This is a v1 of 100 Bespoke Balajisms. The book collects important mental models of Balaji Srinivasan, a tech founder and an investor, who is now a well-known public intellectual beyond Silicon Valley, in an era, when the tech tribe became a global phenomenon. Most of the book, 90 balajisms, comes from a series of blog posts called Daily Balajisms I wrote on my substack linked to my wisdomenterprising.com domain. The rest is the “bespoke” part – 10 ideas I crafted based on Balaji’s thinking. I divided Balaji’s mental models into Bold Balajisms, Based Balajisms, and added my two cents with Bespoke Balajisms. Bold Balajisms have a technical vibe and Based Balajisms are more political.

1. Bespoke Balajisms
Exploring the thinking of Balaji Srinivasan through 100 ideas
v1
Jakub Šimek, 2024

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For my daughters and all the tech tribe people

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Foreword
It’s time to build. And this book aims to provide a “Lego philosophy,” full of composable
mental models, to help builders see further into the definite future. To get into the mode
of definite optimism, as Peter Thiel calls it. What today we call techno-optimism. Let’s
bootstrap the desired future together.
This is a v1 of 100 Bespoke Balajisms. The book collects important mental models of Balaji
Srinivasan, a tech founder and an investor, who is now a well-known public intellectual
beyond Silicon Valley, in an era, when the tech tribe became a global phenomenon.
Most of the book, 90 balajisms, comes from a series of blog posts called Daily Balajisms I
wrote on my substack linked to my wisdomenterprising.com domain. The rest is the
“bespoke” part – 10 ideas I crafted based on Balaji’s thinking. I divided Balaji’s mental
models into Bold Balajisms, Based Balajisms, and added my two cents with Bespoke
Balajisms. Bold Balajisms have a technical vibe and Based Balajisms are more political.
Most of the Daily Balajisms were recorded also as discussions with my old friend Duke
Mtambo at his podcast Mtambo Desk. Enjoy the ride through mental models of Balaji,
and if you like it, get in touch via X or substack.
I highly recommend, you first read The Network State book by Balaji, and The Anthology
of Balaji by Eric Jorgenson. As they represent the original Balaji sources, whereas I try to
add some value here and there, by cataloguing individual mental models of Balaji, and
then customizing and recombining them.
I follow Balaji’s ideas daily, and regularly blog about them since 2020. I am Slovak, so my
writing and editing skills, even with the occasional help of AI can’t match Eric Jorgenson,
the author of The Almanack of Naval Ravikant. Compared to his work, mine is more of a
“devotional content,” but there is quality in quantity too, and I find cataloging Balaji’s
ideas worthwhile.
I want to expand the number of Balaji’s ideas and my understanding of them over the
years, creating perhaps a collection of 365 Balajisms for every day, maybe even reaching
his favorite Ramanujan number of 1729. In the v2 of the book, I want to have less AI art
and add graphs. Let’s see, but first let’s enjoy the first batch of my bespoke balajisms.

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Table of Contents
Foreword .....................................................................................................................................................3
Bold Balajisms ............................................................................................................................................8
The Idea Maze.............................................................................................................................................9
Bright Sun vs Black Mirror .....................................................................................................................11
Money-rich vs power-rich.......................................................................................................................14
Centralized AI is unethical......................................................................................................................16
Longitudinal arbitrage.............................................................................................................................18
HIMBY and Building Man ......................................................................................................................20
God-State-Network..................................................................................................................................22
Optimalism vs Maximalism....................................................................................................................25
Truth, Health, Wealth..............................................................................................................................28
Society as a Service...................................................................................................................................30
Personal Runway......................................................................................................................................32
AR glasses as the next convergence device...........................................................................................35
Truly reproducible research....................................................................................................................37
The One Commandment.........................................................................................................................40
Helical theory of history..........................................................................................................................43
Reverse diaspora ......................................................................................................................................46
The DeFi matrix........................................................................................................................................48
The ledger of record.................................................................................................................................51
Cryptohistory ............................................................................................................................................54
AI, Crypto and Social...............................................................................................................................56
Mobile telescope.......................................................................................................................................58
Flat coin.....................................................................................................................................................61
Bundling, unbundling and rebundling..................................................................................................63
Purpose of tech is longevity ....................................................................................................................65
Network Union .........................................................................................................................................68
Network Archipelago ...............................................................................................................................70
Network State ...........................................................................................................................................73
Digital death..............................................................................................................................................75
Community, cryptography, commodity................................................................................................78
Computable communities.......................................................................................................................80

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Venture journalist and angel influencer ...............................................................................................83
140 characters will give us flying cars ...................................................................................................86
Technical Truths vs Social Truths..........................................................................................................88
Identity Stack............................................................................................................................................91
Digitally-native vs scanner version........................................................................................................93
A phone is a new franchise......................................................................................................................96
Win and help win .....................................................................................................................................98
From tech startups to tech communities ............................................................................................100
Collective exit..........................................................................................................................................103
China is 10x Germany and India is 10x Israel....................................................................................105
Internet values........................................................................................................................................107
History is running in reverse................................................................................................................110
AI plus Crypto.........................................................................................................................................114
Community theory .................................................................................................................................117
Polytheistic AI.........................................................................................................................................120
Crypto Countries ....................................................................................................................................122
Based Balajisms......................................................................................................................................125
True charity is investment ....................................................................................................................126
CCP vs NYT vs BTC................................................................................................................................128
American Anarchy vs Chinese Control................................................................................................131
Pseudonymous Economy......................................................................................................................134
Stasi with a stock symbol ......................................................................................................................136
Downstream media................................................................................................................................139
Crypto vs Big Tech..................................................................................................................................141
Longevity as the $100T unlock ............................................................................................................143
Social war ................................................................................................................................................146
Founding vs inheriting ..........................................................................................................................148
Moral stack..............................................................................................................................................150
User-aligned content .............................................................................................................................152
Privacy over KYC....................................................................................................................................155
BitSignal ..................................................................................................................................................158
Crypto is for power users and the powerless......................................................................................160
Uncle Sam Bankman-Fried...................................................................................................................163

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Orange coin is the new blue jeans........................................................................................................166
TradFi Winter .........................................................................................................................................168
America is the new Argentina...............................................................................................................171
Anarcho-tyranny ....................................................................................................................................174
Blue checks are the new blue collars ...................................................................................................176
Social scam..............................................................................................................................................179
Realignment from Red vs Blue into Orange vs Green ......................................................................181
Robotics over demographics.................................................................................................................184
Communism vs Wokeism......................................................................................................................187
Digital death vs American dynamism .................................................................................................190
Allocation and location..........................................................................................................................193
Fiat crisis .................................................................................................................................................196
Digital lockdown.....................................................................................................................................199
Inverted century.....................................................................................................................................202
Ascending world vs declining world....................................................................................................204
Tribal lens................................................................................................................................................207
Tech Tribe................................................................................................................................................210
Global Greys vs Blue America ..............................................................................................................212
Tech-Zionism..........................................................................................................................................214
Tech vs Woke ..........................................................................................................................................217
Parallel establishment ...........................................................................................................................220
Stupid vs Evil ..........................................................................................................................................222
Socialist vs Technologist .......................................................................................................................225
Digital gold window ...............................................................................................................................228
Exit vs Reform ........................................................................................................................................231
Great Inflation ........................................................................................................................................234
Stochastic journalism ............................................................................................................................237
Political arbitrage...................................................................................................................................240
Bespoke Balajisms..................................................................................................................................243
Welcome to Nuclear Yolocaust times..................................................................................................244
Network states are protopian projects ................................................................................................247
Beliefs, behaviors and backlinks ..........................................................................................................249
Overton whale.........................................................................................................................................253

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From iPhone moment to Nokia moment............................................................................................255
Root cosmopolitans and root netizens................................................................................................257
Pragmatic antagonism...........................................................................................................................259
Netizen story...........................................................................................................................................261
Post-American Dynamism....................................................................................................................263
Lunarpunk Moonshots..........................................................................................................................267
Afterword and Acknowledgements......................................................................................................269
About the author ....................................................................................................................................269

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Bold Balajisms

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The Idea Maze
A grit to face computational irreducibility
A good founder has a bird’s eye view of the idea maze. The history of an industry, the
competitors, all the pitfalls and emerging technologies.
“Anyone can point out the entrance to the maze, but few can think through all the
branches.”
Balaji Srinivasan
Ideas come and go, but what counts are the years someone explored a specific idea in
detail and practice. And all attempts implementing that idea using available technology.
And all the dead ends people encountered, while going through the idea maze.
Sometimes a new door opens in the idea maze, as technologies mature and become
available. Balaji mentions an example of a specific tech stack (LAMP stack) that enabled

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the web2 companies, like social networks. New technology stacks will scale web3
companies.
Marc Andreesen explains in a podcast that at a16z they use the idea maze concept of Balaji
Srinivasan to assess early-stage founders. Often, they find that even a 20-year-old kid has
been exploring a certain business idea and actively tinkering around it, since they were
13. Palmer Luckey, a founder of Oculus (and Anduril) was very young, when he started to
work on his VR kit, which he later sold to Facebook.
A related concept is a tech tree, that according to Balaji also resolves the tension
between “technological determinist” and “a great man” theories of history. I
think Wardley mapping could be an interesting tool to build such tech trees, as it provides
a two-dimensional view of innovation supply chain and commoditization stage of
individual parts in that innovation supply chain. A generalized concept is a vector-theory
of change, mapped through micronarratives, and introduced by Dave Snowden – “more
positive stories like these, and less negative stories like those”.
Prime number maze is a related concept at the core of Balaji Srinivasan’s belief system.
He said on a podcast with Lex Friedman, that even longevity is not the ultimate goal for
him. He wants to live long just to try solving the prime number maze – a metaphor for a
system that has a simple rule that might escape our attention or current capacity to
comprehend it. Balaji mentions how rats cannot be trained to solve prime number maze.
It’s just too abstract for them. Computational irreducibility by Stephen Wolfram is a
similar concept.
Founders need a grand strategy, fast OODA loops and lots of grit to survive many winters
and dead ends in the idea maze.

