I’ve said this before in many private events but I guess I should finally put this into writing.
The Body-State Analogy
Cells come together to form bodies, just like humans come together to form states. Blood flows between the cells, around passing value (nutrients, oxygen). If the body doesn’t appreciate a particular body part’s function, less blood flows to that part. And so it is with money too – the more valuable an industry is perceived, the more investments and resources go into it.
Taking the Analogy Further
Organs -> Specialization: just like cells come together to form organs with specific functions in the body, people or companies specialize in certain industries.
Immune System -> Regulations: regulations can be seen as the immune system of a country, keeping foreign cells from entering the body or causing harm. We all say it stifles innovation – that’s right, regulations protect the status quo.
Circulatory System -> Infrastructure: transportation networks and financial institutions are like blood vessels. Communication infrastructure would then be the nervous system.
Homeostasis -> Economic Balance: Homeostasis is the maintenance of stable internal conditions (medical). Similarly, a state also needs to maintain economic balance by managing inflation, unemployment and fiscal policies.
Crypto is a blood looking for a body
In 2019, I had a choice to make. Go into AI, or crypto? I chose crypto – because it had the potential to be more disruptive – it could potentially upheave entire countries and change the way we transact.
Fast forward to today, and bodies have successfully (as in, the country continues to exist and hasn’t been totally disrupted) managed their relationship with crypto by either regulating it away or embracing it wholeheartedly – strategies differ.
DAOs (analogous to companies) exist based on coins, but still rely on traditional infrastructure provided by nation-states to exist. There is no state-level entity that uses crypto as its blood.
Could Balaji Srinivasan’s Network State be such an entity?