The Rise of Web3: 10 Ways to Transition from the Geopolitical Era to the Technopolitical Era

Author: Parag Khanna (Founder of FutureMap), Balaji S. Srinivasan (Angel Investor)

Original Title: “Great Protocol Politics”

Compiled by: Gu Yu, Chain Catcher

In two recent articles, political scientist Ian Bremmer argues that large tech companies will reshape the global order, while Foreign Policy columnist Stephen Walt amicably counters that nation-states will remain dominant. We take a third view: technology has not only changed the global order but is also altering the nature of companies and states themselves. The 21st century does not belong to China or the United States, nor to traditional tech companies. It belongs to the internet.
There are many reasons for this, perhaps the most important being the rise of decentralized protocols like Bitcoin and Ethereum that are not controlled by any state or company. It is commendable that Bremmer does mention them, but he still underestimates their significance. Both he and Walt have discussed the vulnerabilities of many global tech companies—often registered in the U.S. or China, relying on these jurisdictions to enforce contracts, lacking political legitimacy in any one nation, and facing strong global backlash against their exercise of power—by introducing crypto protocols that can protect property and enforce contracts that transcend traditional nation-state boundaries.
But the challenge that technology poses to traditional geopolitics goes beyond crypto protocols, tech companies, and even the digital space itself, as it has begun to reshape the physical world. Here are 10 ways we are transitioning from an era of geopolitics to an era of tech politics.
1. Network proximity now rivals natural geography
The traditional geopolitics of the Mackinder school focuses on the eternal location of territorial rights. Over time, Russia and Japan may have different ideologies, but their geographical positions remain unchanged—at least that’s the argument.
However, the internet is adding a new dimension to this. It is not only a passive data layer supported and competed over by states, but a new type of geography that is comparable in scope to the physical world. Think of it as a digital Atlantis—a new continent floating in the cloud, where old powers compete and new powers emerge. Within this cloud continent, the unit of distance between two people is not the travel time between their locations on Earth, but rather their degree of separation in social networks.
This means anyone can simply follow others on social networks or block their accounts to keep others away from them—no plane tickets required. Any floating entity within this cloud continent can also attempt to interact with any other entity by pinging the correct IP address for any purpose, from transactions to network intrusions—no pre-existing proximity needed.
Every citizen of the old world, as long as they have internet access, can work remotely through screens, spending hours in the cloud every day, just as billions do—becoming new citizens without actual immigration. Cryptographic technology serves as a cloud-based physical defense, allowing any user to protect their digital property without traditional ammunition and without any physical force.
Bottom line: Network proximity now rivals natural geography, necessitating a rethinking of fundamental geopolitical assumptions about citizenship, immigration, power projection, and the use of force in the digital world.
2. National currencies will face competition from digital currencies
Consider what happened to newspapers: first, they all went online. Then, Google News indexed them all. Finally, local newspapers found their geographic monopoly had vanished, as there was no longer a need to distribute physical newspapers by truck.
National currencies will face a similar fate. Domestic currencies are already competing with cryptocurrencies as individuals and institutions hold digital wallets filled with various assets that can be traded with one another. The introduction of Central Bank Digital Currencies (CBDCs) will only accelerate this. Every asset will trade in a vast matrix we call the "DeFi matrix," including CBDCs themselves.
We are entering an era of global currency competition, where national currencies must occupy a place in someone’s wallet portfolio every hour of every day, even among domestic citizens. The digital version of the yen will find itself in direct competition with the Swiss franc, Brazilian real, and any other capital account open assets (including Bitcoin). Everyone is constantly becoming a forex trader, and only the best domestic currencies or cryptocurrencies will be held by anyone.
Unlike the current environment of uncontrolled inflation and competitive devaluation, the DeFi matrix imposes a new discipline on national currencies, as billions make personal choices about which currency to hold or not.
3. Remote economies create talent markets for citizens
Walt asserts that because supporters of a stateless digital utopia still need to live somewhere, states can ultimately control them. But in a competitive jurisdictional market, no government has as much power as people imagine.
Countries like Estonia, New Zealand, Singapore, Taiwan, Portugal, the United Arab Emirates, and Chile are competing for new mobile talent through "nomad visas" and other similar programs. After all, many aspects of life are already in the cloud (e.g., email, education, and e-commerce), and many others are partially digitized (e.g., finance and foreign companies). Governments are what economist Mancur Olson called "roving bandits," extracting rents in exchange for providing benefits.