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Bright Sun vs Black Mirror
The ascending world is rising with tech, the declining world resents tech.
Balaji Srinivasan explains that he no longer refers to countries as developed and
developing, but he prefers the term ascending and declining countries. We need
to see inequality as dynamic.
The West is increasingly technologically conservative, because the old East Coast elites
are resentful towards the new elites of technology entrepreneurs. These netocrats are
often young immigrant founders from all around the world.
Balaji contrasts the Black Mirror vision of a dystopian future of the declining
world (where the technology disrupts the supposed harmony of the idealized present)
to the Bright Sun vision of an ascending world, represented by global media
content like the Indian movie Super 30.
There are rare cases of technologically progressive movies coming from the West,
like Limitless and the Limitless series.

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Internet and technology more broadly changed the old division of countries into
developed and developing ones. That division implied a certain stasis, as Peter Thiel says.
It assumed developed countries have already reached their destiny, and there is not much
they need to change internally. Only lecture poorer countries on climate and gender,
provide technical assistance and development aid.
A metaphor of a fixed mindset versus a growth mindset comes to mind. A fixed mindset
prevents curiosity and tends to foster zero-sum and transactional thinking. A growth
mindset, a belief that a pie can grow for all, encourages positive-sum thinking
of technological transcendence.
But innovations like Ushahidi and M-Pesa, that came from Kenya showed that even
countries with lower income and younger populations can leap-frog Western countries in
terms of technology. Many people in Africa didn’t own a landline phone and went straight
to mobile phones. The same is true with retail banks and plastic debit cards.
Kenyans, since 2007, pay with their phones. M-Pesa was scaled to other countries, even
briefly to places like Albania.
This decade, it's quite likely we will see similar leapfrogging in web3 and ecommerce.
Crypto is very popular in Nigeria and Kenya. And recently Elon Musk, himself a South
African, praised a Chinese WeChat as an inspiration for Twitter. Because WeChat is not
just a platform, but a whole ecosystem of services. People literally live on WeChat.
India has overtaken the UK, and has the third largest number of tech unicorns, after the
US and China.
We can expect the future services that leapfrog the established Western players to come
either from the Centralized East (China) or from the Decentralized West - a truly global
internet as a torchbearer of the Western ideals of freedom and prosperity.
Tech progress is hindered by outdated regulation and “empty suits” – anonymous,
unelected and unfireable bureaucrats without skin in the game. They need to be
challenged by thousands of stories like Dallas Buyers Club, Ghostbusters or

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House of Cards. Movies with rare depiction of evil regulators, journalists, politicians
and activists. We need smart regulators and citizen journalists to unlock longevity.
Hollywood will get disrupted by decentralized AI, like Stable Diffusion, that will allow the
whole world to tell a personal unique story. Creators will be gradually replaced by
narrators.
Playground AI produced a picture for this article - bright sun rising on the ascending
world vs sun setting on the black mirror declining world.
Balaji says, that a difference between a marketing pitch and a story is, that a story has
an evil guy in it. Decentralized AI as the perfect logos, combined with the pathos of
artists, and new ways of financing art with web3, will enable new mythos to arise.
New myths of Bright Sun for tech-progressive tribes will replace the broken and boring
Black Mirrors of the old establishment.
And they will bootstrap a definite and optimistic future, as Peter Thiel would say.
A future where longevity, and what Balaji calls “practical miracles”, like curing
blindness, become real.

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Money-rich vs power-rich
Money and power are not the same
Often people assume that rich people are powerful. Balaji Srinivasan disputes that notion.
Why would people leave for Dubai or Singapore if they are powerful? Why would Elon
Musk escape California for Texas, if he could reform California? Why would startup
founders flee San Francisco and set up a shop in Miami?
But let’s discuss money and inequality first. You hear politicians complaining about
billionaires and millionaires in one sentence. According to some estimates, there
are 62.5m millionaires globally, but only 3,500 billionaires. Most billionaires live in the
US, but they are less than a thousand. But in the US, there are on the order of 30,000x
more millionaires than billionaires. Between 20-30 million people in the US are
millionaires.
To complicate the issue further – we need to enter the notion from previous two articles
– we need to see inequality as a dynamic phenomenon. Taleb writes that around ten

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percent of Americans will spend at least a year of their life in the top 1% and around half
of the US population will spend at least a year in the top 10% of the wealthiest people.
The inequality in the US is very dynamic compared to Europe. A third of the richest
European families/dynasties were the richest centuries ago. Sam Bankman-Fried
was 60th richest person on the planet just two months ago. Now he is not, nor is he
a free man.
Inequality is dynamic also from the viewpoint of the ascending world/classes and
descending world/classes. Some people used to be high-net-worth and high status, but
technology disrupted their business. They might be part of the old establishment but have
to live with a sense that the good days are in a rearview mirror and the scene and
its scenius have moved to other cities, industries and countries.
This brings us to the very recent exodus of tech talent from San Francisco to Miami or the
“Message received” tweet form Elon Musk. A power-rich politician can chase away built-
rich entrepreneurs and immigrants, often as the born-rich heirs and nepotists (e.g.
NYT owners) are cheering the process just to turn their undeserved wealth into status and
prestige within the old establishment.
Power-rich people are what Balaji calls political billionaires. People overseeing over
billion-dollar budgets. These are often anonymous, unelected and unfireable bureaucrats
without skin in the game.
Balaji asks was Stalin rich? He might have empty pockets but the whole USSR belonged
to him and he could take what he pleased. Similarly, billionaires that fled San Francisco
for Miami or Dubai chose exit over voice and loyalty. Often leaving the city and friends
you like behind is painful, so choosing exit often implies these people kind of lost the
battle for political reform in places they used to live.
The old establishment scored a victory by tech founders and billionaires leaving. But they
might end up being kings of nothing when the proverbial winter comes.

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Centralized AI is unethical
The danger of a single story
Balaji Srinivasan says that a centralized AI is inherently unethical. Because all the
diversity, equity and inclusion initiatives at the Big Tech and large corporations cannot
make up for the lack of voices from non-Western countries.
Only decentralization can fix this and bring true equality of voices and viewpoints. The
study of AI bias is a study of how to put (old WASP establishment) bias into AI. But we
are not in 1950s and the world got used to free and disintermediated expression online.
Balaji sees inequality as dynamic and refuses to use terms like developed countries and
developing countries. He uses the ascending world and declining world instead. There are
billions of people whose lives were improved with technology, and they perceive it quite
differently than the old Black Mirror elites, who were disrupted by the rise of Internet,
and therefore dislike proles short-circuiting them.

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Kenyans leapfrogged the West and launched the mobile banking revolution of M-Pesa.
India developed Aadhaar digital identity and payments stack in record time, provided fast
mobile internet to hundreds of millions through Reliance Jio, and started a national
telemedicine app Aarogya Setu during Covid-19 pandemics. Since 2008, China
has built 38,000 kilometers of high-speed rail. It costs around 100 billion dollars to build
a mile of high-speed rail in the US, so it won’t be built anytime soon.
In what now seems like a different era, the Nigerian writer Chimamanda Ngozi
Adichie talked about the danger of a single story. The danger of seeing Africa only as a
poor place of frequent catastrophes and Africans as passive victims. She talked about
American and English books she read as a kid and how she couldn’t identify with
experiences of their characters.
This is the year of Stable Diffusion, and such decentralized and open-source versions of
AI will eventually disrupt Hollywood and traditional media, which Balaji calls
downstream media. Because it will disintermediate big studios, newsrooms and
professional creators. People will become narrators of their own stories and myths, and
create them symbiotically with AI.
Peter Thiel jokes that the opposite of diversity is university. We have seen prestigious
institutions and scientists engaging in activities like gain-of-function research with the
goal of preventing future pandemics. But this risky research in dual-use tech, might have
instead caused the Covid-19 pandemics, as the lab leak hypothesis is quite probable.
Decentralization of exponential technology increases catastrophic and existential risks.
But centralization of such technologies can result not just in a lack of diversity of
approaches and fragility, but in attempts to slow down tech progress further, and install
totalitarian measures for the supposed protection of the vulnerable world.
Balaji sees a way forward in what he calls optimalism, a pragmatic approach of
increasing choice in smart regulators and de-harmonization, opposed to
maximalism in various ideological viewpoints that lean towards max decentralization or
centralization. We need protopias, instead of utopias or dystopias.

