Tokyo, okay, and they recruit other people, and they connect them together. And notice in the top right, they're crowdfunding territory square meters of territory around the world to live together. And how are they doing it? In the top middle, the annual income is how much they're booking in, you know, let's say, provable, it could be crypto income eventually, or partially crypto income. But they basically have some proof of income in the middle,

• 42:53Speaker 02

  right? And one of the things I point out in the book is that the census was actually, did you know the census is part of the US Constitution, like the post office?

• 43:03Anthony Pompliano?

  I did not, no.

• 43:05Speaker 02

  So it's actually, you know, it's actually something that they thought of as actually being very important from the very beginning. They needed information about their Young Republic in order to do something. It was a huge undertaking, which is why the census is only done every 10 years, you know, because you have to take all this paper and, you know, I don't know if you've ever seen what a million pieces of paper looks like. That's a lot of pieces of paper, right? And you didn't have Excel. You had to add up all of that by hand. Every cross tab had to be done by hand. Just imagine the warehouse and how people had to set it up, right? So now our census, you know, you can do something, not a million people every 10 years, but like Facebook in theory could compute and does actually have a real time census on 3 billion people in a second. Okay. So that's like several orders of magnitude, you know,

• 43:48Speaker 02

  if you go, just think it out, right? 3,650 days is 10 years and then you're doing that not in an hour, but in a second, that is like, you know, six or seven orders of magnitude improved in terms of your speed to go from 10 years to one second, right? And the, the point about that is now the problem is not the speed of the computation, but the reliability of it. Okay. How do you know? Before it was something where, okay, is the US government going to fake their census? You know, okay, maybe, maybe you trust them, maybe you wouldn't. But now anybody can put whatever number they want online. So this census for a network state, you're going to need a lot of the proof of X, proof of Y techniques we've talked about, like proof of human, proof

• 44:31Speaker 02

  of income, proof of real estate, all those things, actually the cryptographic proof that that transaction occurred with many different overlapping points of evidence, any one of which could be fallacious, but combined together, you get statistical inference, right? You have some estimate of, you know, how probable is it that this number is correct, right? It's not going to be deterministic, it's going to be statistical. Even Bitcoin, for example, you know, the, the calculation that Satoshi put in the white paper is a statistical calculation of, you know, how likely it is that, you know, you're going to have finality after like six blocks. And so you do this statistical calculation, you're like, how reliable are these population and income and real estate footprints?

• 45:14Speaker 02

  And if that census is reliable, if you have managed to build a community that's like this, and there's more details that I talk about in the book, but if you can build something at this scale of all these people who think of themselves as being part of the same nation and who actually crowdfund territory and live together in it, and if you notice the buildings, if you put the GIF back on screen, the buildings on the left-hand side sort of increase in complexity. So, you know, right? The footprint starts getting larger in each of these cities, right? Starts as like just one guy in his house, and eventually it becomes cul-de-sacs and ranches and small towns and maybe even small cities, and they're all networked together. And when I say they're all networked together, well, you know, the advent of augmented reality

• 45:58Speaker 02

  glasses, which I talk about coming, that's like the most predictable next thing in tech. You know, like the iPhone was this convergence device, the AR glasses that you tap and then just boom, you can just see ghosts from the internet in real life. Those are going to make it much easier to network all of these different physical regions together into something that feels like the same country, right?

• 46:20Anthony Pompliano?

  So let me ask you a question about this, because I think the number one critique, I was trying to think of like, what are the biggest critiques I've heard of people saying around this network state thesis? And the number one thing that I've seen people talking about is, okay, theoretically, this makes a ton of sense, but you still have to have the physical location, whether it's a building, whether it's land, whether it's whatever. How do those individuals in that building or land defend themselves from the existing nation-state structure? So if you participate in a network state, how does that interface with the nation-state? And do nation-states view this as a threat or abrasive? Or do they embrace it? Like, how do you think about those two, or maybe the line between the nation-state and

• 47:05Anthony Pompliano?

  the network state blurring in the physical world where the network state still needs physical space?

• 47:11Speaker 02

  Great question. So actually, I've got a whole section on this that I will add and then tweet out called diplomatic relations, right? Because I talk about diplomatic recognition as this core part of it, right? So diplomatic relations between network states and nation-states is actually, you know what it's similar to? It's similar to the crypto fiat interface.

• 47:32Anthony Pompliano?

  Ah, okay.

• 47:34Speaker 02

  Because it's like the interface between cryptocurrency Bitcoin and fiat currency, the US dollar was not something that actually, to my knowledge at least, Satoshi wrote about originally. He sort of thought that the crypto economy could bootstrap itself kind of completely on its own. He had like the poker thing that was built into the app at the beginning, right? But it turned out that the BTC USD interface, that exchange rate, once that exchange rate occurred, right? And you could argue it occurred implicitly with the pizza day transaction, right? But the exchange rate between BTC and USD, that is, you know, like future historians will see that as something that almost looks like it went zero to one, right? Like it looks

• 48:18Speaker 02

  infinite, or like it just goes vertical, because it's very fast over a short period of time. But while we're living through it, as you know, it has ups and downs, and it retraces, and so on and so forth, before, you know, like, maybe it'll go to infinity. We'll see. Okay. But the thing is that, ah, so this, this image, by the way, here, this shows a visual of what I'm talking about, where if you scroll down, right, that's, that's Apple's AR kit, which is a preview of what you'll see with your AR glasses. So if you hold a certain NFT, you see a glowing sigil, you're part of this secret society, this Freemasons, or what have you, and all the people who have that NFT can see that sigil, and nobody

• 49:00Speaker 02

  who doesn't can, right? And that means that you, you have a layer over the world where citizenship becomes like single sign-on. You know, you have a private key, you have an NFT that is your digital passport, and you can literally see aspects of the world that others can't. It's like your physical login, right? And so you can start to see how with something like that, you can take all these territories around the world, and, you know, brand is, it's kind of an unfortunate term, because it seems very corporate, but think about, if you walk into the Google offices anywhere in the world, they're basically very similar. You know, they're meant to be similar. It's got the Google logo, maybe there's like a little ethnic touch for that country, like the Google doodle, but they're fundamentally very similar.

