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Borderless Nations of Bitnation: a Libertarian Utopia or Yet Another Disruption

As the world is getting increasingly globalized, sovereign borders start dissolving in human minds. However, while the internet offers the vision of a borderless world, the real life offers something completely different. If someone wants to live, study, or work in another country, they have to go to incredible lengths through a bureaucratic maze in order to somehow prove they are worthy. Even though the idea of one global nation isn’t new and can be traced through many utopian and dystopian works, like Brave New World, Star Trek, or even John Lennon’s famed musical statement, these days such a thing look way beyond possible and even realistic.

Meanwhile, the people behind the initiatives like Bitnation or and many other libertarian activists work hard to make the borderless dream come true by reinventing the concept of society as we know it. Decentralized governance, e-residency, and even smart cities are their tools for the job. In this feature, we’ll take a closer look at these projects.

The Latest Statehood History: Why Is It Important?

Prior to delving into the depth of the concept of post-nation states, it seems reasonable to fully understand what a nation state is, how it came to be, and, finally, why the world today is the way we know it.

Up until the Peace of Westphalia, medieval European states weren’t as centralized as most of us have come to think. Before that, princedoms and counties were governed by the club law: those capable of grabbing the throne gained the power to rule the whole country. However, even the monarchs strong enough to take over the throne didn’t have absolute power. Their vassals, barons, and feudal lords had the actual power over the commerce guilds, family clans, knightly orders, religious and local communities which, in their turn, had the actual power over the common people.

Eventually, technological development changed the way of life. Gunpowder and cannons made heavy cavalry and city walls obsolete. Monarchs became the only ones who could maintain and supply big armies to fight off the enemies. A standing army equipped with cannons and rifles required significant spendings, which only the biggest or economically developed states could afford. The power became much more consolidated.

The Peace of Westphalia was in fact a set of treaties that ended the Thirty Years’ War. It effectively put a lid on religious wars in Europe, and established the principle of the sovereignty of borders and non-meddling with internal affairs of other nations. As the influence of European powers grew beyond the continent of Europe, its basic principles spread out, and eventually became the basis for the international law as we know it. Or, to put it more dramatically, the Peace of Westphalia has laid the foundation of the modern state system with its territorial and national division.

While modern nation states that enjoy those principles often claim themselves as free nations, it’s not always the case. First, it’s quite difficult to find a country that would claim it’s not free but it doesn’t mean that it actually isn’t; second, all the regulations and restrictions that currently exist in most countries, are seen by some as practices contrary to the liberty most people crave to some extent.

Many people mused about the alternatives. For instance, English philosopher John Locke has offered the concept which describes a state that would give its citizens complete freedom. He wrote that it could be achieved by uniting people via so-called “social contracts” and believed a person should be able to choose their citizenship. Ironically, the modern model that imposes reasonable (or not) restrictions also often refers to the concept of social contracts. In any case, Locke’s vision didn’t make it, and the citizenship today is not something you can choose easily. It is primarily granted either by the right of the soil or the right of blood, and in order to change it one has to wait for years and experience the amount of red tape that could stretch from the Earth to the Sun a few times.The modern state apparatus has its own advantages and downsides, but it still works. Yet, it’s more or less plausible that eventually it may be replaced by a different type of statehood, just like the Westphalian order replaced the feudal system. The new hypothetical system in question might as well be close to Locke’s vision, and have citizens playing the central role not only in defining the country’s political course, but in having a direct influence on new laws and services they could develop side by side with the authorities.

Bitnation: an Attempt to Change the System from Outside

History has seen several attempts to overthrow the Westphalian order but none of them has prevailed, mostly because of wrong timing, unreasonable behavior of those seeking to change the course of things, or downright utopian vision of the new world order.

One of the significant attempts to build a different form of society and state apparatus was the notorious attempt to build communism in the Soviet Union in the beginning of 20th century. Communists declared that they seek to build a society without social classes, money and, finally, even without the state. However, shortly after coming to power, they have realized that it’s almost impossible to build what they wanted from scratch. It has resulted in returning to traditional governmental models – in case of Russia, to autocracy.

Eventually, technological progress gave rise to new ideas. The new means of communication, namely the Internet, enabled people to share their thoughts across national borders, decreased people’s need in centralized government-backed media, and laid a foundation for large-scale p2p systems. Over the following decade, the development of blockchain technologies made building trustless government-independent currencies and p2p governance tools technically possible. Those tools potentially make the hordes of clerks and government officials downright unnecessary.

Bitnation is in fact one of the earliest attempts at harnessing the power of internet and blockchain technologies to build something akin to independent p2p statehoods.