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Peter Thiel says crypto is libertarian, AI is communist. But CBDCs and Stable Diffusion
show that the opposite is also true. The real division is between centralized and
decentralized (AI, social, web3) tech.
Longitudinal arbitrage
Digital nomadism in the age of remote work and Starlink
Balaji Srinivasan says that Starlink will reprice the real estate around the world and
enable longitudinal arbitrage. Suddenly you can run an online business from a lodge or a
ranch in the middle of nowhere.
And suddenly even remote areas of Northern Europe and Southern Africa are close to
each other, because fast satellite internet erases the distance, but time zones’ proximity
remains important.

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This empowers not just individuals, but will help also sovereign collectives to
crowdfund territories, build startup towns with off-grid and prefab houses, and thus
launch new network archipelagos.
While Starlink is an important technological innovation, remote work is an important
cultural and moral innovation that might endure and become the norm in many
workplaces also after the Covid-19 pandemics.
Balaji talks about how social progress in the past was accompanied by technological
progress and vice versa. Campaigns to promote better hygiene, with slogans like
“cleanliness is next to godliness” were accompanied by a roll-out of modern sewage
systems.
But in the last 50 years the rate of technological progress in atoms stagnated and most of
progress happened in bits, as Peter Thiel famously said: “We wanted flying cars, instead
we got 140 characters.”
Balaji has a bit different view. He sees the progress in bits as vital to enable individual or
collective exit (see Exit, Voice and Loyalty) and cut the obligate ties to the land, one by
one. Social networks helped us gain voice and stay in touch with our friends, who often
don’t know where are we currently based. Balaji says, that even the question “Where are
you?” is a very modern question, and made sense only after the invention of mobile
telephones.
Starlink is a technological innovation that gradually opens the map for online business
everywhere. I remember back in 2012 how internet was relatively fast(er) in Kenyan
towns like Voi, but super slow in villages.
Some villages lacked mobile signal. Outside the villages, in ranches and lodges, the signal
was sporadic. We were organizing school competitions and video calls between rural
schools in Slovakia and Kenya. And the internet connection, with frequent power
blackouts, was very sketchy and frustrating.

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Earlier this year Starlink has received a lot of media coverage. Soon after the Russian
invasion of Ukraine, SpaceX deployed Starlink satellite internet service in a few hours
after the company made the decision. And physical devices were delivered within 48
hours. SpaceX supported Ukraine with $80m worth of services and equipment, helping
Ukrainians to stay connected and share their message.
The last decade of populism was about nationalist “people from somewhere” versus
cosmopolitan and globalist “people from anywhere”. This “anywhere” usually meant
some Western-aligned financial hub, like London or Tokyo.
But Starlink can enable a third group of people - digital nomads and protopians. Or as
Alexander Bard calls them: “people from everywhere”.
HIMBY and Building Man
Sprawl is good. Building culture is good.
The “Yes In My Back Yard” (YIMBY) pro-housing movement is popular nowadays. In the
context of big cities and dense areas, it usually means building vertically - more

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skyscrapers to fight NIMBY-ism. Balaji Srinivasan has a different take – building
horizontally is much faster and cheaper. This is how American settlers did it. Hence
HIMBY.
People will object immediately that the frontier has closed, and we don’t have enough
space, and sprawl creates traffic jams and long commutes. So why would be HIMBY
feasible and desirable today? Balaji says often, that the internet truly begun in 2020,
as we went digital-first, and even remote-first (at least for a time of the Covid-19
pandemic).
Remote work, as an important cultural and moral innovation, combined with tech like
Starlink, can help sovereign collectives to crowdfund territory and build new hacker-
houses, cul-de-sacs and even towns in the middle of nowhere. These could be even
car-free, or self-driving only, using Boring company tunnels underground and leaving the
city for pedestrians.
Balaji says that Burning Man is ok, but we need Building Man. Something like
the Olympics for builders. People attending Burning Man can create around 70
thousand units within a few days. The festival is something like the American experiment
in Communism, with money-less gift economy. But once the festival is over, people go
home.
Balaji says that there is a continuum in time and alignment of such communities. People
meet online and they form offline bonds. It can be a meeting of two people for one day. It
can be a festival or a workshop that takes a week. It can be an online/offline course. But
what about building something more permanent, what Balaji calls reverse diasporas?
We might need reverse tornados for that - a metaphor for web3. Crypto started Wall
Street-first, which is odd. American settlers have built churches and farms first. Today,
this would be analogous to universities and Main Street (small businesses) being built
first.

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Often we hear a criticism that web3 is a closed bubble and its enthusiasts cannot connect
web3 to the real economy and physical stuff. But Balaji explains that crypto is like Internet
in 2000, still very early.
Once the decentralized finance (DeFi) and decentralized science (DeSci) scale with new
tech stacks, they might play a huge role of reverse tornados – helping to build physical
stuff in remote locations with speed, instead of destroying things.
Communism actually might work on a family/clan level, as mutual trust is high. Central
planning might even work on a larger scale, enabled by AI. At least that’s a provocative
thesis in Balaji’s book The Network State – a section titled “China Can Make a Pencil”.
But web3 brings a crucial innovation in terms of democratizing equity investments.
Equity facilitates alignment of all parties. And crypto-REITs (crypto Real Estate
Investment Trusts) will enable people to collectively own their newly built
towns and network archipelagos. It is like a v3 that can beat both capitalism and its
discontents.
Because a community is more than a market and cannot be replaced by the state.
Home = alignment.
God-State-Network
God is Dead. Gov is Dead. Long live the Network.

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Balaji Srinivasan in his book the Network State discusses three Leviathans. When
Nietzsche proclaimed “God is dead”, he meant that elites of his age didn’t believe in God
anymore. They started to believe in Gov instead. Boys in blue replaced the all-seeing God.
Today we are experiencing a similar transitional movement, when the (counter-)elites
don’t believe in Gov anymore, and they believe in Network instead.
A belief in God was like a distributed law-enforcement. Balaji explains how people in the
pre-industrial period truly believed that God would punish them if they stole. Later, the
invention of the printing press and the spread of literacy boosted the capabilities of the
State. People didn’t steal, because they believed cops would catch them.
In our internet era and the network age, people don’t steal, because the Network doesn’t
let them via encryption, in case of blockchains, or via cancelation and deplatforming on
social media.
There can be various productive and unproductive Hegelian syntheses between these
three Leviathans. God-State hybrid was the US in the 1950s with slogans like “For God,

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Country and Corps”. The network state is Balaji’s concept that could over decades
gradually replace nation states.
Millions of people today hold maybe one percent of their net worth in crypto and this
share will grow over decades, once the technology scales and reaches mass adoption.
Similarly, one doesn’t need to go full-in on a new Leviathan like the Network, or one
particular network state, but can keep a portfolio of passports and future crypto-passports
(see the rise of NFTs as an early precursor).
Balaji explains that he has a positive-sum “win and let win” ideology and is
a polytheist, poly-statist and poly-numist (not just pro-bitcoin, but for other coins
and web3).
Network-State hybrids will emerge bottom-up through multiple stages. Balaji writes
in his book, how startup societies will emerge around one moral innovation (The One
Commandment) and some will create highly-aligned online communities capable of
regular collective action (network unions).
Some of these network unions will progress to crowdfund real estate and create network
archipelagos connected by the ocean of the Internet and global web3 protocols. A few
of network archipelagos will gain sufficient traction, provable collective income and real-
estate footprint to eventually gain diplomatic recognition and become network states.
A Network-State hybrid can emerge also top-down, by traditional fiat states merging
with certain networks. El Salvador and the Central African Republic adopting bitcoin is a
move in this direction. Estonia with their e-Residence program, and China with
sophisticated (centralized) AI and blockchain capabilities are other examples.
There can be also God-Network hybrids. Startup societies can rise to revive old
languages, cultures or religions. There can be The Benedict Option startup societies for
Christianity-centred lifestyles, or ones that take interest in small ancient religions like
Zoroastrianism.