• 49:45Speaker 02

  And that's intentional. It's like a little piece of Google, a slice of Google around the world. But that's within the context of commercial real estate. These are all fundamentally commercial buildings and office space. What if you extended that to residential real estate and industrial and you had all those linked together and it wasn't a company but a community that owned them, right? That you could do. And then the branding would be more like you have a bunch of Chinatowns, for example, or Little Indias around the world, but they're networked together. And now you actually start having something which, nothing I'm describing is like technically infeasible. You know, all these little subroutines exist, right? Chinatowns exist, Little Indias exist, Google exists, Single Signon exists, all those pieces exist, right? What I'm kind of talking about is the system integration of bringing them

• 50:27Speaker 02

  together into this, you know, community that is physically distributed but digitally connected in one place. And one way of thinking about this, by the way, is if you live in Hawaii, many people, I mean, they think of themselves as part of the same country as somebody who lives in New York. Okay, they're not driving to New York. In fact, they probably don't go off the island of Hawaii that frequently. So that gift that I just showed is actually not that different from how people live already. You know, like you don't need that much contiguous space in the middle. It's not flyover country. It is, I'm probably, there's probably some clever one liner you could have, but it's like teleport over a country, you know, because you're just sending the packets over, you know. And so these

• 51:12Speaker 02

  other regions are as, you know, so long as your individual pockets are large enough, and that depends, you know, a person in just like one place on their own could kind of think of themselves as like a, just like an American expat living overseas thinks of themselves as American, even if they're surrounded by a lot of foreign nationals, right? Like a building that had just one person from a network state, that person would LARP themselves into thinking of themselves as part of this larger community. And once it gets to on the order of 100,000 to a million people, if and when it gets there, it's actually not that unreasonable a LARP. And the reason for that is that most countries are small countries. Actually, here's another graphic from the beginning of the book that I'll show you.

• 51:54Anthony Pompliano?

  I mean, in some way, what you're describing, there are crumbs of it already occurring. Google is a good example, right? In terms of like, you think of yourself as I adhere to this community, which happens to be a for-profit company. There's physical space. There's a single sign-on to get into the the internal systems. But you also can kind of extrapolate that out. And you see people doing this in a variety of different ways. It's just no one's done it from an actual nation state, you know, transitioning to a network state, if you will.

• 52:25Speaker 02

  Right. And so if you take a look, for example, at this, just here's a way to calibrate like the reasonableness of this. If you go and look at this link that I just pasted in and scroll all the way down to the bottom, most countries are small countries. Okay, only 14 countries are 100 million person countries. And the reason that that is counterintuitive is probably most people live in big countries, but most countries are small countries, right? And so the thing about that is most of the countries at the United Nations are like, you know, like sub one, sub 10 million, right? And as you know, we can build social networks of that scale, you know? I mean, it's not trivial to build,

• 53:08Speaker 02

  you know, a 10 million person social network, but it's definitely doable. And there's, there's, there's definitely a lot of people who have built, you know, 100K, 1 million person followings online, like you and I are, I think, are at that level. That's not, that's not like that exceptional, right? And so now, of course, there's a huge difference between like clicking a button and following somebody versus actually going and having a much higher level of commitment to think of yourself as part of a country. But in terms of the horizontal scale, we're there, right? Like, we've got massive horizontal scale for like, joining Facebook. And now, you know, the next level up from that, from spending hours and hours a day on something, which is actually a pretty big commitment, by the way, I should say. The next step up from spending hours a day on a social network

• 53:53Speaker 02

  is starting to invest huge chunks of your net worth, like even 1% of your net worth I consider a huge chunk into a cryptocurrency. And so we may have billions of people spending hours on social media. We have hundreds of millions of people putting big chunks of their net worth into cryptocurrency. And so the next question is, will we have some significant fraction of people putting their lives into a crypto country?

• 54:14Anthony Pompliano?

  When you think, when you think of this, right? So use me as an example. I live in the United States of America. Many people would say it's a great place to live. People from all over the world want to constantly come here. There's the American dream. There's democracy. There's capitalism. There's all these kind of unique blend of things. And let's say that that's on one end of the spectrum. Then there's going to be individuals who are in a place where they're trying to leave, right? And they have a unique blend of both advantages and disadvantages as to why somebody may want to stay or leave in that country. But if you put that spectrum out, like, what changes for somebody in a Western developed nation if they want to kind of transition into one of these crypto

• 54:55Anthony Pompliano?

  states? And what changes for the individual who is not in a Western developed nation, but wants to transition into a crypto state? Like, do they end up in the same place? They just came from two different kind of starting points?

• 55:08Speaker 02

  It's a good question. So the thing is, well, so the way, there's a lot of things I can say there. So the first is, the US is becoming less attractive as a destination for, you know, so-called high net worth individuals. It's down about 86% since 2019. Henley Global has a report on this. They're also leaving China, because, you know, it's like the common prosperity doctrine over there. They've cracked down on Jack Ma and all the tech founders and so on. They're leaving Russia, obviously. That's got the massive global outflugs. They're leaving India, though they're getting replenished within India by like new founders, but it's, I think it's like net, net zero. But where they're going, they're going to small countries.

• 55:51Speaker 02

  And this has been a trend that's been going on for some time. And I think, so it's not, you know, the other thing is also like the concept of the developed world and the developing world. This is something which I think is, it's now probably worth deconstructing that. And the reason is that the way I talk about it is the ascending world and the descending world, or the ascending class and the descending class, that's the individual version of it. So the reason I say that is, you know, so here is, it's, you know, do I want to call this an unfair comparison? I think it's

• 56:25Speaker 02

  It's partially fair, but take a look at this.

• 56:30Anthony Pompliano?

  This is underrated Twitter account, by the way.

• 56:33Speaker 02

  Underrated account, yeah. So, so look at her comment, right? So at first glance, I thought this was India, right? Now, here's the thing, a lot of people jumped, jumped on her for that, right? And the thing is, India, you know, there's parts of India that did look like that, that do look like that. But then if you go forward, here is, here are some of the new Indian train stations. Like, that's clean and that's not, that's not, that's like a random train station that people use. Go to the next one, right? Like, the thing is, I'm not saying that all of India looks like this and so on, but parts of India do, and parts of America now look like the previous thing. And so, the, the distributions that were totally disjointed, you know, in the eighties, that were basically like, the richest Indian was poorer than the poorest American.

• 57:18Speaker 02

  Those are, you know, those are now like, converging, right?

• 57:21Anthony Pompliano?

  Is it, you know, an equilibrium is found where like, I, I don't really know how else to describe it, other than like, the United States was on this epic rise. At some point, it just can't keep going up higher and higher, because people get complacent, people get comfortable. And so naturally, you would expect decline at some point. These other countries now are the US, you know, 100 years ago, 200 years ago, they're now on ascent. And so you get that crossover point where the US doesn't keep improving and growing. These other countries catch up. And then you actually get the reverse. Like, is there a point in the future where India is, you know, the new US? And America is the old India?