Bitnation is a project enabling people to join, create, and manage so-called Decentralized Borderless Voluntary Nations (DBVNs) on the Pangea Jurisdiction platform. The Bitnation’s platform allows participants to make agreements, organize the nations’ governance, and resolve disputes within the network. Bitnation provides API for the developers willing to create applications on the platform — the future governance tools for the DBVNs. In addition, Bitnation allows its users to write their own agreements embedded in Ethereum smart contracts using the conventional chat interface.

A nation on the Pangea Jurisdiction is a voluntarily formation, rather than a state or other governing entity.

It is likely that people would be as connected through mutual interests and goals as they would be connected by more traditional commonalities such as culture and language,” the project’s team says in the Whitepaper.

There are two types of DBVNs:

  1. Virtual nations existing only in Pangea.
  2. Geographical nations representing people from a particular existing territory (for instance, there are such geographical nations as Amsterdam, France, Greece, Guatemala, Japan, Brazil, Belgium, Bulgaria, etc).

From Bitnation’s point of view, the humankind will eventually abandon the practice where a person has to stick to a certain territory, state, or other seemingly traditional things like residency. As a result, people would voluntarily form their own communities, i.e. DBVNs and tools for governing them. The main point here is that all these formations will compete for each citizen, just like the companies in the market compete for their customers and skillful employees. Thus, a citizen will be the center of the government’s universe, and will be free to choose the society, state, and nation to contribute to, while the governments will have to offer their potential citizens better terms.

Bitnation offers other important initiatives as well:

  1. The Ambassador and Embassy networks meant to be the real-world manifestation of DBVNs. As Bitnation team puts it, such a network would be “a real world network of people and places where digital nomads can get advice and peer-to-peer assistance, meet-up, and hang out.”
  2. Refugee Emergency Response. This service helps identify refugees via specific Blockchain Emergency ID (BE-ID) in case such people can’t receive other documents verifying an identity. In future, Bitnation plans to provide refugees with documents entitling them to receive financial and/or social security services.
  3. Third party services from partnering projects, such as Exosphere Education Program, SpaceChain’s open source space hardware and software program, basic income protocol, and Dragonfly’s physical security service.

Bitnation’s founder, Susanne Tarkowski Tempelhof, has witnessed the imperfections of the existing statehood and governance well before the Bitnation concept was conceived.  In particular, she told PanAm Post:

I have been thinking about it and writing about it from different angles for about a decade. My father was stateless for several years, and that triggered me to analyze the nation state oligopoly, and how unfair these arbitrary borders were.”

After getting acquainted with Bitcoin and blockchain technology, Susanne thought that the system could be changed from the outside, and founded Bitnation in 2014. The same year, the project certified the first marriage written in a blockchain ledger, and shortly afterwards introduced its first land titles and the first birth certificate. In 2015, Bitnation assisted the Estonian government with the blockchain-based Public Notary system, and next year it gained support from Liberland, a micronation claiming a plot of “no man’s land” between Croatia and Serbia. Two years later, in 2017, aforementioned Bitnation’s Refugee Emergency Response program was awarded by the Netexplo Grand Prix 2017, an annual prize co-organized by UNESCO.

Unrecognized Revolution with Chats and Wallets

Bitnation suggests two use cases of its Pangea Jurisdiction: DBVNs and Peer-to-Peer contracts. However, while theoretically it could be enough to start building the Pangea Jurisdiction, the theory and the practice are not the same, and in real world that would hardly suffice. 

Bitnation Can’t Exist Without International Recognition and Won’t Get Any

Currently, DBVNs on the Pangea Jurisdiction can’t enter into relations with states and other subjects of international law. For example, a DBVN can’t enter into international agreements with other states and business agreements with legal or natural persons. Such DBVNs cannot effectively interact even with other DBVNs on the Pangea Jurisdiction.

Belonging to a DBVN gives one nothing but the option to come and sleep at other citizens’ homes aka Ambassador and Embassy networks. All the practically useful things, such as salaries, property rights, and documents are managed by traditional government of one’s country of residence. Additionally, DBVNs cannot offer their “citizens” a political asylum in case of a litigation by competent authorities of traditional states.

Moreover, despite the existing disadvantages of modern nation states, even Bitnation itself has to rely on such nation states. In particular, there are at least two legal entities behind the Bitnation project: Bitnation GmbH incorporated in Switzerland and Bitnation Americas LTD registered in Belize.