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God is dead. Gov is dead. But the Network can revive them. With (AI, social and web3)
tech innovations and moral innovations. Merging technological and social progress.
Optimalism vs Maximalism
From Logos to Lego
Take Tesla. Its cars can be safer than Volvo, faster than Porsche, and cheaper than
Volkswagen. Startups with new technology can produce Pareto-improvements, where
others would make trade-offs.
Maximizing the size of a bumper will not make the safest car. Driving somewhere at 300
kilometers an hour is not the fastest way to get there.
Balaji Srinivasan’s optimalism is an idea that combines the optimism of tech-
progressivism with optimising an objective function. Balaji uses optimalism as an

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alternative to trans-humanism, which sometimes gets bad rep for its varieties that are
promoted in places like the World Economic Forum.
To illustrate the notion of maximalism (or extremism), Balaji talks about metaphorical
Westists who just want to go West. Once they arrive in California and reach the Pacific
Ocean, the maximalists among them want to still continue going West: “What are you
some Eastist cuck, that you want to give up right now?”
There is a whole body of engineering knowledge around optimization. Theory of
constrains looks for the bottleneck or the weakest link in the chain of a process. For
example, if you want to improve a revenue of a café, buying better chairs won’t bring any
results, if there are already lots of customers lining up, but the bottleneck is the slow cash
register. A need for comfier chairs is not the main issue. Once the bottleneck of a slow
cash register is removed, you can rinse-and-repeat the process and search for other
bottlenecks.
Balaji Srinivasan came up with the Nakamoto coefficient that measures the
decentralization of various sub-systems (miners, developers, owners…) of blockchains
like Ethereum and Bitcoin. It shows the weakest link – a sub-system that is the least
decentralized and has the least entities that need to be compromised in order to gain 51%
control of that sub-system.
Balaji sees two underrated ideologies that will shape the world – anarchoprimitivism and
bitcoin maximalism. Anarchoprimitivism is a de-growth ideology that wants to reduce
population and return to nature. Its opposite is trans-humanism, a desire for longevity
and space travel. All ideologies can lead to extremes and fundamentalism.
Optimalism is similar to the notion of protopia (opposed to both dystopia and
utopia). Optimalists are protopians. They believe in gradual change. Every year can get
a bit better thanks to conscious hard work of engineers and gradual improvements of
technology, as well as some phase shifts and step functions.

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Dystopians are primarily focused on a subject (e.g. their suffering) and are too
pessimistic, utopians are mainly focused on an object (singularity) and are too optimistic.
Protopians are mainly builders focused on a project – how to get from A to B.
Balaji talks about three main power attractors – CCP, NYT and BTC. CCP today is the
center of hard power, NYT is center of soft power and BTC/web3 is the center of smart
power. Maximalism, or excessive tribalism, can be seen as a stupid power.
While loyalty and tribalism are important, maximalism leads to toxicity and an absorbing
one-dimensional universalism – the multiplicity of complex identities collapses into one
and only identity.
Optimalists engage in projects that contribute towards longevity and extension of healthy
lifespan. They are builders bootstrapping a desired future. Building it with Lego bricks of
tech innovations. From Logos to Lego.

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Truth, Health, Wealth
A new Liberté, Égalité, Fraternité
Balaji Srinivasan proposes a new motto for the era of web3 and network states: Truth,
Health, Wealth in that order. It is not enough to be a full stack software engineer.
People need to include morality in their stack, as a fundamental layer-0 that enables all
their endeavours.
Balaji mentions how “fiat money is backed by men with guns”, quoting Paul Krugman. In
contrast, bitcoin is money backed by math. Fiat states rely on reinterpretation of
history to fit current narratives. Network states will need to provide better narratives
of tech progress and a more reliable account of history, where tech progress was hindered
by the lack of smart regulation and smart regulators.
So why is it important for tech progressives, protopians and optimalists to have mottos
like Truth, Health, Wealth or “learning, burning (calories), earning”?
Bitcoin is the digitally-native form of money. What would be digitally-native forms of
education, learning and news?

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Balaji talks about “news you can use” as the model for digitally native media and
education. This is the “truth” bit of the motto. News should demonstrably boost your
health and wealth. They shouldn’t just provide infotainment. Like a healthy food diet, we
need a healthy information diet, and a quality information supply chain.
We need auditable crypto-information and truly reproducible research over fiat
information and publications based on prestige, peer-review and quotations.
News today is mostly entropic (clickbait). Balaji sees certain value in serendipity, but
explains that seeing 20 random links in your twitter feed is entropy. There is a difference
between work and heat. News going in all directions is like particles going in all directions,
producing heat, instead of work. Balaji mentions Brilliant.org as an example of a service
that demonstrably boosts your skills, instead of entropic news about events far away, that
you can consume but can’t act upon.
Bitcoin inverted basic premises. Even mild inflation is bad. Deflation is good. Limited
supply of coins is good. Bitcoin made transactions public. Bitcoin also created a rare type
of game, where the rules of the game don’t change once they are known, because they
can’t be gamed. Balaji sees Longevity similar to crypto in a sense that it inverts basic
premises. He mentions that fitness might be the key to longevity and crypto-medicine.
Web3 and zero-knowledge tech, combined with wearables, will enable “news you can use”
business models for media. Because it will be possible to measure progress in terms of
health and wealth of a community, that has a certain information diet and consumes
specific media.
Balaji says, that “Truth, Health, Wealth” is the new “Liberté, Égalité, Fraternité”.
I think in a way, these mottos are connected, because the truth in form of cryptohistory
will set us free, longevity as a reinterpretation of health, will increase healthspans and
equality, and “win and let win” brotherhood and sisterhood will create wealth.
We can build startup societies and ultimately network states around these values.

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Society as a Service
Startup societies for moral innovations
Startups create technological innovations, and thus better and more scalable products or
services. Tesla has proven electric cars can be faster, safer and cheaper, thus beating
competition on many dimensions.
It is much easier to create software businesses than hardware ones, because the iteration
cycles are just much shorter and capital needs much smaller. Startups require a single-
minded focus and long workdays of grinding hard work.
Balaji sees startup societies as the first step towards network states. They can be
started by anyone with a laptop. The startup society founder aims to create a
community and sells memberships, not a product or a service. The founder doesn’t
produce technical innovation, but focuses on one moral innovation. Or what Balaji
calls The One Commandment.
A key attribute of startups is a relentless narrow focus on one product or service. Similarly,
startup society needs to be focused on one moral innovation.

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The moral innovation needs to be phrased as simply and succinctly as possible, like
“sugar bad” in case of a Keto Kosher startup society. And to stand out, it needs to be
distinct from the mainstream society mores of the day.
Balaji explains that many startup societies can be incompatible, but they can still
cooperate. For example, Carnivore society and Vegan society are clearly
incompatible, but they can be both opposed to the “fiat” food pyramid. A Culdesac
society, that aims to create streets without cars, seems incompatible with Van Life
society – but they can find some middle ground – cars in the cities are bad, but living in
a car outside cities is good.
There can be startup societies dedicated to reviving old religions and practices, or
CrossFit-like societies. Or strange societies like Formalwear society, where everyone
dresses well, and which aims to combine the aesthetics of formal clothes with comfort of
casual clothes, producing a better v3 version (v3 is a Balajism for Hegelian synthesis).
Balaji explains his main motive for the network state idea – to advance longevity by
escaping the global harmonization that he sees as the biggest impediment to
progress. He says, without joking, that it is literally easier to start a new country
than to reform the FDA.
Balaji lists 24 startup societies on The Network State webpage. He wants to see thousands
of startup societies bloom, with hundreds of network unions (capable of regular
collective action online) and tens of network archipelagos (with crowdfunded real
estate and IRL communities), so a diplomatically recognized network state can emerge
within ten or so years.
Anyone with a laptop can start a startup society. To reach the network union stage, they
need to build a highly aligned community capable of collective action – an ideal example
is that all 100 members of a network union collaborate online on a project for 100 days in
a row, each day people spend certain minutes on a project, or contribute some financial
amount instead of their time.

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Balaji says, that startup societies are the new SaaS – Society as a Service.
Creating communities instead of products. And investors can use established SaaS
metrics to measure their performance. Balaji also shows how to practically assess
highly-aligned communities by their level of engagement in collective actions.
Personal Runway
Financial independence is upstream of ideological independence
A runway is cash in the bank, divided by a monthly burn-rate of a startup. With personal
runway, Balaji Srinivasan extended this concept to individuals and connected it to
ideological independence.
You need to avoid, what people like Taleb call an absorbing barrier. Or a trap door in
Balaji’s Idea Maze concept. You need to have enough resources to get through all the dead
ends and obstacles.

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Individuals should have enough personal runway to withstand various gray swans and
black swans, including cancelation by an online mob. If people get cancelled and de-
platformed during our times of, what Balaji calls, a social war, they often lose their
source of income, connection to subscribers and can even be subject to internal sanctions,
like Canadian truckers during Covid-19 protests.
Web3 will ultimately solve this, allowing creators to own their content and social graph.
Together with pseudonymous economy, as another step towards decentralization and
meritocracy, web3 will be a financial unlock comparable to Deng Xiaoping allowing
capitalism in China (~$100T).
Personal runway is upstream of tech innovations, like web3. Because, if you can’t save,
you can’t HODL.
Balaji mentions a new path for young people today. They don’t need to become startup
founders, like in the mid-2000s. They don’t need to rely on optionality and stochastic
processes of creating wealth.
Because, cutting costs is a deterministic way how to boost your personal
runway. In the age of Starlink and remote work, people can capitalize on longitudinal
arbitrage and reduce their spend dramatically, by exiting from expensive cities to the
cheapest remote locations they can tolerate.
Balaji also tells young people to study computer science and statistics. They are what
physics and math were in the 20th century. Most of our daily lives will be spent in the
“Matrix” – mediated through some kind of digital interface. And CS plus statistics is the
way how to manipulate digital objects, using algorithms and data. Another path
for wordcel-like people is to create media content to support engineers and tech-
progressivism.
Saving, and working as an engineer, from a remote location, and in a pseudonymous
economy, is a way to increase personal runway and decentralize reputation. Plus living in
a highly-aligned community.

