The Generalist - The Decentralized Country

Hello friends,

One of The Generalist's main purposes is to help readers think about the future. Often, that's by unpacking the machinations of a particular business that's doing things differently. Other times, it's a discussion of a particular market or trend.

Every so often though, I like to climb to a different altitude in search of a more expansive view. Instead of looking at how the world is changing right now, and what that might mean over the next decade, I try and think about the next century, or longer.

Today's piece is one of these imagination games. In particular, it's an attempt to answer the question: what comes after nations?

As you'll see, I think the current technological revolution has only begun to change how we commune, collaborate, and govern. Increasingly, I believe we'll organize ourselves into "decentralized countries" that have as much or more power than traditional nation states.

Though I always want to hear what you think, the more theoretical nature of this piece is, I think, particularly well-suited to dialogue. Drop me a line to share your thoughts, or of course, join our community for meatier conversation.

On we go!

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IN COLLABORATION WITH MASTERWORKS...

This NYC Startup is Disrupting the $21.1 Trillion Alternatives Landscape (Here’s How You Can Get In)

With volatility rising, billionaires are increasing their allocation to alternative assets to decrease market risk. According to KKR, portfolios over $1 billion are diversified over 50% into alternatives. PwC projects total alternative investments will reach $21.1 trillion by 2025.

There’s one “first in class” alternative that has survived every major economic downturn: Blue-Chip Art.

Citigroup’s data explains why:

• In the first half of 2020, Blue-Chip Art bested all major assets
• 0.01 correlation to public equities
• Blue-Chip Art prices outpaced the S&P 500 (1995-2020)

The one problem? Building a diversified art portfolio could cost over $100 million.

But, an NYC startup lets you invest in the same paintings collected by billionaires. With Masterworks.io, you can add art by Warhol, Banksy, and Monet to your portfolio with a few clicks. In fact, their investors saw a net IRR of 30%+ in 2020 and 2021.

I’ve invested in several Masterworks offerings including a recent Picasso.

The best part? Generalist subscribers skip the waitlist*​

Actionable insights

If you only have a couple of minutes to spare, here's what investors, operators, and founders should know about decentralized countries.

• Nations are a modern concept. Most modern nation states emerged at the tail of the 18th century. That makes them much newer than many other civilizational constructions. There’s no reason to think they should last forever.
• Innovation forces societal restructuring. The advent of the printing press was a driving force behind society’s transition from divine rulers to more democratic nations. Newer technologies like the internet and blockchain will cause similar disruption and reorganization.
• Crypto has introduced “vernacular economies.” Currencies like bitcoin, Ethereum, Terra, and even Dogecoin are internet-native monies. In that respect, they resemble a kind of “economic vernacular,” endemic to the digital realm. In time, that may grant them greater authenticity and social power.
• Decentralized countries may supersede nations. The most influential civilization-scale entities will exist entirely online, a consequence of digital lives becoming more valuable than physical ones. “Decentralized countries” will coordinate and govern our virtual terrain. ‍
• Our sense of identity will be altered by these changes. Today, humans have a mostly monogamous relationship to nations — try and profess allegiance to more than one and things get complicated. In the future, we may be “promiscuous nationalists,” moving between digital states depending on circumstance.

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We have not always lived in nations. Before there were structures like "France" or "Germany," empires reigned. The dominion of Rome stretched up to two millennia, depending on one's definitions, and both the Byzantine and Ghana empires lasted roughly a thousand years.

Compared to those reigns, unions like "the United States of America" look short. Two hundred and forty-five years is the blink of an eye in the Anthropocene. Even the US looks ancient next to constructions like "Russia," its current incarnation created thirty years ago.

Comparisons of this kind are meant to illustrate two simple points: nations are not very old, and there is no species law that we must organize beneath their banner. Across human history, we have cobbled ourselves into tribes and fiefs and city-states of varying prosperity and endurance. We have favored other configurations and flourished.

We will do so again. Just as mechanical advancements gave rise to national systems, the technological revolution enables new structures. While the internet was the dominant force in the current shift, cryptocurrency represents the missing piece. Though much discussed, we remain in the early innings of understanding how profoundly the blockchain "vernacularizes" economics and empowers digital, censorship-free homesteading.

The result will be a new kind of civilizational structure: decentralized countries. "DeCos" will operate above national borders in the digital realm. In that respect, they resemble the "cloud nations" theorized by one of decentralization's poet laureates, Balaji Srinivasan. This piece owes a debt to his thinking and the writings of Benedict Anderson and Marshall McLuhan.

While Srinivasan's "cloud nations" seek to proceed "cloud first, land last," DeCos may never attempt to settle terrestrial territory. Rather, these entities recognize that our digital lives are more real and valuable than our corporeal ones.

In stating this claim, DeCos begin to fulfill it, drawing groups into meaningful digital communion. Eventually, this will allow them to supersede nations as the primary recipient of our time, attention, capital, and social fealty. Our descendants may not identify themselves as "Italian" or "Turkish" but from a specific digital clan that can be carried with them, regardless of their physical location. Once Romans walked the breadth of the empire protected by the phrase "civis romanus sum" — I am a Roman citizen. In the future, we may jump between a range of such identities — civis Bored Ape sum — promiscuous in our nationalism.

If not already evident, such a fundamental shift will open radical opportunities. Founders and early denizens of DeCos may exert outsized control over the dominion's GDP and branches of government. Investors in the DeCos themselves and the technologies enabling them will also prosper.

Today's piece is an exploration of this idea. By the end of our journey, we will have discussed:
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• The definition of a nation. Before it receives a eulogy, the concept of a "nation" deserves depiction.
• How innovation created national structures. We can trace our current civilizational structures to the rise of the printing press and the decline of religious elites.
• Nations and temporal manipulation. As national citizens, we experience a form of "simultaneous time" which recognizes the simultaneous existence of compatriots we feel a kinship for but do not know.
• The internet and spatial manipulation. The proliferation of the internet has created something like "simultaneous space." We occupy many terrains simultaneously and understand that others do the same.
• Crypto and "economic vernacularization." The blockchain opens up the ability to create an independent economy.
• When terrestrial and transcendent countries collide. For the foreseeable future, we can expect humans to have bodies. That pesky corporealism makes interaction with the physical world necessary. DeCos will need to build relationships with terrestrial entities, even as it looks to transcend them.

We'll also discuss which entities have the potential to become DeCos, in time.

Onwards, compatriot.

IN A MEME

For the pictorially inclined, here's the whole piece — all 5,700 words of it — in a single meme.

PUZZLER

All guesses welcome and clues given to anyone that would like one. Just respond to this email for a hint.

A syllabic secret was quickly found by Lorenzo C. He was joined by Robert H, Benjamin H, Austin V, Ajay J, Neil H, Jim W, Michael O, Kelly O, Stephen C, Thomas K, Nicholas T, David H, Tom S, Michael G, Nate M, Hari A, and Russell I in finding the answer to last week's Puzzler:

The answer? "Seven" has two syllables while every other number has just one. Nice work, everyone.

I think it's time for a cup of tea, some reading, and maybe a game of some kind.

Until next time,

Mario

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​*See important disclosures​