• 58:06Speaker 02

  Yeah, so, right, so basically, when I, when I talk, think about India, by the way, I'm, I'm only moderately bullish on India as a country, but I'm very bullish on Indians as a network, like around the world, including Indians within India. But basically, Indians in general are just like leveling up. And they're, they're having an impact on the world. I mean, it's like, you know, a billion people.

• 58:30Anthony Pompliano?

  I mean, they run like every major tech company, right? Or at least 60% of the top ones.

• 58:36Speaker 02

  Yeah, and this is, well, I mean, they've done very well there. And they've also, you know, Indians have done well in media and other places. And this is, this is this huge new phenomenon where, I think, you know, so one way of thinking about it is if you look around your room and you're like, okay, how much of this physical world was made by, you know, effectively Chinese people in factories, right? Or, you know, Chinese entrepreneurs. I think you're going to see over the next 10 years, a very large fraction of the digital world will be made directly or indirectly by Indians.

• 59:05Anthony Pompliano?

  Interesting.

• 59:06Speaker 02

  Okay, so like an interesting kind of way of thinking about it, right? And that's, that's obviously like at the CEO level and so on. But I think an underrated thing is micro work, you know, outsourcing and like, you know, machine learning labeling of like cat and dog, you know, the digital assembly line, the new, the digital blue collar on Android phones for cryptocurrency. But basically what we're doing at Earn, but like, you know, 10, 100, 1,000, a million X bigger. That is going to be a big thing, where you just open up your phone and you can do micro work anywhere for cryptocurrency, like a Twitter feed, right? And I think a lot of that is going to happen in India because it just kind of fits how people just, you know, think about things there, right? They're willing to do these sort of, you know, drudge type tasks. They've just got Android phones.

• 59:51Speaker 02

  They've got information, but like, you know, a dollar a day is still like a big deal for people there. So they will actually do a good job for something like that. And, and also, I think this is the part that's not appreciated. Um, you know, my, my friend Akshay, who actually, you know, I think he coined this term as basically like, Indians used to need the H1B visa, but now they have the TCP IP visa. Okay. So he has this podcast.

• 1:00:14Anthony Pompliano?

  That's pretty good.

• 1:00:15Speaker 02

  That's pretty good, right?

• 1:00:16Anthony Pompliano?

  Yeah, that's pretty good.

• 1:00:18Speaker 02

  And the thing is like H1B visas, you know, they're, they're down and up and, you know, it seems like down and harder to get recently. But the thing is now you have, you know, this, these graphs, again, this is stuff that hasn't really been reported in the US. But if you look at the adoption of, you know, 4G or 5G, rather.

• 1:00:40Speaker 02

  This is, this is something which is just really kind of not on people's radars. You know, while the US is kind of fighting this domestic civil war during the Trump years and all attention is on the domestic kind of thing, almost a billion people got online in India from 2017 to 2021, and that's continuing, right? So what that means is all those folks are lurking in the comment section. They're all reading, right? And so a good chunk of your upvotes are Indian. A good chunk of your readers and listeners are going to be Indian. And in fact, most of the English internet is going to soon be Indian because

• 1:01:14Anthony Pompliano?

  One of the best examples I have of this is in 2015 or 2016, I went to India. I did like a two week trip and went to multiple cities and I kept meeting entrepreneurs. And they'd come up to me and they'd say, you know, hey, we've built X product. We have a hundred thousand users. I remember being like, holy shit, like a hundred thousand users. And after like the ninth or 10th time, I turned to somebody who was there and I was like, how the hell are these people so good at growth? And he was like, no, no, no, no, like a hundred thousand users in India is like 5,000 in the United States, right? He's like, it's just a bigger country or whatever. And so I remember like, that was one of these things where I was like, oh, literally

• 1:01:55Anthony Pompliano?

  the scale of the opportunity just to get people in your local economy onto these products is going to be massive. Imagine if they're then able to scale them globally, like they are just used to building for scale and getting users at a, in a way that is probably more difficult in the United States. And so it was just like this one little thing that just stuck out to me of like, man, this is so different than kind of the United States and the way that we think about, you know, consumer products and growth.

• 1:02:24Speaker 02

  Right. And, and the thing is that basically the integration of India with the global economy via the internet is a massive pro-globalization force. As per, going back to our earlier thing, like there's a billion people who really, really, really, really want to work online for money and are willing to do so and can do art and computer programming and

• 1:02:50Speaker 02

  And social media and blah, blah, blah, like lots and lots of white collar, digital labor kinds of jobs. They don't need an H1B visa anymore and they're culturally acclimated. So, you know, they, they may speak with an accent, but they kind of know all the memes, right? They're, they're fluent in the memes. They've been growing up with the same memes. They've been lurking for the last five years and kind of learning all of that stuff. So, uh, you know, the first time I realized this was actually in the early 2010s when I, I taught this huge online course, massively open online course. Actually, when the first, uh, first, I think, courses on Bitcoin, uh, here, let me show you this. I'm not sure most people even know about this, um, but in 2013, when Bitcoin was at double digits, uh, I taught this course.

• 1:03:35Speaker 02

  It actually hit 250,000 people worldwide. So yeah, this is 2013, right? Build Bitcoin profit. So 250,000 people, you know, when Bitcoin was at like 10 bucks or something, not 10, but it's like double digits. Like, I think it was 60 bucks or something at that time. Um, so point being that, uh, what I realized with that course is that the internet was to America as America was to the UK. It is like the more global, the more, um, like internationalist, like, you know, the UK had all these innovations like, um, you know, obviously common law, like all Englishmen are equal. And, you know, many civilizational innovations. And then the US leveled up and it said, hey, you know, we're actually going to have a written constitution.