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Taleb mentions Gell-Mann’s metaphor for ergodicity – it is quite different, if 100 people
visit a casino for one day, or if one person visits a casino for 100 days. Startup founders
aren’t VCs with portfolios, they go all-in on one big bet (their company) with a relentless
focus for a limited amount of time.
Startups, like people, die all the time, and Peter Thiel says, it is always tragic. Investors
have optionality.
Communities are more like cities than companies. More diversified and less focused.
Communities in the noosphere, like startup societies and network unions, are even more
decentralized and thus nuke-proof.
Financial independence is upstream of ideological independence, as Balaji
says. With web3 we can measure and audit the wealth of communities like network
unions/archipelagos/states. Like a personal runway, we can measure a community
runway on various dimensions.

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AR glasses as the next convergence device
The most predictable invention of 2020s
Balaji Srinivasan thinks that AR glasses will be to this decade, what a smartphone was to
the last decade. Many people are at first amazed by the VR headset experience, but they
don’t use the device regularly.
The sales of VR headsets are growing every year, the experience of using them is getting
better, and Facebook even rebranded into Meta, showcasing their commitment to build
metaverse. But there hasn’t been an iPhone moment yet.
Currently it’s a commitment to put on a VR headset, but the Big Tech companies and new
startups are working on AR glasses. They will have the form of regular glasses.
You will be able to take pictures and record videos with them, like with
Snapchat Spectacles, you could do VR with them like with Oculus/Meta headset, like with
Google Glass and HoloLens from Microsoft you can get overlays and holograms, and they
will be programable like Apple ARKit.

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Balaji often says that most of our lives will be spent in the “Matrix”, meaning that
majority of our waking hours will be mediated through some kind of digital interface.
AR glasses can have many second-order consequences – building stronger communities,
and support the rise of startup societies and ultimately network states.
Balaji mentions that mobile made us more mobile. At first, the experience of using
mobile apps was worse than using desktop ones, but the fact that we could access info on
the go was crucial.
AR glasses will free our hands and we will be able to access info while looking around and
up, not only looking down at our mobile phones, like today.
Google Glass and HoloLens are used currently in the enterprise contexts, freeing hands
of workers and advancing vocational education and training. But once the iPhone
moment for AR glasses happens, they will go mainstream.
Mobile phones as a convergence device replaced many gadgets, like cameras, torch lights,
MP3 players… and also less obvious areas, like retail banks and debit cards. Back in 2007,
with the rise of M-Pesa mobile banking in Kenya, Africans leapfrogged the West.
Mobile phones also had indirect consequences, like the rise of EVs and electromobility
due to tech progress in batteries, or the spread of Arab Spring protests enabled
by Twitter.
Initiatives to bridge the digital divide, like One Laptop Per Child were too early, says
Balaji. Because the convergence device happened to be a smartphone.
With AR glasses we will bridge the digital with physical, and people will be able to
recognize building and members of their startup societies/network unions through
glowing sigils that will be visible only to those communities.

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With web3, NFTs and smart locks people will be able to enter places based on
membership. While non-members won’t be able to even spot them. Secret societies
will have a comeback.
My personal wild guess is that Elon Musk, with his hardware experience from Tesla and
SpaceX and the recent purchase of Twitter, could be a new entrant to the AR glasses race,
that could usher the iPhone moment – with something like Tesla glasses.
Truly reproducible research
Turning fiat science into crypto-science
Balaji Srinivasan sees truly reproducible research as the next step in open science and
citizen science movements. Science is about independent replication, not
prestigious citations, he says.

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There is orders-of-magnitude difference between a scientific paper, that was published
recently in a prestigious journal but wasn’t replicated yet, and Maxwell equations that
have trillions of replications, as they underpin our electronic devices, and are reproduced
every time we use a phone.
Bitcoin is a digitally-native form of money. Less obviously, blockchains are also
the truth machine – establishing universal truth, where even sworn enemies can agree on
who owned what amount of bitcoin at time t.
Everybody may believe in the dollar, but as Balaji says, the No. 1 rule of the rules-based
order is that America makes the rules. Fiat is backed by men with guns. With bitcoin, the
rules are set by math. And math is more rigorous than science.
Ossified and centralized fiat science (prestigious citations) underpins the fiat state. Public
policy and regulations are set “because of science”. Mask don’t work, before they do, based
on public health officials’ statements (“by fiat”).
Balaji uses a model of physical/scanner/digitally-native versions to assess levels of
digitalization. Cash is physical, internet banking is a scanner version that has a bricks-
and-mortar equivalent in the form of a retail bank.
Web3 protocols are forms of programmable money that disintermediated Wall Street and
gave rise to Decentralized Finance (DeFi). Similarly, Balaji says, all science will
become computer science – from computational archaeology to computational social
science. And sooner or later, all science will be put on-chain and become Decentralized
Science (DeSci).
There is a long-term effort in reproducible research, using tools like Jupyter
Notebook to run code on data within scientific papers, instead of using just PDFs. The
next step is truly reproducible research, where the scientific information supply
chain is fully traceable, auditable and replicable on-chain and citing papers will
become a function call.

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Balaji mentions how even scientific papers can get cancelled in today’s social war.
Therefore, even computational history is not enough. We need cryptohistory.
Crypto-oracles will verify that scientific data were collected and put on chain. The data
can still have errors, but one can at least know what, when and by whom was put on chain.
And the data on chain will be immutable. The problem will reduce to tracking reputation
of crypto-oracles, and the data can be audited for anomalies with techniques
like Benford’s Law.
Next step is using crypto-instruments that collect scientific data and put them directly
on-chain, which will make controlling for issues like batch effects easier.
Balaji sees the Nobel Prize as a flawed and Eurocentric endeavor. He proposes Satoshi
Prize for truly reproducible research and DeSci, that could be awarded also
to pseudonymous researchers.

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The One Commandment
Exit is good
Balaji Srinivasan in his book The Network State introduced a concept of The One
Commandment. It lets startup societies focus on one and only one moral
innovation (“sugar bad” for the Keto Kosher society). This prevents mission drift
and reduces complexity.
The One Commandment makes it easier to compare startup societies focused on the same
moral innovation. Tech startups are laser-focused on one tech innovation - their product
or service. Startup societies should be laser-focused on just one moral innovation and
build a community around it.
Anyone with a laptop can create a startup society. They will be the new SaaS
– Society as a Service. They can be evaluated by same metrics as the traditional SaaS
companies. Startup societies are communities built around one cause - moral innovation
that distinguishes them sufficiently from the mainstream. This is similar to companies
using product differentiation.

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Startup societies are the first stage of a gradualist and bottom-up process to build the
network state. The next stage is to build a network union - a truly aligned online
community through daily calls to action.
Many network unions don’t need to progress to the next stage, and can remain just purely
online – for example a guild of graphic designers that collaborate, observe agreed rules,
promote each other, and protect members from cancelation.
The next stage is to build a network archipelago – crowdfund communally owned real
estate around the world, connected through internet.
Eventually some network archipelagos will achieve some levels of diplomatic
recognition - from sub-national, national or supra-national sovereigns. The interface
between crypto-countries and fiat-countries is important in the same way, as the
bitcoin/dollar interface and trading was important to scale bitcoin and web3 to its current
levels.
But at the very beginning of the journey from a startup society to the network
union/archipelago/state is a moral innovation of The One Commandment like –
“longevity good”, “saving good”, “sugar bad”, “formal clothing good” and “digital sabbath
good”.
Balaji talks about a need for a moral stack as the layer0. Web3 founders, as well as startup
society founders, need to constantly stress the moral argument for their existence – this
gives them a license to operate.
The ability to exit is very important for Balaji’s thinking (See Exit, Voice and Loyalty). Exit
is getting easier, thanks to bitcoin and web3, and will be much easier in the near future.
Balaji is predicting that, what he calls, the DeFi matrix will be to this decade, what
the social graph was to the last one. In the DeFi matrix, all assets are tradable against
each other – making exit much easier, and thus increasing the price of loyalty.

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Balaji measures alignment of communities by percentage of members engaged in daily
actions. It’s like daily active users – but for focused work on building a community, not
just entropic infotainment of social media.
I think, the ethics of communities like startup societies could be measured by the ease
of exit.
And if there could be a kind of meta-one-commandment for all startup societies and
network unions/archipelagos/states, it should be in my opinion, (the ease of) “exit is
good”.

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Helical theory of history
Progress happens on the z-axis
Balaji Srinivasan has a unique view of history, combining the theories of linear
progress and cyclical theories of history. He says, that all noble ideas and ideals have
been with us since the dawn of humanity, what makes them feasible is technology.
Balaji mentions the Chinese proverb “The empire, long divided, must unite; long
united, must divide” to illustrate the cyclical theory of history. There are right-wing,
left-wing and libertarian versions of these cycles.
The meme of “hard times create good men, good men create good times, good times create
weak men, weak men create hard times” is the Right’s example of cyclical history. The
Left’s version is “zealous revolutionaries spark a revolution, that is later corrupted and
stolen by bureaucrats or despots like Stalin, and so people have to rise again to fight
oppression”.

