Building a Cloud Country in the Modern Era

When a country has too much technical debt and historical baggage, sometimes the best thing to do is to start fresh. Why not start a digital-first country?

Building a Cloud Country in the Modern Era
This blog post is a response to the 1729 article How to Start a New Country, written by Balaji Srinivasan. The article introduces the notion of a "cloud country" and how it could gain status as a legitimate country.

I recommend first reading it for context if you haven't already.

The fantasy of starting a new society from scratch has always stuck in the back of my mind. One day, a group of the smartest people I know would colonize some abandoned island. Over time, we'd form a micro-economy that made the colony sustainable yet independent. New people would be welcome to join this society if they brought something to the table. And as the society scaled, it would out-innovate and surpass the old societies. We'd be free from the technical debt and political baggage of existing countries.

As you might have guessed, when Balaji wrote about how to start a new country, I was rather excited. Bootstrapping a physical nation is hard. But starting from a digital realm might be the stepping stone that a new society needs. So how can it be done? Is it feasible? Let's take a look.

I've divided this up into four main sections in case you'd like to skip around.

  1. Motivations for Starting a New Country
  2. Implementation Details of a New Country
  3. Establishing Legitimacy for the Country
  4. Thought Experiments

Why You'd Want a New Country

We want to be able to peacefully start a new country for the same reason we want a bare plot of earth, a blank sheet of paper, an empty text buffer, a fresh startup, or a clean slate. Because we want to build something new without historical constraint.

The motivations that Balaji provided for starting a new country are pretty straightforward:

  1. We don't want the historical constraints of an existing country.
  2. There is financial upside with starting something new.
  3. Starting fresh creates societal value without conflicting with old societies.

Regarding the incentives for starting a country, we're pretty much in agreement. Sometimes it's easier to start a new system than to fix a broken system.

Suppose you wanted to change an existing law in your country. In a well-developed democratic country (e.g. United States), you'd need to gather support for your ideas for a chance at effecting change. Everything has to go right. Becoming part of government is a possibility, but that's its own odyssey. An authoritarian country is far worse. It's hard to make change without the risk of conflict and violence.

I like to think about choosing a country (or place to live) in terms of BATNA. If you're unhappy with your current living situation, look for a better country. That's why we have immigrants. People vote with their feet. We even see such behaviors on a local level. During the COVID-19 many tech workers (myself included) left Silicon Valley. Leaders of other geographical locations have tried to attract the fleeing talent. (In some sense, it resembles a CEO recruiting for a company, but that's out of scope for this blog post.) What most people fail to understand is that you can start something new if the existing options aren't appealing. The idea applies to countries as well. If there are no good countries, why not start your own?

Note that this isn't a criticism of any country but rather an observation of the world. A well-established behemoth will have lower velocity by nature.

Why NOT to Start a Country

Something the original article forgot to mention was reasons not to start a new country. I'd be remiss if I didn't at least briefly discuss the topic.

Depending on your problems and goals, you may find reasonable alternatives to starting a new society.

  • If you don't want to be constrained to a country, consider becoming a digital nomad.
  • If you are looking for like-minded people, consider joining or starting a community that revolves around a topic.
  • If you believe the problems with your country are fixable, consider going into politics.
  • If you don't like obeying laws, consider watching The Purge.

Starting from scratch is not without its hardships and downsides. You lose a lot of existing luxuries by departing from established society. (For example, who helps you if you get attacked in public?) I like to draw comparisons between working at a large tech company versus a startup. The large company gives perks that not all people are willing to give up.

How You'd Build a New Country

We've covered motivations for starting a country, so next we must figure out how to start one. Let's dive into the implementation details.

How NOT to start a Country

Balaji lists out 6 publicly discussed methods of starting a new country. I'll sprinkle some of my own opinions on these methods.

