Digital Nations - The Daily Gwei #202

Where we're going, we don't need nation states.

The crypto ecosystem commonly uses analogies to map our new creations back to something that we can all relate to. It started with Bitcoin and “digital gold” but with Ethereum we can now basically recreate an entire nation and map its digital properties to things we’re familiar with in the physical world.

Within the Ethereum nation we have cities and suburbs or as I like to refer to them as: protocols and layer 2. You can think of protocols like Aave, Compound and Uniswap as the cities and they are of course expensive to use because of Ethereum’s network fees. Suburbs aka layer 2 on the other hand are much cheaper to use and most people will flock there in order to do their business/live there in a more scalable way. Now of course protocols can live on layer 2 as well and even inherit Ethereum’s security but the cities will most likely always be where the most capital lives.

Etherean citizens occupy the Ethereum nation and are part of “gen Ξ” - a generation that is not defined by the year they were born; rather it is defined by one’s presence in the nation. Ethereans use ETH as their native currency in a number of ways - whether that’s to fund the Ethereum nations military by using ETH as an internet bond in eth2, to obtain a piece of culture by buying an NFT or to collateralize positions in the native financial system of the nation, DeFi. Each citizen also has their own Ethereum address which acts as their bank account* to store not only their money but also their collectibles, insurance policies, in-game items, art or whatever else.

*I know that my tweet says passport but I think “bank account” makes more sense!

The native language of Ethereum isn’t English or Mandarin or Hindi - it’s Solidity. Developers use this language to create new cities in which Ethereans can use their ETH to trade on a decentralized exchange (the nation’s stock market) while paying ETH gas fees to secure the network (the nation’s tax). Developers can also adopt other languages and use them on Ethereum’s layer 1 or within Ethereum’s emergent layer 2 ecosystem.

You could probably extend all of these analogies out further and say that there will be a universe of crypto-networks and each one will actually be a planet rather than a single nation. So from this point of view Bitcoin and Ethereum would be the major planets (aka home bases) while the smaller planets will be other things that are commonly referred to as “sidechains” - these could be crypto-networks or centralized crypto services. All in all though, everything will simply live in the “crypto universe”.

Have a great weekend everyone,
Anthony Sassano

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All information presented above is for educational purposes only and should not be taken as investment advice.