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The libertarian version, according to Balaji, is – “a libertarian founder ends up
rebuilding the state”. By creating a successful startup, that later scales to millions of
customers, the bureaucratic structures are rebuilt, the company gets ossified and pushes
the creative and entrepreneurial employees away – to create new startups.
Balaji gives a metaphor of a clock – the dials go in circles, but there is a new day, a new
startup, a new country eventually. His helical theory of history unites both cyclical
and linear theories of history – it goes in circles indeed, but the progress happens on
the z-axis.
The “great man theory” and “the arch of history theory” of how inventions and
innovations are born can be reconciled in the concept of tech trees, says Balaji.
Sometimes inventors stand on the shoulders of giants and the time is ripe for a certain
invention and a few people arrive at it independently (Newton/Leibniz). And sometimes
radical innovations come out of blue, like Satoshi Nakamoto’s bitcoin.
Alexander Bard, a Swedish philosopher of the internet, has a similar view of “process vs
event” (his upcoming book is titled Process and Event), uniting cyclical/gradual processes
with unique and radical events/step functions. He also says, people are constants, what
changes is technology.
My good friend Silvo’s mom used to tell him to eat his food when he was a kid, because
“kids in Africa are hungry”. He replied, “why don’t you pack the meal then, and send it to
Africa”? It still takes days to do a bank wire to Africa. But only minutes, if you use Wise
and M-Pesa. And seconds with BTC Lightning.
My friend Allan, who is in his seventies, heard the same story when he was growing up in
Canada, but at that time his mom told him about hungry kids in South Korea. Back then,
the country was poorer than Kenya, now it’s richer than my home country of Slovakia.
Rule of law, industrialization policies and education transformed South Korea to one of
the Asian Tigers.

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Singapore’s Lee Kuan Yew created a successful model of going from third world to first,
later copied by China’s Deng Xiaoping. Balaji often mentions, how the moral
innovation of “profit is good” transformed China. The country now builds half of
world’s ships, has built 38,000km of high-speed rail since 2008, and plans to build 150
nuclear reactors in 15 years. The US & EU seem to go from first world to third.
Moral innovations are important, but often what makes them feasible is
technological progress. Balaji explains how in the past the moral progress and
tech progress went hand in hand. Public sanitation buildout was coupled with public
education campaigns and mottos like “cleanliness is next to godliness”.
God is tech and art, in the sense that any sufficiently advanced technology is
indistinguishable from magic.

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Reverse diaspora
Cloud formations take physical shape
Almost ten years ago in 2013, Balaji Srinivasan wrote an article Software is reorganizing
the world. He mentions there his concept of a reverse diaspora - one that starts out
internationally distributed, finds each other online, and ends up physically
concentrated.
You can gather people, who are aligned in values and interests, one by one, and build
your community in the noosphere, with its capital city in the cloud. And later get
fragments of it printed out on land, in the geosphere. Like a city for CrossFitters, or
a Culdesac for car-free people.
Software isn’t just eating the world, turning every company into software company, as
Marc Andreessen wrote in 2011. It makes people move to places, after they discover their
soulmates across the globe. We have seen people gathering at Burning Man. Balaji wants
to see something more permanent, like a Building Man, or Olympics for builders.

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The frontier has reopened after 100 years again, when commerce became legal on internet
in 1991. There are no unclaimed plots of land, but anyone could start their .com domain
in the cloud. The cloud cartography is characterized by geodesic distance, the degrees of
separation of two nodes in a network.
People can be separated by a physical ocean, but are next to each other in a network and
the noosphere. Balaji thinks that this state will not last forever. Now we don’t know our
next-door neighbors in an anonymous apartment complex, but share intimate moments
with people across the globe. But a mobile is making us more mobile, and AR
glasses, as the next convergence device, will 10x that.
Two people can meet online and spend a life together. 10 people can live in a hacker house
for a year. Thousands can gather for a couple of days, to attend an annual conference of
their digital tribe. This has no physical upper bound, so we might see 10,000 people
coming together for a year and cloud towns, cloud cities and cloud countries
emerge, writes Balaji in 2013.
Communes, co-living and co-housing are not new, what is new is the mobility and speed
provided by technology. Web3 enables what Balaji calls a crowdchoice – sovereign
collectives negotiating collective exit with existing cities and jurisdictions.
Something like the recent exodus of tech talent from SF to Miami, but organized by
a network union that wants to crowdfund real-estate and become a network
archipelago, to use terms from Balaji’s book The Network State.
These network unions emerge out of startup societies, which can be established by
anyone with a laptop and a compelling moral innovation in the form of The One
Commandment - like “sugar bad” for a Keto Kosher startup society.
Silicon Valley migrant tech entrepreneurs are a reverse diaspora created by the internet.
The physical location was incidental and dictated by car commute of VC investors.
Remote work changed that.

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These reverse diasporas, or cloud formations that take physical shape, are
much easier to realize today, thanks to the moral/cultural innovation of remote work after
Covid-19, and technical innovation of Starlink.
We keep in touch with family and friends on Facebook/WhatsApp. We order meals and
rides through Uber. Balaji says, when goods themselves can't be digitized, our
interface to them will be.
The DeFi matrix
A global decentralized exchange of all-against-all assets
Balaji Srinivasan thinks that, what he calls the DeFi Matrix, will be to this decade, what
social graph was to the last one. Decentralized Finance (DeFi) disrupted Wall Street and
created composable finance ruled by code.
The DeFi matrix is an abstraction of a giant crypto wallet, where all assets
are tradable against all other assets. It will do to finance, what Google News did to

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traditional media – it dissolved their natural regional monopolies, and reprinting AP or
Reuters stories suddenly wasn’t enough.
After crypto, suddenly even national currencies need to compete on features, says Balaji.
China with their digital yuan CBDC, has understood it for some time. Last year, 100B of
digital yuan was spent and the currency was tested in cross-border transactions.
The global share of yuan is around 3%, compared to over 42% for dollar and 35% for euro.
Digital yuan might change it quickly.
I remember, many years ago, reading a quote by Wang Chuanfu, BYD CEO, who was
saying something like digital watches are much easier to produce than analog
ones, so BYD will outcompete trad car companies with EVs. You can watch how BYD will
soon disrupt the European car market and industry.
This logic applies to digital currencies as well. EVs can have 100x less parts than
traditional ICE cars. But hardware is hard (to iterate on) so this analogy is only roughly
accurate. Bitcoin was the first digitally native form of money – the digital gold.
Satoshi Nakamoto’s invention will be probably on par with the Reformation, in the large
scheme of things, thinks Balaji. But today, any kid can create a token, DAO or NFT using
chains like Solana for a price of a lunch or less. With no need to ask IMF or think about
SDR reserves.
Balaji explains, that today around 1000x more people have crypto wallets than
Bloomberg terminals. People learnt how prices are born thanks to V-shaped depth
charts on crypto exchanges.
Just a side note, Balaji connects the concepts of a depth chart and the Overton
window – how the acceptable opinions are shifting based on demand and supply for
them.
Currently, many governments contemplate digital currencies and CBDCs. Pro-crypto
mayor of Miami, Francis Suarez, launched MiamiCoin, the first city coin. He and Eric

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Adams, the mayor of NYC take their salaries in bitcoin. Wyoming has a DAO legislation.
El Salvador and the Central African Republic have accepted bitcoin as legal tender.
Sooner or later, all assets will be put on chain. For many reasons, one of them is the
desirability of triple-entry accounting and composability of finance that will make M&A
and VC investing much easier.
The DeFi matrix will make all assets liquid and tradeable against each other 24/7. This
will reduce the need for cash and fiat currencies.
Bitcoin is the ungovernable governor of governments says Robert Breedlove during his
Balaji podcast series. Balaji has a similar opinion - bitcoin will be the 0,0 of the DeFi
matrix, and it will be a de facto world government nobody anticipated.
The digital gold will keep governments in check, as the physical gold once used to.

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The ledger of record
Bad feeds can kill us. Good feeds can free us.
Balaji Srinivasan presents his idea of the ledger of record as a better alternative to the
paper of record – BTC over NYT, paradigmatically. The argument from cryptography
replaces the argument from authority. The Gray Lady Winked by Ashley
Rindsberg details misreporting of the NYT over decades.
Balaji posits cryptoinformation, secured by blockchains and provided by crypto-
oracles, against fiat information, backed by prestige and popularity and prone to
cancelation, alteration and retraction.
Bitcoin is not just a digitally-native form of money but less obviously also a truth
machine. Even sworn enemies can agree who sent what amount and when.

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With decentralized social networks and crypto oracles, we will see more and more
data feeds put on-chain. The news making will split into two functions – oracles and
advocates, thinks Balaji.
Bad feeds can kill us, says Balaji. We have seen the downstream media and public
health officials repeatedly change narrative on Covid-19, often based on political
convenience (mask didn’t work before they did), or tribal logic (when Trump feared the
virus, media claimed “it was just a flew”, then they switched narratives), and not facts (the
lab leak theory was very probable, very early, see Rootclaim).
Just to repeat - at the very critical time, during the onset of the pandemic, media
downplayed its severity and risk – for clicks. This wasn’t just evil (zero-sum), it
was stupid (negative-sum), thinks Balaji. Journalists were putting also their
own lives at risk, just for clicks.
Balaji and other tech people were painted as lunatics by “just-the-flu” journalists for
taking precautions very early, with articles like “No handshakes, please: The tech industry
is terrified of the coronavirus” by Recode/Vox.
Downstream media employ a school of fish strategy, explains Balaji. They condemn
the lab leak theory in unison, when it is politically correct, just to oppose the other tribe
domestically. And they flip to embrace it, once it becomes politically useful for attacking
China. They operate on the third level of Baudrillard’s simulacra (pandering to their
tribe/subscribers), disinterested in truth seeking.
Balaji says, that financial media can be seen as wrappers around ticker symbols, sports
media as wrappers around box scores, and political media are becoming
increasingly wrappers around tweets. And a tweet is a data structure with metadata.
The ledger of record combines the immutability and decentralization of blockchains with
the reputation of crypto-oracles who provide the data feeds. The decentralized and truly
reproducible research, underpinned by cryptography, replaces the argument from a
centralized authority (legacy institutions).