In order for a DBVN to be something but an online community of enthusiasts, it should be recognized as a subject of international law. Evidently, none of more than a hundred of Pangea’s DBVNs can be recognized as a state. Amsterdam DBVN cannot become a sovereign state within the Netherlands. If it does, nothing good will come out of it, as that’s what people call separatism.

Recognizing the entire Pangea Jurisdiction as a state would’ve been a potential solution to the situation. In such a way the Pangea Jurisdiction could have, as a recognized state, create nation communities (DBVNs) within it and delegate most of its authorities to them. Yet, it is also quite unlikely.

In order to be recognized as a state, an entity should comply with the requirements for statehood set forth in the Montevideo Convention on Statehood of 1933. In particular, it has to have a permanent population, a defined territory, a government, and the capacity to enter into relations with other states.

There is no commonly agreed opinion as to whether compliance with the Montevideo criteria is sufficient for a state to be a state, or recognition by other states is also required. Generally, there are two basic options in this regard.

  1. Once an entity finds itself fully compliant with the conditions of the Montevideo Convention, it is a state. This point of view is generally preferred by most of modern experts, however, the lack of recognition on the part of other states effectively means that such an entity cannot have diplomatic or other relations with other states, even though it technically is a state.
  2. A contrary point of view suggests that it’s the recognition by other states that makes an entity a state. It is more in line with the Realpolitik approach and is slightly Machiavellian, but in practice things generally happen that way.

There are no explicit criteria covering the population’s size, nature, or nationality, so even though the Pangea Jurisdiction can theoretically state it has a permanent population, in the sense of the international law it wouldn’t mean much.

The Pangea Jurisdiction, unlike the ancient supercontinent it is named after, doesn’t have a consistent territory in a geographical or geopolitical sense. Due to the existence of disputed territories or annexations, the international law doesn’t provide for explicit delimitation or geographic definition of states, however, it requires that a state should have a decisive control over the territory in question. Under that criterion, the Pangea Jurisdiction cannot be considered as a state as it exists only virtually and lacks any real world territory. This in fact may qualify it as a virtual state like the Aerican Empire, which was founded by a Canadian national Eric Lis and a couple of his friends back in 1987 to claim sovereignty over other planets.

The Pangea Jurisdiction also fails to comply with another part of the aforementioned criteria, which implies that a state has to have control over the territory in question, and for that reason have a government. Bitnation state they might provide the necessary means to exercise governance but they won’t enforce them, and therefore there can be no government in the modern sense of the word.

In addition to that, the Pangea Jurisdiction cannot have any capacity to enter into relations with other states for the very same reason. The lack of any government, or basically someone for a foreign leader to call to in case of anything, means that no such capacity is even in question.

Theoretically possible recognition by micronations like Liberland doesn’t establish any legally valid precedent due to the lack of recognition of such micronations.

For all those reasons, the Pangea Jurisdiction doesn’t qualify as a state under any provision of the Montevideo criteria.

Moreover, the Pangea Jurisdiction isn’t very likely to be recognized as a state by other mutually recognized states. Politically speaking, the recognition of the Pangea Jurisdiction would have catastrophic consequences for today’s world order as it would very likely entail an avalanche of separatist movements in territories that crave independence like Catalonia. This, in turn, may as well result in a vast number of civil wars ravishing across the globe, which is hardly a likable scenario. For that political reason alone, the Pangea Jurisdiction has the chances for recognition that have to be expressed in terms of quantum probability.

Peer-to-peer Contracts: Smart but Unenforceable  

Bitnation offers its users to utilize P2P Agreements concluded in the form of smart contracts, which are, basically, pieces of code in Solidity or another programming language uploaded to the blockchain.

Bitnation’s Whitepaper makes it clear that it’s fairly easy to “draw up a contract, resolve any disputes that may arise, and incentivize contract compliance through the reputation system.”

One of the examples of peer-to-peer contracts are so-called Business Agreements, as defined by Bitnation. For example, two Bitnation participants can compile an agreement for graphic design services and create a respective smart contract in the Ethereum blockchain via Bitnation’s chat-based interface.

If it were a conventional written contract, both parties’ identities would be explicitly included in the contract, and the obligations stated in such a contract would be judicially enforceable in the respective jurisdiction.

However, when it comes to Bitnation’s smart contract agreements it is not the case. Even though smart contracts are executed automatically, they aren’t always legally binding. In most cases a smart contract can be considered legally binding if all the parties have expressed their consent with every term of the agreement in a way that’s appropriate under the Civil Law system, while in the Common Law system the condition for the same is that the contract includes the following:

  • Offer and acceptance.
  • Consideration (a remuneration for one party’s goods or services and the respective obligations of the other party).
  • Intention to create legal relations.
  • Certainty of terms and conditions.