The first 3 methods are conventional and aren't particularly new ideas:

  1. Elect a new country through legal means.
  2. Start a revolution.
  3. Win a war.

Readers may notice that these methods carry historical baggage of an existing nation. That directly contradicts one of the original motivations for starting a new country. Additionally, these methods invite violence and conflict. It's probably not anybody's first choice.

The next three ideas are a bit less conventional:

  1. Stake out a micronation.
  2. Build a habitat on international waters.
  3. Colonize territory in space.

All of these are slightly gimmicky and very land-centric. It's almost like creating a country for its own sake. There's also a problem around the legitimacy of the country. What's going to stop a real military from marching (or sailing) over and destroying the "country?"

Although seasteading hasn't worked out in practice, the concept art is really cool.

Cloud Countries

Rather than go with one of the prior methods, the suggested solution is to go digital-first. Rather than focusing on land, groups of people can build a community online. Balaji calls this a cloud country. The community creates its own economy around remote work and can form its culture online. After the cloud country has a strong online foundation, it can begin to accumulate territory in the physical world.

What's nice about starting digital-first is that the nation grows in incremental steps. Claiming a physical plot of land is an expensive hurdle. Our odds of building a country increases if we can make smaller iterations. It also allows people to join based off values, rather than physical location. People don't get excluded for reasons out of their control.

To add on to the concept of a cloud country, let's explore some emergent properties of cloud countries.

Values 🤝

We recruit online for a group of people interested in founding a new virtual social network, a new city, and eventually a new country.

Regarding the recruitment strategy, I don't quite agree with the above quote. What happens if we recruit exclusively among people who want to start a country? We end up with people who start a country for the sake of starting a country.

  • If these people don't share values, how can they collaborate in the long term?
  • If nobody has skin in the game, what's stopping them from leaving if they don't get their way?

When something goes wrong, the cloud country gets abandoned like a science project.

The people who found a new country need some set of shared values. A cohesive nation requires people to be united. Otherwise, there's nothing to keep a society intact. I do believe the ambition to start a country has its place. The founders of a country need to want to built a society and have common values that act as a country's foundation. The ambition makes the country happen; the higher purpose keeps the country alive.

Economics 📈

Surprisingly, cryptocurrency is a mandatory innovation for cloud countries to exist. (Maybe this isn't surprising to some.) Let's explore why.

  1. It's a globally recognized currency.
  2. It can't be (easily) manipulated by enemies (or friends).
  3. It doesn't require a government to maintain.

Suppose you're the benevolent dictator of your brand new cloud country. You decide to distribute a new fiat currency. It immediately goes through hyperinflation and becomes worthless.

Now let's suppose you pinned your currency to another country's currency. The threat of instant hyperinflation disappears. But now you're at the mercy of another country arbitrarily printing money. A foreign government can manipulate your currency's value.

While stressing over currency manipulation, suppose you fall into a coma. Nobody else can print your currency, so it goes into hyperdeflation. During the coma, people fall back to other currencies (or simply leave the cloud country).

By 1923, the Weimar Republic had gone through so much hyperinflation that you needed baskets of cash.

Using a cryptocurrency solves all of these problems. Ironically, bootstrapping a new fiat currency will be more volatile than adopting crypto. In an ideal world, I like the idea of starting a new cryptocurrency so everyone starts on the same page. However, that does lead to a question of currency legitimacy. New currencies may also incur risks of 51% attacks by foreign nations. Although not ideal, sticking with a popular existing cryptocurrency makes the most sense.

Culture 🎄

I expect cloud countries to develop rather colorful cultures. A distributed country leads to distributed subcultures. People naturally mimic cultural aspects from their physical locations. Afterwards, they bring those aspects to the online community. One can think of subcultures like dialects of a language. Within the cloud country, these dialects will form around interests, rather than location. The citizens who hang out the most will mix their cultures more. Within the cloud, it's independent of physical location. It's a melting pot with unique properties.

Even if the cloud country has physical land, I don't see a reason for the distributed culture to disappear. If anything, most citizens may still prefer the nomadic lifestyle.