• 1:04:20Speaker 02

  And it's not just all Englishmen are equal, but all Europeans can come and immigrate and so on. And, um, you know, that built this amazing country. And then, you know, the next level, I think, is to go from common law to constitution to, uh, you know, cryptocurrency or to a smart contract. Where it's not just like a written law with some judge who could enforce it, you know, as they see fit. But something where there's a compiler that's enforcing it, there's a, there's a chain that's enforcing it. It's actually more, um, more difficult to, to abuse and it's more impartial, a computer enforcing the law. And it's also something which is not just limited to those people who can get a visa in or something, but it is anybody with an internet connection, which is basically everybody. We've enfranchised billions of people. The phone is the next franchise in a real sense

• 1:05:04Speaker 02

  because you've given all these people who didn't have a voice, a voice. You've given them all a, you know, a way to, to make money online, to build things. And when you started putting all of that together, you're like, okay, like, the internet is to, you know, the Americas, it's like this, this new, new world, like what the new world was for the Europeans. And it is, it is something that I don't think people have realized its full potential and how large it is yet. As much as we talk about it, we still haven't really conceptualized it as such because, you know, the, the new world was seen, but for many years by the European powers as just being a place for them to go and send votes. And of course, you know, obviously the Native Americans and South Americans, Mayans, because,

• 1:05:46Speaker 02

  you know, I actually talk about that in the book, like, there was a lot of warfare and, you know, there's different ways that one can, can think about that. But the internet is different where, you know, there's nobody on the other side. It's like, you know, there's nobody who's sitting on that server before you. It's a piece of just bare digital territory. So people think of it as just a place that America or Europe or India or China or what have you is just going to quote, settle and build American tech companies or Chinese companies. But over time, I think it takes on a logic of its own and has its own internet native nationalism where things like keto, for example, or CrossFit or Bitcoin are internet

• 1:06:31Speaker 02

  native things that are, in a sense, genuinely international because they cut across all international boundaries and will eventually be able to acquire territory and form new nations of their own. And that's a big part of what the book is about.

• 1:06:46Anthony Pompliano?

  Well, it's, um, the adjustable market is much bigger. I also think a lot about, you and I have talked about media, you know, a bunch of times, but I think there's many industries where I call it like the, the boardroom expansion plan, which is like, I built a company in the United States. And I, you know, work really hard for three or four years. And then at some point I sit down with the board and I say, okay, board, I think now is time for international expansion. We all debate, we pick like, let's go to England, right? Or let's go to, you know, Mexico or like wherever we want to go. And it's like this very kind of methodical, you know, global expansion plan. And some of that's because, you know, if you're doing manufacturing or supply chain related things, there's a physical element.

• 1:07:27Speaker 02

  You need the regulations certifications for this.

• 1:07:29Anthony Pompliano?

  Yeah, but we've even seen this with just tech companies, right? I mean, there was a big deal when like Airbnb said, hey, we are now are going to go and go into a certain geography. And I think what has happened now is just like people turn it on. It's a global, you know, effort.

• 1:07:45Anthony Pompliano?

  And look, I was at Facebook when internet.org was a big focus of the business. And they were trying to bring internet and the joke always, you know, kind of was like, hey, we're running out of people on Facebook. So like, let's go get more people on the internet to get them on Facebook. Uh, and there probably was some hint of truth to it, but, but I do think that most of the effort was genuine and like giving people internet accesses is a net positive. Google at the same time was flying, you know, hot air balloons and yeah, doing all this stuff. But if you fast forward now and you say like, those internet companies are going to actually lose that internet race to Starlink and SpaceX. And it was, you know, it was somebody who started in a completely different industry, realized I have an advantage.

• 1:08:26Anthony Pompliano?

  Now I'm going to be able to put this satellite constellation out there and like, how impactful will Starlink be? To getting more people on the internet, which then leads to more economic productivity in this digital world. Like you can just see the pieces starting to come together. And sure, there could be external shock or kind of something catastrophic that drastically slowed internet adoption or, you know, economic productivity on the internet. But like, that's pretty hard to see right now. It, the writing is on the wall, it seems. And we're only headed in one direction, which is more people on the internet, more people coordinating and doing economic commerce there. And so naturally you would think that that's where kind of power, influence, wealth, et cetera, all gravitates as well. If that's what people spend all their time doing.

• 1:09:10Speaker 02

  Yeah, you know, I want a, I want a word that's like, like disenfranchised, but for taking away internet. It's like disinternetized or something like that. I could probably come up with something. Because all these folks who have now gotten their phones, have gotten their laptops, who've gotten their voices and, and their crypto and so on and so forth. States will want to take that away. And that's actually why you're seeing this push in the US and in the CCP for censorship, for crackdowns, for deplatforming, for demonization, for, you know, I get disinformation, Mr. All that stuff is an attempt to kind of shove the genie back into the bottle, to take away speech from people and so on and so forth. And to kind of stop this internet thing from, from getting somewhere.

• 1:09:55Speaker 02

  And, you know, I'm not saying those will be completely necessarily failed. I actually unfortunately think it might, it might actually work. This so-called counter decentralization could work in China, but I don't think it's going to work in the West. And actually, um, you know, to your question of will it get like stopped or what have you? Do you want my scenario for kind of like my? Okay, here's my, here's my base case model. And one thing I want to say about the book, I'm going to actually edit it to kind of make it, you know, more obvious. The way I think about it is it's set up as problem and solution. Okay?

• 1:10:30Speaker 02

  So the problem is based on kind of my worldview, which is, uh, you know, if you take my reading of past, present and future, I think we're headed for American anarchy and Chinese control. That is to say that the US is going to be, uh, potentially falling into some conflict between, uh, wokes and Bitcoin maximalists, um, who, who we could talk about. But basically I think, I think that is sort of where things are headed. And, uh, I think that, um, so that's like what I call American anarchy. And, uh, it'll get pretty crazy, potentially an attempted, one of the things I talk about is an attempted Bitcoin seizure. Like an executive order 6102 that puts half the, you know, puts the state in a collision

• 1:11:13Speaker 02

  course with the network. And, uh, and that's the only way they can finance the government after years more of printing and inflation and so on. They try to do some kind of Bitcoin seizure and states resist this. There are states that have passed anti seizure bills. This is one scenario. That's the American anarchy scenario where things get kind of crazy there. On their side is Chinese control and whether it's in response to, you know, Roger Garside has this book called China coup where he, um, like, you know, basically talks about how he thinks there'll be a coup in China and democracy will take over. Whether that coup happens organically or is attempted by, you know, or, or the US like helps back it or whatever, just like, you know, Biden saying Putin must, you know, leave power or, you know, the various regime change things that have been tried, whether it happens

• 1:11:57Speaker 02

  organically or it's US backed or who knows some combination. If something like that is attempted and Garside and others are kind of advocating for it. Sources kind of talked about something like this. The China crackdown will be insane because that's the thing they're set up to, to go against and they'll use AI to like rip civil society out by the roots. You know, like anybody who's near anybody who is possibly related to somebody involved in some kind of crazy, you know, like, like a coup attempt, it'll just be like ripped out by the roots. You might see nationalist, Chinese nationalist mobs running around on the internet or even in person against this. And so they will have a total potential crackdown, Chinese control. And, uh, in that scenario, that, that software to control, you know,

• 1:12:39Speaker 02

  basically the entire population then gets exported to every country that China has hard power in, all these African countries, but also, you know, uh, lots of countries in sort of the border zone, um, that could swing in, you know, the American or Chinese direction. And so between these two things, between American anarchy and Chinese control, you kind of want neither. Okay. Um, you know, you don't, you know, anarchy is really bad. Anarchy is, uh, in my view, something that people think is good, but, you know, even crypto anarchy is certainly better than nothing, but it's not that great. And the reason it's not that great is there's many goods that cannot be reduced. To like a peer-to-peer transaction. Yes, I can buy bread or milk or something like that potentially from you.