Furthermore, the laws of many states presume that the persons entering a legal agreement should have an appropriate legal capacity in order for this agreement to be valid. There could be other requirements as well: under the English law, a contract will have legal power only if there is “sufficient certainty” about the identity of the contracting party.

In most countries, it’s virtually impossible to recognize smart contracts as legally binding contracts in the traditional sense of the word. However, a smart contract can be considered a technology that helps execute conventional legally binding agreements. Thus, when a smart contract itself acts as a separate agreement and its code is the actual agreement, the recognition of its legal validity can be problematic.

Smart contracts also entail other legal complications, as:

  1. They might not to be recognized as a legally binding agreement.
  2. There will be no clearly identifiable responsible party in case of system malfunctions that resulted in errors during the execution or failure to execute the agreement.
  3. The transactions written in a distributed ledger are pseudonymous. It’s nearly impossible to identify a person who has sent or received the transaction with sufficient certainty.
  4. Should the dispute be resolved in a court, it may be complicated or even impossible to enforce the court’s or arbitrator decision, considering the immutability, pseudonymity, irreversibility of transactions, and other specific traits of distributed ledgers.

Thus, it’s not entirely clear how exactly Bitnation would ensure the enforceability of its smart contract agreements.

Apart from business agreements, Bitnation also offers other ways to apply its smart contract agreements, namely private agreements and essential records. Evidently, Bitnation users can register same-sex or polygamous marriages and exercise other civil rights that may be restricted in their jurisdiction. Yet, this fact alone doesn’t necessarily mean that such a “virtual” recognition of one’s rights and status can help solve anything in the real world. For instance, the people who have entered a same-sex marriage via Bitnation won’t be able to adopt a child, if it is forbidden to them by the existing legislation of their country.

As an additional tool to augment its smart contract system Bitnation offers so-called market of freelance arbitrators, smart contracts, and laws. Users can choose Mediators and Arbitrators by their expertise and reputation and use their services to resolve potential disputes. It isn’t clear, however, how exactly will the project check and verify the arbitrators’ expertise, and whether their rulings are legally valid and enforceable.

Data Protection Issues: How to Create a Registry of Public Enemies

Another significant issue is the data protection, especially considering the General Data Protection Regulation (GDPR) rules in the EU. It isn’t obvious how user data are stored and protected by Bitnation. There are two options: either the data are stored directly on the Ethereum blockchain, or the data from various applications are stored in a centralized fashion as seen in Facebook or Google that store their data in special data centers.  

If the information is stored on the blockchain, it would be nearly impossible to guarantee the enforcement of the right to be forgotten, the data portability right, and other data protection requirements under the GDPR, because Ethereum public blockchain is immutable by design.

Otherwise, if the information is stored in particular data centers, other problems arise. It is quite likely that the people who would be interested in creating their own “voluntary nation” or joining one are in some way disappointed in the existing government apparatus, which certain countries tend to see as a threat to the constitutional order. In this case, the governments and intelligence agencies would be able to get their hands on the well-structured registry of such public enemies. It is more than arguable that Bitnation can do a better job protecting their data from professional intelligence such as NSA or Russia’s FSB, than Google or Facebook do.

All in all, Bitnation is unlikely to comply with the GDPR requirements for the following reasons:

  1. Ethereum is a public blockchain, so, practically, there is no specific authority that controls it. Moreover, the blockchain where the data is stored is separated from Bitnation. Thereby, the project can neither appoint a data protection officer for blockchain, as such a officer won’t have any power in this case, nor it could exercise the GDPR rules, such as the right to be forgotten, the right of access (art. 15), the right to data portability (art. 20), and conditions of consent (art. 7).
  2. Bitnation doesn’t have enough resources to protect the data stored in conventional data centers. Intelligence agencies would be able to hack such centers or force the project to give them access to the data.

Proof of Concept: Yet to Be Proved

While the idea offered by Bitnation may seem quite interesting, especially for those in the libertarian community, it is yet to have any proof of concept (PoC), which basically means that the project has to offer something viable, like a working product, to show it is practicable and useful.

Still, it remains questionable if Bitnation has it all, considering it had been ridden with problems, such as exodus of three core developers or underperformance during a fundraising event. Particularly, those three members of Bitnation left stating they didn’t very much like the way BitNation was run, both legally and ethically. Susanne Tarkowski Tempelhof, on her part, stated they were not developers or even members of the core team.