But as long as people can afford or are allowed to leave, they have more choices than ever to select a more hospitable host country. Just ask the 9 million Americans scattered around the globe, a number that has doubled in the past decade.
4. Bits are ultimately reshaping atoms
Over the past decade, entrepreneurs Peter Thiel, developer J. Storrs Hall, and economist Tyler Cowen have made compelling cases that digital technology has advanced while physical technology has stagnated. But if we consider drones, robots, self-driving cars, brain-machine interfaces, vaccine passports, gene-editing tools like CRISPR and mRNA vaccines—and the return of nuclear energy, the space race, and supersonic planes—we are finally witnessing a renaissance of innovation in the physical world. Once something is online, it can be printed anywhere and scaled faster than ever before.
This is why Walt's assertion that states will inevitably control the "physical environment"—a concept known as "territory"—is actually unfounded: a government that does not understand digital may not be able to control the physical environment. Weaker states will attempt to regulate emerging physical technologies through futile, reactionary attempts to maintain control, while more capable jurisdictions will embrace them.
In other words, it is shortsighted to think that technology will be indefinitely confined to the digital realm. Countries need to reshape themselves as masters of new digital and physical technologies, or they will fall behind and witness their best citizens move to jurisdictions that do.
5. Cloud-based regulators are surpassing state-based regulators
Traditional taxi regulators may conduct rough checks on medal holders. But they do not regulate drivers as strictly as Uber, Lyft, Grab, Gojek, and Didi do. That is to say, they do not use GPS to track every ride, ensuring that drivers and riders can complete transactions, record both parties' star ratings, and utilize the full suite of tools available from modern "cloud regulators."
In a real sense, these tech companies are more modern than the paper models of the 20th century. Thus, they have faced strong opposition from traditional participants hoping to maintain control over the system, perhaps best exemplified by ongoing legislative efforts to squeeze the square peg of the 21st-century sharing economy into the round hole of 20th-century lifetime employment.
However, this will prove to be a defensive action.
First, in significant cases, these companies have already achieved national goals faster than states. For example, Gojek's parent company GoTo Group now supports over 2% of Indonesia's GDP, creating millions of jobs and bringing nearly 2 billion annual transactions into the taxable formal economy. This provides Gojek with a massive public support base.
Second, these companies will not remain companies forever; they will gradually be replaced by protocols that share benefits with users. From a political perspective, anti-tech activists can only muster weak and controversial support for new regulations, as app workers benefit less from the rise of the sharing economy than app developers do—this provides an example for class-action lawsuits.
However, the next step is the complete decentralization of Web3-based online markets and sharing economy services, which has already been facilitated by peer-to-peer transactions of cryptocurrencies (so-called decentralized exchanges). Over time, these new forms of transnational regulation (where app users have stakes and a voice in how their platforms operate) will expand from cryptocurrency to peer-to-peer transactions of other goods and services.
Why? Because the establishment of the U.S. Food and Drug Administration was to regulate Merck and Pfizer, not a million biohackers; the Federal Aviation Administration was built for Boeing and Airbus, not a million drone enthusiasts; the U.S. Securities and Exchange Commission was established to go after Goldman Sachs and Morgan Stanley, not a million Web3 developers. The people managing these agencies often have career tenures, are not democratically elected, and are not easily dismissed. Thus, they are clearly not accountable to the public they claim to serve.
In contrast, cryptographic protocols allow millions of active participants in the market (including customers and producers) to develop decentralized regulatory mechanisms, avoiding the dangers of captured state regulators and corporate self-regulatory bodies. It is only a matter of time before cloud-based entities emerge to decentralize regulation of industries beyond cryptocurrency. Importantly, these entities will truly be global and cross-border, unlike today’s geographically constrained state regulators.
6. Property rights are becoming cryptocurrency
The concept of the state as the legitimate guardian of private property can be traced back at least to philosophers Thomas Hobbes and John Locke. But cryptocurrencies challenge this view as they establish mature theories of digital property outside of the state. Explaining why this is the case would be technical, but in short: no amount of violence can solve certain types of mathematical problems, especially those designed for secure encryption.
When property becomes cryptographic, all our intuitions change. Soviet Premier Stalin famously asked, "How many divisions does the Pope have?" But in the age of encryption, it is not a matter of how many departments a state must have to defend its property, but rather how long the division needs to be to catch you.
7. International regulations are shifting to code rules
After three years of bombings and invasions, sanctions and surveillance, the United States can no longer convincingly claim to be a fair arbiter of a rules-based international order. Clearly, any such rules do not apply to itself. Of course, other great powers cannot claim to be defenders of a rules-based order either.