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Balaji suggests that the oracle-problem could be first solved in the context of reporting
inflation – as there are lots of incentives to misreport prices. Once the inflation dashboard
use case (see Truflation) for the ledger of record is successfully demonstrated, it can be
generalized to other domains.
Our information supply chain is broken, says Balaji. Who controls the past, controls
the future and who controls present controls the past, said Orwell.
In order to bootstrap a desired and technologically-progressive future, we need to
make the leap from online reporting, prone to cancellation, to immutable on-chain
reporting.
Better feeds and cryptohistory will set us free.

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Cryptohistory
A better history production and record-keeping.
Balaji Srinivasan has a concept of a cryptohistory – a cryptographically verifiable
macrohistory. Books can be burned, online papers can be cancelled, photos can be
airbrushed from history in a Stalinesque way.
But on-chain data are near impossible to doctor. With new techniques and crypto-
oracles, the scope of cryptographical verification is expanding, to include proofs of
location, proofs of identity, proofs of reserves and more.
Startup society founders will need to wrestle with history, and provide a much better and
reliable record of it – a cryptohistory. They will need to create a detailed narrative of why
their moral innovation matters, and how the current establishment got things wrong.
Bitcoin is digital gold, a digitally-native form of money backed by math. But less
obviously, bitcoin is also the truth machine. Even sworn enemies rely on the bitcoin ledger
to provide a truthful state and history of their asset holdings. Fiat money is backed by men
with guns. And so is fiat history. Narratives change to serve people in power.

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Balaji Srinivasan talks often about his concept of the ledger of record, an alternative
to the paper of record (NYT) that served as the first draft of history, but often was the first
rewrite of history with many missteps – as the book by Ashley Rindsberg, the Gray Lady
Winked documents.
The argument from cryptography should replace the argument from authority –
“BTC over NYT, paradigmatically”, says Balaji.
Currently blockchains are recording only cryptohistory of financial transactions that is
very difficult to falsify. But with crypto oracles and decentralized social networks all kinds
of data feeds will be put on chain.
Balaji uses the term downstream media to describe current media that are
downstream of the internet, where the main action happens, and are mostly providing
wrappers around tweets.
Tweets and accounts are being censored and deleted often nowadays, but with web3 and
decentralized social media we will have a permanent record of who claimed what and
when. The claims can still be false, but at least metadata will be permanent and hard to
alter. These can include proof of location and proofs of various actions besides
transactions.
Alexander Bard, a Swedish philosopher of the internet, asks a question if people living in
the Bronze Age knew that they lived in one. In fact, the division into Stone Age, Bronze
Age and Iron Age is a very recent one, produced by historians celebrating factory
owners, who were their sponsors two centuries ago.
People who control the present, control the past. And the one who controls the past,
controls the future, says Orwell. Balaji has a twist on this – in the case of microhistory –
like a trajectory of a rocket – this is true literally, in terms of control theory. A civilization
that has a better control theory gets to Mars first.

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There are political truths of who controls a border, and technical truths of what is a
diameter of a virus, says Balaji. Crypto lies between these two and gives us a
cryptographically verifiable macrohistory.
AI, Crypto and Social
The age of a short phrase.
Balaji Srinivasan says that AI, Crypto and Social (networks) are the three most important
technologies today. They brought us into “the age of a short phrase”.
With a short prompt you can make an AI produce content, that would take thousands of
lines of code. With 12-word mnemonic phrase you can store 100-million-dollar worth of
crypto. And with a hashtag you can start a global social movement.
AI in a broader sense includes also automation and robotics. It allows governments to
surveil and control citizens much more effectively, like in the case of Chinese social credit

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system. But it also turns creators into narrators, and allows anyone in the world to tell
their own stories, with tools like Stable Diffusion and ChatGPT.
Crypto(currency) started in 2009 with bitcoin, but today central banks all around the
world are contemplating CBDCs and Chinese digital yuan crossed 100 billion in
transactions and accomplished cross-border tests.
Social networks were not taken seriously for a very long time, but people started to take
them very seriously - after Donald Trump won the elections in 2016, and after he got
deplatformed from Twitter in 2021. And after Elon Musk bought Twitter in 2022.
The goal in the early 2000s was to get everyone online, and social networks grew in size
and value, thanks to the network effect and Metcalfe’s law. But Balaji explains that this
also created the network defect of highly adversarial communities – like Twitter, a
global arena, with a global leader board and zero-sum behavior like online mobs and
cancellation.
With web3 and decentralized social networks we will get walled gardens, where thousands
of highly aligned communities can bloom.
All three technologies – AI, Crypto and Social – can have their centralized and
decentralized versions. This complicates the Peter Thiel’s quote that “AI is Communist
and crypto is libertarian”, says Balaji.
According to Balaji, these three technologies also map somewhat to the tripolar power
attractors of today – CCP, BTC and NYT – or Communist Capital, Crypto Capital and
Woke Capital.
CCP is heavy on AI, bitcoin is the father of all crypto, and prestige press, like NYT,
influences heavily social media, but is becoming increasingly the downstream media –
downstream of twitter and the internet.

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Together with Balaji, we can map these three technologies and three power attractors also
to the deterministic hard power (CCP, AI), the stochastic soft power (NYT, Social)
and the money power/smart power (BTC, Crypto).
In interesting ways, AI enables the pseudonymous economy – with AI filters people can
sound and look as they want and use crypto as a digitally-native currency. AI helps social
networks filter content and bad actors. And crypto with pseudonymous economy will
enable training of teams of AI agents and hybrid AI-human collaboration.
Mobile telescope
Discovering the dark talent hidden worldwide
Balaji Srinivasan uses a metaphor of “a mobile telescope” that searches for the dark talent
worldwide – like a Hubble telescope that was built to search for dark matter.
Over hundred years ago, G.H. Hardy from Cambridge discovered Indian math genius,
Srinivasa Ramanujan, who wrote letters to many Western mathematicians. Hardy

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brought Ramanujan to England, where he later made many unique contributions, also in
the area prime numbers that underpin today’s cryptography.
Today billions of people have mobile phones and are much more discoverable. Balaji
previously founded Earn.com built around tasking for crypto, that he sold to Coinbase.
People today can work pseudonymously and earn crypto – and thus be a part of the
emerging pseudonymous economy.
Balaji divides countries into the declining world and the ascending world, treating
inequality dynamically, similarly to Taleb. Like Peter Thiel, he criticizes the division into
developed and developing world. Because the word “developed” presupposes a certain
stasis and completion.
Many radical innovations and impressive infrastructure improvements come from the
ascending world. Rwanda has a drone delivery service for medicines. Kenyans pay with
mobile phones since 2007, thanks to mobile banking revolution of M-Pesa. India
has built its digital identity and payments stack – the India stack in rapid time.
China managed to build 38,000km of high-speed rail in 15 years, and plans to build 150
nuclear reactors in the next 15 years.
Marc Andreesen says that most startup ideas weren’t wrong – they were just too early.
Food delivery companies, after the dotcom bubble, were ridiculed, now they are
mainstream. The previous initiatives to bridge the digital divide, like the One Laptop Per
Child, were also too early, because a mobile phone happened to become the
convergence device, instead of a laptop. Balaji thinks AR glasses are the most obvious
convergence device that might happen this decade.
A mobile made us more mobile, says Balaji. Mobile apps were harder to use at the
beginning, than their desktop versions, but people like to move and use technology on the
go.
Social media business model is built around clicks and advertising – what Balaji calls the
entropic media, showing you 20 random links that are interesting, but leaving you with

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a feeling that you just wasted an hour of your life on Twitter. Balaji mentions that entropy
is heat – particles flowing in all directions. The opposite of heat is work – particles flowing
in one focused direction.
Balaji sometimes mentions Brilliant.org as an app and a website for “the news you can
use” that provides constant upskilling – a time well spent on improving your skills
through study and smart tests.
Imagine media that would provide focus and work. A media feed that would help you level
up and learn, burn (calories) and earn. There are some decentralized web3 social
media, like Mirror, DeSo, Farcaster and Lens Protocol. And some of them might focus on
learning, tasking and pseudonymous economy.
Solana is focusing heavily on mobile stack and even creating their own Saga mobile phone
for web3. And there are $20 and $30 smartphones in Africa. Combining these two can
give us a crypto phone under $100 – a mobile telescope for searching dark talent and a
truly global pseudonymous economy.