• 1:13:21Speaker 02

  But what I can't buy is a high-trust neighborhood and a peaceful walk through the street without bullets whizzing through past my head, right? Like, you know, if you have a guy in Syria and he's got $10 million in Bitcoin, you know what he wants? He wants a ticket out of there or he wants peace. Those are collective goods, maybe obviously, but this is something where the totally peer-to-peer model of the world doesn't account for those kind of collective goods where people all have to sort of sacrifice some autonomy for a collective good that everybody has. It's almost the opposite model of, you know, the communist who cannot see the need for individual self-interest and they only talk about the collective. This is the exact opposite of that, which is only talking about individual peer-to-peer

• 1:14:03Speaker 02

  transactions and not talking about anything that's, you know, collective or whatever. Okay, so between these two things, between anarchy and tyranny, between American anarchy and Chinese control, I think we need to build a recentralized center. And the reason I say recentralized is it's like the least popular word on the planet. Okay, why? Because they're centralized and then there's decentralized, right? So centralized is the US establishment and the CCP, the CCP like with their crackdown and the US establishment saying, hey, you know, we may have printed all these dollars, we may have screwed all this stuff up, but we're still the legitimate representative of the flag, you know? Why do you want to go into this maximalist anarchy?

• 1:14:47Speaker 02

  That's, you know, questionable as to what's going to happen. It could be really bad. You know, this is our country, you know, we want to fight for it, etc. And that, I think, is what I call the the green faction. If you take red versus blue and you splash yellow on both sides, green versus orange, orange versus green is, I think, where it lines up, dollar green versus Bitcoin orange. And that's a green faction narrative is centralization, just like the CCP. Then against both of those is the orange faction, BTC, which says decentralization, says, screw you, you guys, you know, like, did the China virus and you faked all the, you know, news and you printed all this money and you minted all these cantillionaires and you've basically built this entire fake system. There's a lot of, there's a lot of merit to this, right? There's a lot of merit to the

• 1:15:32Speaker 02

  concept that there has been a ton of fakery and whatnot. And then the issue is that gets taken to the point of no leaders ever, right? All hierarchies are illegitimate. Um, and you know, what's the saying, like slay your heroes or something like that, which is basically, you've heard this kind of term, no? Yes, right? So what that is, is something where the maximalist actually overlaps with the woke, where they actually start to sound very similar. The woke says civility is tone policing and the maximalist says toxicity is good, right? Or, you know, the, the woke wants to abolish the police, the maximalist wants to, you know, you know, abolish the state. And whether it's we are all equal

• 1:16:14Speaker 02

  or you ain't the boss of me, even though there's tonal differences between them, the vector sum is, uh, nobody's in charge, right? Total anarchy, no leadership. And the thing is that the woke will constantly talk about fascism, fascism, fascism, fascism, and they'll define themselves as anti fascist against the upper right corner. They signal against that push to the lower left of the political compass. And what you're seeing to a greater extent are folks who define themselves as anti communist, right? And of course I'm against communism, but they define themselves as being against the upper left corner and point in the lower right direction as ultra, ultra, ultra libertarian. And when you take those two vectors, when you take things that kind of point like this, uh, the left and right kind of cancel out, but you have the, the sum is to the bottom, right? Have you

• 1:16:59Speaker 02

  done like vector math? Do I'm talking that?

• 1:17:01Anthony Pompliano?

  Uh, nowhere near what you've done, but I know what it is.

• 1:17:04Speaker 02

  You know what it is, right? What, once you, once you think like, oh, actually these things, um, they do disagree on many aspects, but they both agree on is nobody should be in charge and the current order is illegitimate and rotted and should go away.

• 1:17:18Anthony Pompliano?

  Let me, let me ask you about this and, and, uh, we're, we're going to wade into, uh, uh, an area where I think there, there's plenty of people who have lots of opinions, uh, both on the woke side and also on the Bitcoin maximalism side. How much of this is, um, The Bitcoin maximalists care more about being a maximalist than care about the success of Bitcoin. The woke care more about the camaraderie of everyone is woke together more than like the actual impact of achieving their goal. Like, is it a replacement for religion? Is it like the community and cultural aspect of it ends up transforming someone's identity and the identity to this set of ideals is almost more important than the actual intended outcome? Or like, how do you think about that? Because to me, that

• 1:18:03Anthony Pompliano?

  feels like they both, it's very important to them that they are identified as part of the group.

• 1:18:09Speaker 02

  Yeah, so I actually have this tweet thread from a little while ago that you might have there. So basically, people who think they're supporting an issue online, I'm just going to read this, okay, for a second, then discuss it. Many folks who think they're supporting an issue online are really just taking direction from Twitter's algorithm. There's an unmistakable stylistic convergence of many different ideologies. What is rewarded is Twitterism. And what is Twitterism? The sick burn, the public feud, the sarcastic meme, the purity test, the hysterical mob. Some ideologies claim to be for tolerance. Others preach order or moderation. But Twitterism is none of these and is what actually happens. And even if you personally try to resist Twitterism, it doesn't matter. The most sarcastic tweets

• 1:18:52Speaker 02

  go viral, it can be 1% of your output, but 100% of what the world sees from you. And so, you know, there are good parts of Twitter, but the internet increases variance, it amplifies the extreme good and bad. And, you know, Twitter is like a dispatch mechanism for our attention, the same way that Uber dispatches drivers to riders. And so, the thing is that people are kind of hill climbing. So you've heard of like, number go up technology?

• 1:19:16Anthony Pompliano?

  Yep.

• 1:19:16Speaker 02

  Well, what are the wokes about? They're about status quo, right? Wokes are, you know, like, kind of, very roughly speaking, and this is just rough, right? But if you take the left-hand side of the political compass, they are more concerned with status and, you know, academic position and political rank and politics and so on. And the right-hand side of the political compass is more concerned with economics and money and markets and so on and so forth. Very, you know, high level, right? And so, status go-up technology is, you know, the woke's developed this entire set of verbal armaments in academia where they could just like, you know, stab you in it online as "You're a white male, haha!" You know?