However, the goal itself is desirable—small countries prefer some order rather than being subject to the whims of a great power (the U.S.) that only provides international rule of law and another that does not even do that.
To this end, at least in the commercial realm, we believe they will increasingly turn to what we call "code rules." Whether Democrats or Republicans, Chinese or Americans, Bitcoin and Ethereum are the same for everyone and treat everyone equally. Intellectual property has been encoded into blockchain ledgers, starting with non-fungible tokens, bringing transparency to decentralized legal processes.
Property itself can be digitized through Geographic Information Systems (GIS) mapping and land cadastres (measurements and divisions of property), eliminating bureaucratic opacity that favors predatory governments. Rather than subjecting themselves to the risk of expropriation, investors can demand collateral from governments encoded in smart contracts that will be seized in the event of default.
We are still in the early stages, but at least in the context of international trade, enforceable international law may become synonymous with decentralized smart contracts. Beyond trade, cryptographic protocols also provide transnational protections for civil liberties such as freedom of speech and privacy. This is not all that a rules-based order aims to protect, but the ability to guarantee freedom of speech and free markets to anyone with internet access is an important step forward.
8. Web3 is addressing global inequality by sharing rewards and risks
While doctors and professors like Hans Rosling and others have documented how global inequality is actually declining, this issue remains a hot topic for Western countries, even as other countries (especially in Asia) rise while their net worth stagnates.
The most promising solution to this problem may be through Web3 protocols, which can be seen as a variant of universal basic income, distributing the rewards and risks of building large tech services among millions of asset holders. In other words, if the combined market capitalization of Alphabet, Meta, Apple, Amazon, and Microsoft—around $5 trillion—were distributed to 1 billion users, giving each about $5,000, they would be more supportive.
Most of the funding for Web3 protocols does not come from established tech companies. Bitcoin was coded by an anonymous founder who did not take venture capital. Ethereum was founded by a college dropout who crowdfunded its startup capital. And with the rise of decentralized finance, there are now various funding mechanisms that allow smart individuals without money to find wealthy smart individuals to build tools that enable everyone to profit. This is how Web3 can accomplish what antitrust actions or arbitrary seizures cannot.
9. Companies, cities, currencies, communities, and nations are becoming networks
We once thought books, music, and movies were entirely different. Then they were all represented by packets of data sent over the internet. Similarly, today we think of stocks, bonds, gold, loans, and artwork as different. But all of these are represented on the blockchain as debits and credits.
We should begin to think of collections of people—whether communities, cities, companies, or nations—as cohesive entities in themselves, unbound by geography, with different layers aligning in constantly changing combinations. For example, physical governments can integrate with digital networks, and companies can operate as applications on dedicated blockchains.
El Salvador's Bitcoin City, Wyoming's decentralized autonomous organization (DAO) law, and projects we financially support, like MiamiCoin and NYCCoin, are all early parts of this future. In El Salvador, President Nayib Bukele has adopted Bitcoin as the national currency and attracted global investment for what he calls "Bitcoin City," bringing his country into the social media spotlight.
In Wyoming, new DAO laws establish rules for fully digital organizations to compete equally with traditional paper companies, allowing many corporate actions to be automated. Miami Mayor Francis Suarez and New York City Mayor Eric Adams have embraced the concept of city tokens, providing citizens with a means to generate Bitcoin as digital currency.
In each case, cities and states are merging with cryptocurrency networks to provide new services for their citizens.
10. Power is decentralizing away from the U.S. and China
About 75% of the world's population, over 60% of global GDP, and about 50% of billionaires are neither Chinese nor American. These two superpowers may fight, but it is unclear whether the rest of the world is willing to ally with either side. In fact, with the rise of decentralized protocols, we expect many countries in the middle may decide to use Bitcoin, Ethereum, and other chains to establish channels for communication and financial transactions that resist the two superpowers.
That is to say, in addition to building national stacks (data and application ecosystems) for domestic transactions and communications, countries can also use neutral protocols for international transactions and communications. This gives each country a choice: rather than being forced to take sides in a new Cold War, they can update the "Non-Aligned Movement" to form an "Aligned Movement," where they unite around common sovereign interests in Web3 protocols to promote cross-border trade. This early sign is already evident as Latin American countries adopt Bitcoin. By the way, such protocols will also earn the respect (and investment) of millions of citizens from China and the U.S.