When You'd Know It's a Real Country

One can debate whether a cloud country is an actual nation or a glorified online community. The original article explores four ways of defining a country.

  • Territorial Definition: A new country settles in a new territory.
  • Governmental Definition: A new country is a new government formation.
  • Numerical Definition: A new country has a critical mass of citizens, land, and wealth.
  • Societal Definition: A new country is recognized by the United Nations as an entity capable of self-determination.

Balaji rejects the first two definitions and uses the latter two to define a new country. I agree that the first two definitions are poor measures of a country. However, it's worth noting that the latter two definitions have their own issues as well.

Small and poor countries get excluded with the numerical definition of a country. For example, an Indian reservation may not meet the numerical definition of a country. The societal definition suffers due to the subjectivity of the United Nations. Taiwan isn't recognized by the UN, but its status of a country is still debated to this day.

This isn't to say that these are bad definitions. If anything, they make remarkably good approximations. I'd like to extend both definitions:

  1. A country needs some sort of governance structure. (It doesn't have to be strict.) A critical mass of people should recognize and unite under this governance.
  2. A country should be capable of self-determination. However, rather than the UN judging status, its own citizens should be the judge. A critical mass of citizens should be fine with renouncing their prior citizenships.

Governance 🗳️

The problem with focusing on numbers in isolation is that context matters. Is a really large community a country? What about rich and powerful companies? Both hit numerical targets for critical mass. The earnings of large tech companies outweigh the GDP of certain countries. We already know that certain companies even wield political power.

I would draw the distinction at a point where two conditions are met:

  1. The community has some sort of governing structure.
  2. The citizens of the community are on the same page about the governing structure.

A government and its citizens have rights and responsibilities. A legitimate country should prove that these exist.

Citizenship 🛂

Could a sufficiently robust cloud country with, say, 1-10M committed digital citizens, provable cryptocurrency reserves, and physical holdings all over the earth similarly achieve societal recognition from the United Nations?

The answer to the above question is "Yes, but not necessarily."

We assume that the United Nations is an objective source of truth. In reality it's a centralized body, driven by consensus and political influence. Remember that consensus is independent of truth. Suppose a powerful country decides to be a mortal enemy of our cloud country. Do you expect it would allow the UN to recognize the cloud country? Do you expect the UN to resist the country's influence?

Instead of listening to a centralized entity, we could use a simple heuristic. A critical mass of citizens should be comfortable renouncing their previous citizenship. A citizenship with the cloud country should be sufficient. The measure is now decentralized and gives the citizens skin in the game. Are the people serious about making the cloud country a real country? Now there's a way to prove it with action. (Astute readers may notice that this measure is still based off consensus. Consensus is independent of truth. For example, most cloud citizens may have high risk tolerance. It's still better than leaving it to some third party with questionable incentives.)

Dual citizenship is another case to take into account. It's allowed in most of the world. My point here is that we should highlight the value of a cloud country citizenship.

The reason I want to drive home the idea of citizenship is because a country fits more needs than a community. If everybody remains associated with their original country, is the cloud country legitimate? It's easy to claim to be a "citizen" but outsource healthcare and taxes to your real country. A real county should be autonomous (though it doesn't need autarky). Its citizens should not be forced to rely on other countries for certain needs.

The Next Step

Balaji concludes the article with a call to action.

The next step is to describe exactly how we might go about this.

I'll bite. It may not be productive to speculate too hard, but it sure is fun. Let's conclude this blog post with some thought experiments!

  1. Implementing a Government 🏛️
  2. Joining an Established Cloud Country 🧳
  3. The "Skyborn Babies" of a Cloud Country ✈️
  4. Caring for the Poor and Elderly 👴
  5. Physical Conflict and War 💣

Thought Experiment 1: Implementing a Government 🏛️

It's pretty hard for a cloud country to fall into tyranny. I can see mob rule (or anarchy) being a more likely alternative. That's no good. People will return to their original countries. The cloud country will turn into their role play hobby on the weekends. As a result, the country needs some reasonable government.