A little ways down the road, Bitnation attempted to raise money for the development of the project, which didn’t go as well as one could hope: over the first phase of the event, the project managed to raise nearly 13 BTC, which at the time was worth around $5,200. The second phase was a bit more successful as it was held in the times when ICO has become a more common phenomenon. It brought the project $3.8 million ($2.7M of which came from the presale, and $1.125M from the public sale), which, on the other hand, was a dramatic underperformance compared to the event’s hard cap of $30 million (or $27.3 million, according to the Whitepaper). For now, the slow release phase is underway, which means that all unsold tokens are released via cryptocurrency exchanges, so the final amount of raised funds will become known only by April, 2020.

Still, even considering that, there is notable underperformance in terms of delivering a product that works as intended.

“I can’t say for sure what the future of governance will look like. But I can tell you it won’t look like Bitnation. Henry Ford famously said that if he asked people what they wanted they would have asked for a faster horse. Bitnation is, even executed perfectly, nothing more than a faster horse. The reason that this problem is so hard is that we have to go back to the basic questions of what government is, why it exists, and ask ourselves how to achieve those goals given the current technological, social, and economic landscapes,” said Anthony D’Onofrio, founding member of Ethereum.

DBVNs were conceived as the roots that would eventually blossom into the new post-nations of tomorrow that, according to the developers, would be based on common interests and goals of people that constitute them. However, people seem to use them for completely different purposes. For instance, there are two DBVNs in Catalonia, two in Romania, and two in the U.S. which are functionally indiscernible from Facebook groups and serve only for the purpose of chatting online about the future of the statehood. While Bitnation seeks to create a new world where boundaries mean next to nothing, those groups prove the exact opposite by putting emphasis on the language and the territory, thus in fact recreating the current state of the world on a miniature scale.

Making Governmental Tools Open to Everyone

Still, the fact something isn’t effective enough for now doesn’t mean that it won’t be effective in a long run.

Stuff that will change the world always looks stupid until you turn around. That’s certainly true — airplanes, motion pictures, and nuclear power come to mind — but we do live in a world seemingly staunchly entrenched in the current political model,” says Vinay Gupta,  project manager of Ethereum Release.

Bitnation services can solve significant social and political problems that make people stateless and create refugee crises. Its Smart Love app, that is currently a part of Public Notary, for example, allows people to marry without any authorities, taking the whole Pangea Jurisdiction citizens as witnesses. Unfortunately, Public Notary isn’t available at the moment due to the token sale procedures but one can check out how it works here. Susanne Tarkowski Tempelhof says there’s a real need for such a marriage service in the LGBT, inter-faith, and polyamorous communities around the world.

In any case, it could be a great initiative and a foothold from which developing new governance tools and procedures may start.

Bitnation has also created the first virtual Constitution and deployed it on the Ethereum blockchain. The project has already changed quite a lot in the traditional state administration by digitizing and accelerating such procedures as ID and birth certificate issuance, marriage, agreement formation, land titles, wills and so on. Such solutions are already adopted by the governments of Estonia (Public Notary) and Ghana (Land Titles). These countries have not only implemented Bitnation’s software solutions, but changed their legislation to make these innovations legal.

Paving the Way for More Digital and Efficient World

As we see it now, Bitnation initiative is merely an experiment outlining the possibilities of building a completely different government model and revolutionizing the concept of citizenship. It drafts the ideas and instruments to be used by decentralized voluntary states of the future, provided it ever comes. To some extent, Bitnation offers everybody to test those, or at least to think about the possible alternatives to the traditional statehood.

On the other hand, Bitnation didn’t pass proof of concept failing to gain support from the public, which is illustrated with its underwhelming token sale results, and even from its own developers, some of which left the project early on out of disappointment in its methods and ideas. Currently, everything Bitnation has to offer is a chat platform with ETH wallets and some sort of an Airbnb for its citizens.

The vision of Bitnation can be seen as a utopia that cannot be upheld by the existing international laws, and is directly opposed to the Westphalian system. For those reasons, the post-national concepts, though interesting, cannot be enforced anywhere as there is no territory controlled by Bitnation’s Pangea Jurisdiction, no government that could have represented it, and virtually no other feature of a sovereign state as defined by the Montevideo criteria.

Still, some of the solutions offered by Bitnation are already incorporated in the existing governmental systems, paving the way for a more “digital” and efficient world. In turn, such a digital world may give way to digital citizenship somewhat similar to the one outlined by Bitnation.

Generally, the libertarian dream to build borderless states and global jurisdictions now is a little bit closer to reality than it was several years ago, however, it’s still megaparsecs from coming true. Nevertheless, considering the overall tendency to globalization seen in today’s world, the concept of global jurisdictions might change our way of life in the nearest future.

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