At balajis.com, How to Start a New Country, 9 April 2021.
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.
And finally we arrive at our preferred method: the cloud country. Our idea is to proceed cloud first, land last. Rather than starting with the physical territory, we start with the digital community. We recruit online for a group of people interested in founding a new virtual social network, a new city, and eventually a new country. We build the embryonic state as an open source project, we organize our internal economy around remote work, we cultivate in-person levels of civility, we simulate architecture in VR, and we create art and literature that reflects our values.
Over time we eventually crowdfund territory in the real world, but not necessarily contiguous territory. Because an under-appreciated fact is that the internet allows us to network enclaves. Put another way, a cloud community need not acquire all its territory in one place at one time. It can connect a thousand apartments, a hundred houses, and a dozen cul-de-sacs in different cities into a new kind of fractal polity with its capital in the cloud. Over time, community members migrate between these enclaves and crowdfund territory nearby, with every individual dwelling and group house presenting an independent opportunity for expansion.
What we've described thus far is much like the concept of ethnic diasporas, which are internationally dispersed but connected by communication channels with each other and the motherland. The twist is that our version is a reverse diaspora: a community that forms first on the internet, builds a culture online, and only then comes together in person to build dwellings and structures. In a sense you can think of each physical outpost of this digital community as a cloud embassy, similar to the grassroots Bitcoin embassies that have arisen around the world. New recruits can come to either the virtual or physical environment, beta test, and decide to leave or stay.
Now, with all this talk of embassies and countries one might well contend that cloud countries, like the aforementioned micronations, are also just a LARP. Unlike micronations, however, they are set up to be a scaled LARP, a feat of imagination practiced by large numbers of people at the same time. And the experience of cryptocurrencies over the last decade shows us just how powerful such a shared LARP can be.
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? A cloud country with a population of this size would actually fit right in the middle of the pack globally, as out of the 193 UN-recognized sovereign states approximately 20% of existing countries have a population of less than 1M and ~55% have a population of less than 10M. This includes many countries people typically think of as "real", like Luxembourg (615k), Cyprus (1.18M), Estonia (1.3M), New Zealand (4.7M), Ireland (4.8M), Singapore (5.8M), and so on.
More at the link.
Think of this as another variety of virtual feudalism.