Having some sort of republic with term limitations would be an interesting option. Rather than presidents and senators, we could view leaders as CEOs, moderators, and admins. Smart contracts could enforce power and term limits. That way, no centralized power can take over the government. Some consensus algorithm "elects" a new leader based off citizen input. The smart contract then grants the leader permissions that expire after the term. The election repeats itself afterwards.

Thought Experiment 2: Joining an Established Cloud Country 🧳

Decades into the future, I wonder what it would look like for a newcomer to join a prosperous cloud country.

Cloud countries may be especially appealing in places with questionable governments or economies. I can imagine that one day, a young adult in such a country will turn to remote work in order to support his or her family. Businesses within a cloud country may offer remote jobs to people in other countries. The remote work pays in something stronger than the local currency.

As the young adult saves up money, it becomes appealing to change citizenship. The young adult can immigrate to community-owned land and get a voice in the political system.

Thought Experiment 3: The "Skyborn Babies" of a Cloud Country ✈️

The first midair birth dates back to 1929. The lucky child may earn free airline miles, but the parents need to determine the baby's citizenship. So what happens if a cloud country citizen gives birth in neutral territory?

It's easy to imagine members of a cloud country as naturalized citizens. But birthright citizenship breaks that model. (And as the population of a cloud country increases, the population of children must grow as well.) It's hard to obey the one-private-key-per-citizen model with babies. Maybe the parents claim responsibility for naturalizing their children. But then we run into a corner case with orphans. That opens its own can of worms. We explore the idea of people who can't take care of themselves in the next thought experiment.

Thought Experiment 4: Caring for the Poor and Elderly 👴

If I share this blog post with my friends outside of tech, I expect some skepticism. They may ask whether this is a delusion of grandeur among rich and power tech bros. Hopefully I can say "no" with a straight face.

Is this just a "Cloud Brotopia?" Maybe it depends on if people of different backgrounds are welcome in this society. The poor and the elderly come to mind, since they lack the means of taking care of themselves.

The government should play some role in helping those in need. Maybe it doesn't have to be direct help. Spreading awareness or starting a crowdfunding campaign can have high leverage. But if the cloud citizens aren't generous, this quickly turns into a dystopian society.

Thought Experiment 5: Physical Conflict and War 💣

One day, a foreign government might try to seize your assets and throw you in a re-education camp. When that time comes, you'd better be prepared to defend yourself.

To be honest, I don't see a good way for a cloud country to resist a physical invasion. An armed group is going to seize land. However, in a digital sense, there's a lot a country can do to defend itself. Pseudonymity can be helpful with protecting citizens. If there's no good way to identify citizens, it'll be hard to hunt them down. I wish there were a similar concept with assets. It would be cool if there were some cryptographically-backed broker that manages securities. Maybe it can be implemented with smart contracts. That way, some third party couldn't seize digital assets by force.

It may not be feasible to create a military or hire mercenaries for physical conflict. Geography plays too big of a role. However, a cloud country with sufficient influence can leverage the economic sanction. After all, it's a more common form of warfare these days.

A distributed country misses out on some perks of a centralized company. However, it's harder to kill off by nature, due to the "cockroach strategy." It's possible to break a few nodes, but the network will not be killed.


Congrats for making this far! It wasn't a short blog post. As a reward for reading, please enjoy this picture of a kitten.

The kitten is tired after reading a long blog post.

Let's recap what makes nation building so interesting these days:

  • Countries carry centuries of technical debt and historical baggage. Sometimes starting fresh is best for the long term.
  • Modern technology allows us to start digital-first societies. Thus there's a lower barrier to entry.
  • Gaining recognition as a country can be subjective and difficult. My opinion is that it's sufficient if a cloud country fulfills the same responsibilities of a real country. Additionally, its citizens should have some skin in the game.

We may find that our understanding of countries will change very soon.

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