• 1:19:58Speaker 02

  And what happens is, it's like redistribution of status in real time, you know? And one way of thinking about it is, if communism was about the factory floor and it was about the strike, you know, and that was the collective action where you could get the hated boss to finally hand over all that money that they'd been hoarding. Now, what happened was, it meant that you suddenly actually had a second boss, which is the union boss, and you actually had a whole second group of managers, who are the, you know, mid-level managers, and now you actually had two managers, and you had to pay union dues. And it's not like the original company went away, it's just like this vampiric thing got attached to it, which is the union, and it sucked off, you know, some of the money, and it made the company less competitive. But it had the optics of like liberating the workers, even if it made, it was like

• 1:20:41Speaker 02

  this barnacle that attached, and didn't produce anything, it didn't take any risk, just kept asking for more money and made the company less competitive. Fine, okay? But that was, the thing though, is that in the very short run, the group of union workers were convinced that those strikes were making them money. Even if in the medium to long run, it was debiting in an invisible way from the competitiveness of the company, even if it was actually making them poorer in the medium to long run from the union dues, and the fact that the union was then going to be controlling their speech, and the union was going to be controlling their promotions and all that stuff, like, even if all that was true, in the very short run, it gained them money, and that's actually one of the reasons that, you know, unions proliferated. It seemed to give people a tangible good, until in the long run, it didn't, right?

• 1:21:26Speaker 02

  And wokeness is kind of like that. Wokeness, it's not the factory floor that's the setting anymore, because people aren't on the factory floor as part of their workday. Where are they on? They're on the internet, right? They're on the internet, they're on social media. And so, what is wokeness? It's a collective action by all the people who accept those woke premises, to go and gang up on somebody, and they're taking not their money from the boss, but the status from the oppressor.

• 1:21:48Anthony Pompliano?

  And when people do this, is there a defense mechanism? Is there a way for the non-woke to either resist, to fight back, to just ignore? Like, how do you look at the other side of the equation?

• 1:22:06Speaker 02

  Extremely good question. And, you know, I thought about this a lot and whatnot. And in some ways, it's actually like a virus in its own way, where it had to partially like go through the population for you and me to both know what wokeness is, for the audience to know what it is, for us to have a word for it. I mean, one thing, by the way, the wokes themselves didn't come up with the word woke. In fact, they hate it. They try to scratch off the label all the time, right? And it's funny because everybody else is labeled with something. Like, wokeness is all about coming up with labels for everything else, pathologizing it, problematizing it, and so on and so forth. Everything else is labeled and named and analyzed and verbalized to very verbal, except for wokeness itself, right?

• 1:22:50Speaker 02

  Which is sort of the, you know, you ever seen Indiana Jones? Like, the scene where he like swaps out the idol, you know, in, do you know what I'm talking about?

• 1:22:59Anthony Pompliano?

  Yeah, yeah.

• 1:22:59Speaker 02

  Yeah. So, wokeness is like the combination of fecal deconstruction with civil rights ideology, where it like takes away, it first says, "Everything is relative, there's no morality, and then this is what's good," right? And it's basically like a radicalized version of civil rights, you know, kind of stuff. But it's not even equal rights, it's just a, it is to equal rights what communism is to treating your workers well. You know, it is something that claims to be for that, but is actually not that. You know, communism claims to treat workers well, but put them in the Gulag, right? Wokeness, you know, claims to, you know, treat people equally, but you get like, you know, BLM burning, you know, black businesses down and so on, right?

• 1:23:40Speaker 02

  And so, the, you know, hopefully I can say this because, you know, it's true. And it's something where, you know, if you look at the history of communism, it was actually terrible for workers. You know, by the end, you had this situation with solidarity, where solidarity was trying to strike. That was actually part of what brought the Soviet Union down is that they were cracking down on the group that they were supposed to be for. The workers paradise, the Soviet Union is cracking down on the workers. This, I think, is also going to be the big problem with woke capital and why it's not going to live very long, is all this inflation that's happening, all the dollars that are being printed, it's hitting non-whites the hardest. Right? If you look at inflation numbers, The Hill actually has a study like

• 1:24:24Speaker 02

  inflation hitting non-white people the hardest. So what's going to happen, what's already happening is it's hitting the coalition that they claim to be enriching and speaking for, is just like the workers under communism were actually impoverished and harmed, the printing under woke capitalism is going to hit and hurt non-white people very, very badly, much worse than they were under the previous system, the pre-woke system, which had its flaws, but was better than wokeness. And so that I do think is delegitimizing, but then that doesn't mean that anything that replaces is necessarily good. I certainly agree with the maximalist critique of inflation or things, but I also do think that the answer

• 1:25:09Speaker 02

  is not just total decentralization and cryptoanarchy, but rather recentralization under opt-in leaders. And some maximalists, by the way, would, I think, agree with me on that. But it's a spectrum. It's just like with wokeness, where does woke end? And simply just somebody who is liberal or progressive or whatever, where does that begin? And that's the reason it works, right? The reason it works is you have somebody who is genuinely tolerant, and then somebody who says all the same things, but uses it to be intolerant.

• 1:25:42Anthony Pompliano?

  The last thing I'm going to say here, and I know we're running out of time a little bit, but

• 1:25:48Anthony Pompliano?

  I always go back to this idea of so many of the problems in the world and whether it's Bitcoin maximalist or kind of Fed critics or whoever, they all kind of arrive at the same conclusion, which is we don't have free markets and free markets have kind of been co-opted and taken over by ideologies, by the social focuses, by everything other than like free market capitalism, right? And if you believe in free markets and their ability to self-correct and kind of eventually find the answer, optimizing for anything other than let the free market do its thing

• 1:26:30Anthony Pompliano?

  is obviously intervention and would prevent the free market from operating. And so what I think is a unique way to present Bitcoin or other types of technologies that follow similar ethos is that it's trying to implement free market dynamics again, but do it in a way where they cannot be co-opted. Like, yes, somebody can go and manipulate the Bitcoin price, right? But if you're just a large holder or whatever, but they cannot change fundamentally what Bitcoin is. They cannot take over the network. They cannot change the programmatic monetary policy. They cannot do these things. And so it goes back to like the classic Google, like, don't be evil, can't be evil, right? Type nomenclature.

• 1:27:14Anthony Pompliano?

  If we were successful in implementing free markets where people could not take them over, would the world be a better place? It's up for debate, but I think there's a strong argument that the free market would definitely self-correct.

• 1:27:26Speaker 02

  Okay. So let's say that I probably, I probably agree with almost, you know, with much of that, right? The only thing is, do you know the difference between open loop versus closed loop control?

• 1:27:40Anthony Pompliano?

  No.

