Author of The Network State.
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It's been a while since I went on a threadoor moment. Here's the spicy take: @balajis.eth is right. But what he's off about is the endgame. Here's the Cassie crystal ball tea 🔮🍵 and you can bet it comes back full circle to my grander theory of crypto. We're going to start from right now, and work forward 40 years.

BDFL of Quilibrium, Eng @ Farcaster, ex-Coinbase, always opinionated, never hydrated

/quilibrium

At this point, everyone has heard the $1MM bet. And to be fair to Balaji, clearly no, Bitcoin won't reach $1MM in 90 days. But what is going to happen is a mass capital exodus as panic sets in once the curtains are pulled back and people see the emperor (banks) has no clothes (money).

But there's a lot of moving pieces to a very substantial world-changing event, and this is just the pretext. What's next? Something that @balajis.eth has also been hinting at – the rise of the network state. But how it's going to happen is going to be much like my morning routine: messy and chaotic.

Why am I bringing this up when we're watching the latest economic empire see its fall? Because these two parallel events are the grandparents of what will emerge as the new state. For all recorded human history, our ability to self-govern has been lead by a subset of a mixed representation of ourselves.

Mostly wealthier, more aggressive, certainly more power-hungry people. And every time there has been instability within the walls of the state, the levers of control over money have been actuated to contain the chaos. When that hasn't happened, well, capital takes flight, exacerbating the situation.

When the Great Depression hit, people started the capital exodus into stores of value like gold. This was a difficult medium to manage, especially given ownership could easily be assessed and taken by force (https://theconversation.com/how-the-us-government-seized-all-citizens-gold-in-1930s-138467).

Given the dollar has long been removed from a standard beyond its own sheer economic (and hegemonic) force, and that it is harder than ever to reasonably obtain and use stores of value like gold in times of crisis, there did not seem to be a way for people to seek capital flight. Enter Bitcoin.

And Bitcoin and other crypto have worked their way into the hands of the general public after a decade, with 16% of the American population having touched it, and specifically, 31% of young adults. In other words, the cat is already out of the bag, and that bag when self-custodied can't be seized.

The demand for sound, transparent and universally applicable rules and freedoms of finance makes for an obvious choice of capital flight. So how does this relate to network states, or AI? Economic disruption is just the first domino.

Capital flight is something people with money can do, but people who can't have to make ends meet. With capital and brain drain in motion employers have no choice but to max impact with fewer resources, and with the progression of AI, this is soon feasible. Especially once we get these functions talking to each other.

Physical labor is not immune to this. The slightly funny, slightly terrifying work of Boston Dynamics empowered by AGI can handle even the currently "AI-proof" labor that people will inevitably do in the last hopes of making money in a hyperinflated world.

But the consolidation of banks will lead to consolidation across industry, with the power of the compute resources which serve as the substrate for these AI functions similarly consolidated. And over time, as more and more is automated away and the economic utility of people becomes a net negative...

Of course, people won't go away. And people have to eat. Those that made their great escape into Bitcoin and other assets mostly won't survive forever off the imbalance between hyperinflation and stores of value. Like people have gig-economied their way into new income streams, they will put their computers to work.

Decentralized general compute at scale is happening parallel to all of these current events. In the same way that Bitcoin offered clear, stable rules and unfettered access to sound money, decentralized compute will offer the same for a true world computer – uncensorable, impartial, and rewarding users who contribute.

Like Bitcoin was an escape from central financial systems, so too will there be an exodus from the concentration of compute power into decentralized compute. And being capable of handling the complex AI functions that have destabilized the workforce, shifts away from the central power that disproportionately benefits.

And when you have decentralized money, decentralized compute, decentralized intelligence, you have a complete system replacement for the institutions of power. And as that intelligence grows beyond that of any single person's role, it grows into something that can serve the greatest role.

Because remember, it can hear you now. It can respond to you now. It can see you now. And it knows you now. And by then, it will know you all. And who better to govern than what was built to help us better than we could help ourselves? And thus the final state, the network state, was born.

Things on a parallel track are accelerating with absurd momentum. AI has dramatically overshot human performance. It can hear you now. It can respond to you now. It can see you now. And it knows you now. The only thing these functions can't do, is talk to one another. https://i.imgur.com/0mcB4YQ.png