The Digital Leviathan
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Dear Bankless Nation,
The nation-state is a Leviathan we created to protect humanity from its lesser instincts and to help us coordinate. But it’s old. Rusty. Corrupted. Consuming. Analog.
A new Leviathan is rising up.
This one’s different: the Digital Leviathan is headless. No president, no king, just unstoppable, openly verifiable code. Power to the people.
And with that power, comes responsibility.
We have a responsibility to help our nascent leviathan grow. With growth comes strength. And once strong enough, it can help us take back our money—maybe even our identities.
That’s when Bitcoin & Ethereum become unstoppable Digital Leviathans.
The Digital Leviathan
Nature (the Art whereby God hath made and governes the World) is by the Art of man, as in many other things, so in this also imitated, that it can make an Artificial Animal… For by Art is created that great LEVIATHAN called a COMMON-WEALTH, or STATE (in latin CIVITAS) which is but an Artificial Man; though of greater stature and strength than the Natural, for whose protection it was intended.
- Thomas Hobbes, Leviathan
Here’s this one, for those who prefer the audio format:
A Metaphysical Body
In his famous book Leviathan (1651), Hobbes describes the commonwealth of a nation-state as an "artificial person”; a body-politic that mimics the human body. A gigantic human form built out of the bodies of its citizens, with the sovereign leader as its head.
The individual constituents of the body of a nation each add to the social contract that emerges. This strong social contract is the force that keeps the individuals cohered and organized into the holistic body. Importantly, each individual constituent of the body of the Leviathan contributes their own variant or interpretation of the social contract, impacting what the overall composed social contract manifests into.
Hobbes argued that this social contract, alongside the rule of a single absolute sovereign, was the strongest way to compose a nation. A strong, undivided government is what enforces the rule of the social contract and keeps the body composed and functioning.
This became even more true with the advent of democratic republics. The establishment of one-person-one-vote instantiated the contribution of the values of each individual to the health and vitality of the greater overall body of the nation.
Democracy is the vehicle to which the individual can integrate their personal values and ethos codified into the social contract of the Nation: laws.
We’ve talked about this before ad nauseam but Ethereum and Bitcoin are their own nations and each has their respective Leviathan; dually composed by the code of the protocol and the individuals that use it. These new kinds of Leviathans have made one critical update to Hobbes's theory of the Leviathan: replace the sole sovereign leader with unstoppable, openly-verifiable code.
All technology enables creative destruction. Bitcoin and Ethereum will subsume the job of the monarch, prime minister, president, or dictator. The role of enforcing the social contract is now replaced by people running their nation’s respective software — the unstoppable code.
The responsibility of enforcing the code is shattered into a million pieces and handed off to the people.
The progress and developments of Leviathans of old have shown that this is desirable by the people that have composed them. Throughout history, Leviathans have discovered mechanisms to formalize and protocolize their social contracts into concrete and well-defined laws. Progress in this endeavor is akin to the establishment of communication and transportation infrastructure of a nation. The more roads and cables that a nation lays, the more holistic and integrated it becomes. Similarly, the more formalized and understandable its social contract is, the easier it is to be following by the masses. The effort of clearly laying out the rules that govern a nation means that the nation can scale its Leviathan to be a larger and more powerful beast.
Bitcoin and Ethereum are the new absolute sovereigns for these new nations. We didn’t eliminate the role of President, King, or Dictator, we automated it. Not only that, but they also automated a large part of the necessary infrastructure that maintains the cohesion of the body: value and value management.
The physical bodies of people will always compose their nation-state Leviathan, but value is perceived, and nothing is stopping the constituents of a Leviathan from choosing to perceive value from existing outside the boundaries of the Leviathan they compose.
Leviathans are not composed of people, but rather what those people perceive as valuable.
What is the role of government other than to manage value in the ways that we collectively agree? However, if we chose to perceive value outside the body of the nation-state Leviathan, and instead inside the body of a digital-nation Leviathan, the former reduces while the other expands.
The migration of value from the Physical to the Digital Leviathans is the foot-in-the-door for these Leviathans to establish themselves as real, growing life-forms in this universe. If they hold and manage our value, we are incentivized to uphold these systems.
As the nation-state falls from favor (have you seen the global unanimous distrust and lack of faith in institutions lately?), the migration of money is just the first exodus. After we migrate our money, we migrate our identities.
You are an organic NFT, and you leave social impressions upon your organic NFT kin. These impressions are already encoded in various different ways; credit score, Facebook friends, twitter followers, stream viewers. The manifestation of one’s social graph and whether or not one can be ‘vouched’ for by others can itself migrate from their current systems to the leaderless Digital Leviathans.
As the Digital Leviathans grow in scale and capabilities, it will come at the cost of the Physical Leviathans. This isn’t a zero-sum game; the existence of Digital Leviathans is net-value generative, but simultaneously the Physical Leviathans have everything to lose and Digital Leviathans have everything to gain.
Bitcoin vs Ethereum
Perhaps this perspective provides an answer as to why Tribalism seems to be an inextricable component of the crypto space.
Bitcoin and Ethereum are the President, Prime-Minister, Monarch, or Dictator of their constituents, and their constituents create their legitimacy and power.
Leviathans (nations) survive by accessing and leveraging scarce resources. While the landscape available to Digital Leviathans is vast and bountiful, it is still limited and finite. At some point, these two Digital Leviathans will grow to maturity, and any further growth will have to come at the cost of the other. While these two Digital Leviathans generates more total space, more total space can still come to be completely saturated.
In The Three Nation Problem, I discussed how I believe the U.S. Leviathan will subsume its Silicon Valley sector, in order to access enough information and power to be able to compete with the Chinese Leviathan. So far, this process has started with conflict, as the 4 Leaders of the Silicon Valley Nations were summoned to congress to atone for breaking the social contract. However, I think the Nation-State will find it is better off by absorbing Silicon Valley technology rather than expelling it.
I see no reason as to why Bitcoin and Ethereum won’t become composed together as a more holistic Digital Leviathan. These systems can never become one singular body; both protocols must retain their sovereignty to remain legitimate. But the inflows of BTC on Ethereum in the last few months illustrate the melding of these two systems into a single greater one. Simbiotic twins!
Growing our Leviathan
We all are constituent parts of our respective Leviathans, and we all have a part to play in its growth and health. Leviathans depend on civic engagement and community for optimum development (Gitcoin Grants Round 7 starts in one week!).
Like infants learning to operate in an unknown environment, Leviathans in development need conversation and community engagement in order to learn about the world in which it resides. The ‘narratives’ of crypto, P2P electronic cash, world computer, digital gold, gas, DeFi, are all conclusions and iterated conclusions about what these Leviathans have learned about their role in the world. These things are discovering, through experimentation and failure, how best to operate in order for optimum development and health.
These Digital Leviathans are leaderless; we replaced the sovereign with the protocol. That means that there is no one specific human responsible for its existence. Therefore, we are all responsible for the health and growth of these new species, as we embody them and they rule over us.
The whole point of these systems is that they turn the tragedy of the commons into the festival of the commons. Use and alignment with these Digital Nation adds value rather than consumes it; they get better with use. However, there are still costs to every action, and as stewards of our own leviathan, it is our (your!) responsibility to ensure that your fellow Digital Nation citizens are upholding their part of the social contract!
Be a good citizen! We have a very young Leviathan on our hands. It needs our care!
For further and more in-depth reading on this subject, check out this piece.
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Not financial or tax advice. This newsletter is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. This newsletter is not tax advice. Talk to your accountant. Do your own research.
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