• 1:27:41Speaker 02

  Okay, so like in control theory, um, let's say that you, you had a car, okay? And you close your eyes and you just hit the gas. Okay. That's like open loop control. There's no feedback. Okay. But closed loop control, you have your eyes open and you're looking at the road and you're making micro corrections and steering the wheel left and right and so on and so forth. And so you're making micro corrections constantly, sometimes a little bit left, sometimes a little bit right. And, uh, and that's keeping you on the straight and narrow to get there. And if it's a complicated and long direction, um, you can't just keep thing veering left or keep thing veering right and hope to get there. Okay.

• 1:28:27Speaker 02

  Um, as, as a second metaphor that I think is also related, imagine that somebody was a westist. Why are they a westist? Because they liked the idea of California. Okay. So just kept going west. And they, then they got to California and then they, they had people in the group say, "We have to keep going west." "What, are you some kind of cuck? You don't want to be, you don't, we gotta keep going west. Aren't you a westist, right? You're going east now? You're in Califor-" And so then they keep going west, it lands in the Pacific Ocean. Okay. And so the point is that an ideology that is just a direction is going to insist on a purity that is actually a stupidity

• 1:29:12Speaker 02

  because you really want to optimize for destination, not consistent direction. You can go too far left, you can go too far right. You have to actually be able to steer. And so it may be the case that at this point in time, I agree that one should steer right or steer left or, or up or down or something else, right? Like, there's more than just two, two directions also. But you have to have some vision of what that destination is. And moreover, as you know, as a startup investor, just the words that somebody writes in a slide deck, there's a thousand micro corrections that they have to make on the steering wheel, 10,000, 100,000 between that slide deck, their words and their vision and their actual destination. You know? And so simply saying it on the internet, it's like, you know, it's, it's a starting place.

• 1:29:58Speaker 02

  But the execution, the implementation of that concept require many pragmatic compromises with reality. And so that's actually one of the things I talked about in the book is basically, I do believe in moral entrepreneurship in the sense that I do believe people should, and I think tech entrepreneurs have actually only done this implicitly. It's not just about a technological innovation, it's about a moral innovation. It's not just about a failure in the market, it's a failure in society that one wants to fix. You don't just have something that is a better mousetrap, you have something that's a better world. But how do you actually prove that that's actually a good moral innovation and not a bad one? Because just like most tech companies fail, you know, most, most, you know, things don't actually work in the market. Many moral innovations, like the communists had a moral innovation, which is profit bad. The profit

• 1:30:41Speaker 02

  used to be considered good. Then they said, hey, let's, what happens if we say profit is bad? It turned out to be a very bad door to go down, but hundreds of millions of people were enslaved, a hundred million died before you fix that, right? Other moral innovations, like, you know, cigarettes bad or smoking bad, you know, before cigarettes were acceptable or even good, then flipped to bad. I argue that's probably on balance a good intervention. And then yet still others like prohibition, which said alcohol bad, and then it got flipped back to alcohol acceptable, right? That was, you know, neutral to negative, that the prohibition thing. But you can also argue that alcohol does cause still a lot of crimes, DUI, etc. So you can argue that point. Maybe you want not a course of prohibition, but a dry society, you can argue that point.

• 1:31:22Speaker 02

  Okay. So the thing is, if you have a moral innovation, if you have a strong moral position, then what you want to do, and I talk about this in the book, is build society as a service, right? Prove that you're right by actually going, let's say you're Maximus, you go and build your citadel, and you, you bring people in, society as a service, and the thousand things that can't fit in a tweet, all the decisions that you actually have to make about a real society, like, what are the laws going to be? Are there going to be police? Is there going to be any central government of any kind? All this type of stuff, you actually will have to go and figure out in your society as a service. And it'll have to make pragmatic concessions to reality that one does not if one is just, you know, kind of popping off, right?

• 1:32:07Speaker 02

  Kind of how I think about it is you want to give people the ability to morally innovate and technologically innovate. They build these societies as services. And the way that there's a check on their legitimacy is that people choose to come and they choose to stay. And if they don't like it, they can choose to leave and they can choose between others of these kinds. And, you know, they can tour it online. That's why the digital component is so important. They can tour it online cheaply. So they can go and comparison shop and then find the best ones. But with that said, I do think there's a big difference between those folks who will build these societies and those folks who are the consumer, you know, citizens. I do think there's a good thing about comparison shopping between jurisdictions. But that's like, you know, the difference between buying an iPhone, building an iPhone is much harder. And so the folks who

• 1:32:49Speaker 02

  are going to build these jurisdictions cannot simply be the consumer citizen. They have to be, you have to be much more missionary than quote unquote, you know, mercenary, right? So this is how I think you can actually prove that your online morality is right. Build a society oriented around that. See what it actually looks like when you materialize it. Just like a theory of, you know, math or computer science, you actually sometimes need to write the code to see if it works. And then you can show that it's attractive and you've actually made the right trade offs. Or it might be something that only works when you can be, you know, in the back row throwing stones or online throwing stones and doesn't work if you actually go and declare yourself president of a startup society and try and build one.

• 1:33:27Anthony Pompliano?

  When you think about kind of these theories as they continue to come together, put a probability, I don't know, next 10 years, what's the probability that we see a network state in a 10 year period? And then what's the probability we see it in a 50 year time period?

• 1:33:45Speaker 02

  It's a great question. I mean, I want to actually bring this into fruition. So,

• 1:33:51Anthony Pompliano?

  I'm playing on your rational and optimistic sides.

• 1:33:56Speaker 02

  Sure, sure. Well, I mean, this is the thing, as we've talked about, there's actually a lot of proof points towards this. We have billion person social networks, we have billion person crowdfunds, we have massive online meetups, we have, you know, remote work and all that stuff is now mainstream. We have dissatisfaction with the establishment, blah, blah, blah. There's like many, many different things where it's just systems integration.