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Flat coin
A currency that curbs inflation.
Balaji Srinivasan introduced a concept of a flat coin that would remain flat against a
basket of goods. It is a newer type of a stable coin. It is not stable against fiat currency,
that might inflate itself away, but it remains flat against a basket of goods tracked on-
chain.
The DeFi matrix will be to this decade, what social graph was to the last one, says Balaji.
Sooner or later, every asset will be put on chain, and become instantly liquid and tradeable
against each other in a giant matrix of all-against-all assets. Imagine CBDCs, city coins,
crypto-REITs, NFTs, various utility tokens, DAO tokens, company tokens and flat coins.
The DeFi matrix will do to assets what Google News did to newspapers. By comparing
them against each other, Google News destroyed their regional monopolies, and they had
to start competing on features. The same awaits central bankers and mayors. Their CBDC
or a city coin needs to compete on features. And so, they need to boost their moral
stack and tech stack to become a preferred destination/asset for globally mobile digital
nomads and web3 founders.

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A flat coin can be also a piece of the inflation dashboard proposed by
Balaji. Truflation implements a v1 of the inflation dashboard as a demonstration of the
ledger of record concept that aims to be an alternative to the paper of record and is also
focused on solving the oracle problem for prices (true reporting of price inflation).
Balaji explains that the flat coin would need to place orders on both sides of the depth
chart on N orderbooks to keep the flat coin stable against selected baskets of goods – and
it would need reserves to do that.
And Balaji proposes a demurrage as a solution - to make the trade-off between crypto
and fiat explicit: BTC has a short-term volatility but a long-term appreciation, while USD
provides a short term price stability for a long-term depreciation.
A demurrage (paying a fee to hold assets like gold in a vault) would make this trade-off
explicit and can make various flat coin managers compete against each other.
The 20th century was a centralizing century for the West, with peak centralization in the
1950s, says Balaji. Printing press, radio and television were centralizing technologies. But
computers and internet are favoring decentralization.
The state and big companies shielded us from volatility. Big Macs and Macbooks have
relatively stable prices, while commodities used to produce them are wildly fluctuating.
Similarly, centralized media provided Overton window stability (Balaji connects Overton
window with a depth chart).
Tech induced deflation, but sectors controlled by the state produced inflation – because
of increasingly complex regulation in education, health care and construction.
Balaji wants to see competition between smart regulators and between flat coin managers.
You still need to trust the issuer of the flat coin, but that’s portfolio theory, says Balaji.
You don’t need to put zero trust nor 100% trust into one flat coin – you can have a portfolio
of well managed flat coins.

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Bundling, unbundling and rebundling
The Internet is to the US, what America was to Europe.
Jim Barksdale famously said that there are only two ways how to make money in business
and on the internet – by bundling and unbundling. Balaji Srinivasan uses this example a
lot, and adds a third phase of rebundling. In the same way he talks about centralization,
decentralization and recentralization.
The Internet unbundled news articles into single tweets, and they got rebundled into a
twitter feed or twitter lists. Albums got unbundled into individual MP3 and again
rebundled into music playlists.
Internet increases variance, because it allows for peer-to-peer interactions, says
Balaji. Uber rides are both much shorter and longer than traditional taxi rides. A tweet
can make you go viral or get cancelled. With crypto, every user is a root user and
can experience high upside, but also lose a fortune with a key stroke.

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In the West, we experienced peak centralization around 1950s. Up until then,
technological innovations, like printing press, radio and television favored centralization
– media with a centralized hub-and-spoke topology that caused the Gell-Mann
Amnesia, explains Balaji. But with computers and the commercial internet and social
media we got technologies that favor decentralization.
Balaji says, that he is in favor of recentralization, which is the least favorite word today.
Because many people in crypto and politics favor decentralization, and the old
establishment thinks that the current centralized form of institutions are just fine.
But liberal democracies dance delicately between chaos and tyranny. Balaji thinks that we
are currently headed for a future scenario which he calls the American Anarchy vs
Chinese Control or a Decentralized West vs Centralized East, more broadly. The
West will experience quite some unbundling before it can rebundle into something better,
while the East is still in its centralizing arch.
Balaji thinks that India and countries like Israel and Singapore could play a role
of International Intermediates – mediating between the chaotic US and digitally-
authoritarian China and carrying the torch of Western pro-democracy and pro-capitalism
values. And he sees a role for web3 and the future network states as
the Recentralized Center – providing new sources of trust and conviviality trough
both technological and moral innovations.
Progress happens on the z-axis, says Balaji, giving a metaphor of a helix for
his helical theory of history. The libertarian founder starts a company but ends up
rebuilding the state (bureaucracy). Dissatisfied employee leaves that company to launch
a new startup. But the new boss is not the same as the old boss – in the same way as
playlists are not albums, and twitter feed is not a newspaper.
The future is our past and the past is our future, but with opposite
outcomes – which has some predictive power, says Balaji. When commerce became
legal on the internet in 1991, the frontier reopened after 100 years, when it closed the

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US. The Internet is to the US, what America was to Europe. In the last century
The West was centralizing, now it is decentralizing.
Back then the US became a hyperpower and the Soviets lost a war in Afghanistan. Now
the US lost a war in Afghanistan and China is rising. Before 20th century we got railroad
barons, now we have Elon Musk and Jeff Bezos competing in space industry. Before FDR
defeated the Business Plot, recently Big Tech censored Trump. Before China was a junior
partner to the USSR, now Russia is a junior partner to China.
Balaji lists many such stories where the outcomes are opposite to the past. If we can expect
a greater decentralization and unbundling of the West in the near future, we need to build
tech and moral innovations, that can catch us on the other side of that unbundling, and
help us rebundle into highly-aligned communities and high-trust societies.
Purpose of tech is longevity
Technology buys us time

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The proximate purpose of technology is to reduce scarcity. But the ultimate purpose of
technology is to end mortality, writes Balaji Srinivasan.
Technology allows us to do more with less. To make things better, faster, cheaper, and
smaller. To move the Pareto-frontier and reconcile previous trade-offs.
Take Tesla – the company made EVs go mainstream and produces safer cars than Volvo,
faster cars than Porsche and cheaper cars than Volkswagen. EVs have 100x less parts than
ICE cars.
Balaji gives an example of Haber-Bosch process and the subsequent Green Revolution
that fed billions of people – a literal reduction of scarcity thanks to technology.
In a very deep sense tech founders are more inclined to have the positive-sum mentality
that Balaji describes as the win-and-let-win ideology. Because unlike heirs, tech
founders started often from nothing and build empires from scratch – they saw how the
proverbial pie can grow. Balaji calls this founding vs inheriting. Built-rich is very different
from born-rich.
Mortality is the ultimate source of scarcity, explains Balaji. We value speed, because we
value time. And we value time, because our lifespans are finite. Our healthspans are
shorter yet. Therefore, life extension is the most important thing we can invent.
But longevity is still a niche area of research and investments, and age reversal was a
controversial topic just a few years ago, says David Sinclair. Longevity can be a $100T
wealth unlock - like China after Deng Xiaoping.
Balaji thinks that it is easier to start a new country than to reform the FDA. Same as it was
easier for Satoshi to create bitcoin, than to reform the Fed. But we need bits to reform the
physical world of atoms. Because bits help us to organize highly-aligned
communities of tech progressives.
Balaji’s motivation for writing The Network State book and making network states a
reality is driven by his desire to unlock innovation in longevity.

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People with STEM backgrounds have a duty to advocate technological progress on a daily
basis. Because you might not be interested in politics, but politics is interested in you. We
need to create a parallel tech-driven decentralized media ecosystem with thousands of
movies like Super 30 or Limitless, says Balaji.
“This could be us, but you are regulating”, says Balaji, paraphrasing the popular meme. If
Covid vaccines were shipped earlier, using voluntary challenge trials, thousands of lives
could be saved - daily.
Innovations in space travel and the mission of SpaceX to colonize Mars is also an indirect
example how technology reduces existential risk of humanity dying out. And we need
longevity to reach other planets.
Balaji says that technology is both the cause and the solution to all of life’s problems,
jokingly paraphrasing Homer Simpson.
To extend the concept of technology supporting life further, according to thinkers like
Forrest Landry and Alexander Bard, technology should be used to improve biodiversity
and climate. We can terraform Mars and deserts on earth.

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Network Union
From everyone online to everyone aligned
Balaji Srinivasan in his book The Network State describes a network union as “a social
graph organized in a tree-like structure with a leader, a purpose, a crypto-based financial
and messaging system, and a daily call-to-action.”
Balaji Srinivasan sees a network union as the second step towards the network state –
a digitally-native form of bottom-up nation building. It is a highly-aligned
community. If the goal of the previous decade was to get everyone online, the goal of
2020s is to get everyone aligned, says Balaji. It not a simple leader-follower relationship,
but the goal is a complete graph with dense connections – where people form deep
relationships and a high-trust environment.
The first step is a startup society with a clear moral innovation in the form of The One
Commandment, that anyone with a laptop can start. Balaji sees startup societies as the
new SaaS – Society as a Service. You are selling memberships to a society, and not
subscriptions to software products. But investors can use familiar SaaS metrics to