• 1:34:18Speaker 02

  But um, I mean, let me put it like this. Do I think it is possible? I mean, 10 years ago, in 2012, I think, you know, what was the price of Bitcoin? It was in, it was 10 bucks or something like that, right? So a lot can happen in 10 years. A lot, enormous amount can happen in 20 years. 20 years ago, you know, 2002, I mean, like, that's, Google was around, that's true, but it was pre-Facebook, it was pre-iPhone, it was pre a lot of things. You know, even the internet age, as we normally think about it, really, I think only truly started post-iPhone. There's a great book on this, but until basically 2008, Google, you know, was the only company that was making money on the internet. Microsoft didn't really think of

• 1:35:01Speaker 02

  the internet, thought of Google. And Apple was not solely an internet company, it was a gadget company. And that was before Airbnb and Uber. So all this stuff, this entire internet economy is about, like, less than 15 years old, maybe 13 years old. So an enormous amount can happen in 10 years. And do I think it is possible that you could have a startup society that, you know, my phases, by the way, of emergence are, you have a startup society, which is a guy, you know, person declares himself, you know, just like you declare yourself CEO of a new startup company, you're declared self-president of a new startup society, and you have one person. Then you recruit people online for that. You build it to 10 and 100, and then you start organizing them into what I call a network union, which takes, you know, the big difference between a network union and a normal online community is,

• 1:35:43Speaker 02

  the network union is capable of collective action. Seems like a small thing, it's actually a huge thing. It basically means that they are combining to achieve a goal, and they're actually doing that thing, even if that's all just uploading something. They start to actually get accustomed to sacrificing for the group and working together for a measurable cause, where the group is stronger than the individual. Just getting 10 people to go and, you know, help some member of the network union each day is a big deal. And you might start to have an internal currency of that network union, because they don't just do normal union things like, they might help somebody if they've got a conflict with their employer, that is a potential thing. They could also do like group purchasing, they could help somebody with a launch, they could, you know, help and crowdfund something. They're basically like a online community that helps you out.

• 1:36:27Speaker 02

  Right, a network union. So that's digital. You get these people accustomed to doing collective actions, building trust and so on. And eventually that network union takes the next step to physical. And what does that mean? They start crowdfunding buildings. Maybe it's houses that two or three or five people live together in. Maybe it is apartment complexes that, you know, if you have a large network union, a hundred people can buy an apartment complex. And suddenly they all have equity in the building where they wouldn't have had it before. When you have a hundred, you know, streams of Brent together. You have a different conversation with the building owner than if you have one, right? And doing all this means they have to sort of appoint a CEO or a president of that network union. It can't just be like an online community that, you know, everybody's there for Game of Thrones. They actually have some sort of collective leadership.

• 1:37:10Speaker 02

  So you go from startup society to network union to what I call network archipelago. That is this global build out of lots of little physical pieces of territory that are knitted together. And then eventually, if you have enough population and enough income and enough real estate footprint.

• 1:37:28Speaker 02

  You can gain the diplomatic recognition from an existing state required to become a network state. And that might not be a sovereign, like, you know, you might not have a France or recognize you. You might start with a small country like a Tuvalu or a small city even, you know, like Miami isn't that small a city, but. You know, a Texas or a Miami or Tuvalu. You don't have to have a huge national government do it. You could have a state or a city government. Or a small national government do it. And that first thing, that first recognition, why do I think that's possible? Because you do have Tuvalu, you know, signing deals with companies. You have Columbia signing deals with companies for the dot TV and dot CO domains.

• 1:38:07Speaker 02

  You have El Salvador doing the Bitcoin deal, you know, the Bitcoin deal, the Bitcoin as the national currency, right? You have, which is a big deal. You have Wyoming doing the Ethereum DAO laws. They're integrating with the Ethereum network that, right? And so you have many proof points like this where you have states and cities and small countries. That are doing deals with corporations or with networks and or with.

• 1:38:36Speaker 02

  With other groups. And so I do think all of those proof points are there. And I think if you have a large enough online entity that shows enough longevity, it's going to be rebuffed the first time. It's going to be laughed at for years. It's going to be thought to be crazy. But eventually, five, or 10, or 15 years, or sooner or later, I don't know, it will have the scale, I think, to achieve diplomatic recognition, especially if it's like more than a million people, and it's bigger than, you know, 20% of the countries in the UN.

• 1:39:03Anthony Pompliano?

  I mean, it would be incredible if this happens. And I think your point about there are many, many proof points, and a kind of many milestones that we can plot out, that this seems to be the direction that we're going. If people want to learn more about the network state and read the book, where can we send them to to find it? And then where can we send people to find you on the internet?

• 1:39:22Speaker 02

  Great question. So if you go to thenetworkstate.com. So yeah, so thenetworkstate.com. So first is that subscribe widget in the lower left, go and subscribe, because there'll be more chapters, free chapters, and so on. The whole thing is free online. You can read it online. You can download the PDF. If you want it on Kindle for offline, buy it on Amazon. I think it's a pretty decent experience on on mobile. So you know, your Android phones and so on. So go there. And then otherwise, go to twitter.com/balgs, and you can follow me. And that is here. And I will return to tweeting soon.

• 1:39:59Anthony Pompliano?

  Yes.

• 1:40:01Speaker 02

  I've just been I've just been paving and RTing and stuff. I've been warming up. But but it will begin. It's like it's like

• 1:40:10Anthony Pompliano?

  The return.

• 1:40:12Speaker 02

  Yeah, yeah, something like that. Right. So we wanted to basically, if you scroll up, I wait for a second in this, in the zoom. Oh, yeah, great. So that's me at balgs. Yeah. And if you go, I should actually update the URL. But if you go back to thenetworkstate.com, so upper left corner, it's kind of a fun logo, right? Get it? New country. Ha ha.

• 1:40:34Anthony Pompliano?

  Create, create new country.

• 1:40:36Speaker 02

  Country. Yes, exactly.

• 1:40:38Anthony Pompliano?

  Right click. Let's go. All right.

• 1:40:40Speaker 02

  No, left click. This is left.

• 1:40:42Anthony Pompliano?

  Left click, left click, left click. Listen, thank you so much for for taking. Time to do this. I think that you and I could, uh, could literally sit here. I, I've actually thought that you and I one day should sit down and just go for 12 hours and just see like how, how much shit could we actually talk about? Cause I enjoyed every single time.

• 1:40:58Speaker 02

  When we, when we get the hardcover out there with the 600, 700 pages, all the charts and stuff like that, we'll do a page flip and I'll just kind of call out what I think is

• 1:41:06Anthony Pompliano?

  cool. Page by page.

• 1:41:08Speaker 02

  Something like that. There you go.

• 1:41:10Anthony Pompliano?

  All right. Well, listen, thank you so much for taking the time to do this. I know people will have learned a lot. I learned a lot and we'll definitely do it again in the future. Thanks so much for listening to today's episode. I really hope you guys enjoyed this one. Make sure you subscribe on Apple, Spotify, or your favorite podcast player. And if you're looking to try to transition to get a new job in the Bitcoin or crypto industry, we've got you covered. Head over to pompscryptocourse.com. We've developed a curriculum with the top teams across the industry. It's a three-week intensive training program with over 50 events packed into that three-week time period. Go to pompscryptocourse.com to learn more and I'll meet you guys for the next episode.