Digital Ukraine, Special Legal Regimes & Oracles + English Law [Pt.1]
Navigating Ukraine’s digital city within the context of Balaji’s Network State in conjunction with digital governance facilitated by smart contracts (and disputes settled by oracles)—run on interoperable blockchains and distributed ledgers; all in accordance with English Common Law.
In this episode of the Green Pill podcast, Balaji Srinivasan talks about his new book titled The Network State — I found this interview to be particularly informative (especially the last twenty minutes). I first heard about Bilaji from Aly Alexandra (she was the first person to put him on my radar). The interview mentions a few key things that I want to expand on, so, I will be going all over the place (from oracles and smart legal contracts to Swiss-English Law and Belarus) but hopefully the connections I lay out make sense in the context I’m presenting them. Toward the end of the podcast, Balaji talks about Ukraine’s digital government services on a phone application called Diia and the digital city by the same name.
At the 2022 Diia Summit, President Volodymyr Zelenskyy described Diia City as “one of the best tax and legal regimes on the planet; it understands the language of venture capital and is transforming Ukraine into a country of start-ups and product companies.” Doesn’t that sound similar to Israel (the original start-up nation state). Israel is a tech juggernaut because of the abundant international capital that was invested into its tech and health sectors—facilitated through the military (specifically the Talpiot program). The gentlemen from The AnteDote podcast have covered the Talpiot structure here (and video here from when they stopped by Doom&Gloom).
The Diia app allows Ukrainian citizens to receive government public services online (like registering newborns, paying taxes, or verifying identity). There is also a Diia.Business project that is aimed “at Ukrainian entrepreneurs and those who want to launch their own business. It consists of a webpage and offline support centres.” The Diia.Digital learning project was launched with the goal to expand digital competency to 6 million Ukrainians by 2024. One can even vote on the Diia app — just recently, the citizens of Ukraine were reported to have voted to allow weapons for personal protection via a survey conducted by the Diia application. No further comment on that one—
—scratch that, I do have a comment: the lack of outrage from the anti-gun people about Ukrainians “voting on a smartphone to allow civilians to carry weapons” doesn’t help the prevailing “liberal establishment” argument about guns (in the U.S. government). Where is the condemnation? Yes, of course, I understand that the cosmetic condemnations are usually for theatrics, I was asking rhetorically. Personally, I don’t like guns at all, but I have no desire to dictate my preference on others. I’m not discounting that some Ukrainians feel under attack, I just think the mechanisms used to make decisions on such matters is rather odd. And no, I’m not “picking a side between NATO and Russia”—this is my stance: fuck them both. Is Putin invading Ukraine wrong? Yes. Are the NATO countries hypocrites for condemning Russia, but not the U.S. when it invaded Iraq? Yes. Does that give Putin the moral high ground? No. If you want to call me “Russian disinformation” or a “NATO shill” then go right ahead—but that would make you appear dishonest because I’ve made a video here criticizing the Russian government and Putin (just like I have written here dismantling NATO and the “west”). I’m an equal opportunity hater.
In the podcast, Balaji and the host also discuss how Network States will be perfect for large refugee populations (which is how Ukraine’s digital city came up in the conversation). Denis Aleinikov, from Ukraine’s Ministry of Digital Development had this to say about Diya City, in a 2021 interview:
Diya City is not a free economic zone and not some kind of dedicated cluster. Diya City is the name of a special legal regime for doing business in IT for national and foreign players. The Diya City regime will operate throughout Ukraine. It will be possible to work both from a large city and from a small village. In fact, Diya City is the transformation of the whole of Ukraine into an international digital hub.
Before I get ahead of myself, let me step back and go chronologically. The dialog begins with Balaji explaining that since 2020, the world has gone digital first and physical second. Basically, that physical is now a premium product (reminds me of reality privilege). In the interview, Balaji defines a Network State as an online community that has similar goals and is equipped with the skills to take collective action by investing in territory across the globe (he emphasizes that the physical territories purchased by these online communities should also be decentralized). The Network State would also have a collective consciousness because it would be made up of people who have common deep moral beliefs (not just similar interests) and who have the skills to accomplish a shared goal (collective action). In his words, it could be called a digital union where the participants crowdfund projects to benefit the entire community (impact investing).
He highlights that once you have the alignment (or harmony) then you are able to coordinate and do things together (like gather funds online in order to purchase land offline and live together). This reminds me of the Freedom Cell Network, which is basically a movement of people organized in small groups working together to accomplish shared goals. That’s not an inherently bad thing, by the way, but I don’t think it’s a solution that most people would be able to participate in on a massive scale because of the lack of means to get involved in the first place.
Let us carry on; Balaji spoke about how the US census could be replaced by a dashboard and people could use crypto oracles to verify if the data on the dashboard is legitimate instead of depending on legacy institutions in government (more on oracles later). Anyway, this is the usual rhetoric from people in Balaji’s circle (not to generalize, but I’m making mental notes of certain patterns in the arguments I often hear) — “the trusted institutions are eroding, so we should let the private sector handle it” — as if the behemoths dominating the private sector have not been working with the corrupt government the whole time.
Side Note: the private investors may not be the government but they are the ones influencing policy makers (on the surface level). In fact, if you’re interested in understanding the future of economic legislation, pay attention to private angel investors (like Balaji Srinivasan or Marc Andreessen) because the successful and seasoned ones know which policies end up getting passed — they are the ones benefiting from the policies, duh (video about that topic here via Doom&GloomHQ). Sure, you can just watch hours of C-SPAN all day, but keep in mind that by the time an issue reaches congress for an “open” discussion or vote, the negotiations have already taken place behind closed doors and the hearing is (mostly) for show.
I want to address Rogue Cow’s comment from this livestream on Doom&Gloom: of course, the international central banking mafia has always used their ill-gotten gains to finance chaos in many nations for their own agendas (including what’s currently happening with the supply chains), but I believe that tide has turned (so have the tactics) — and the overt model of toppling governments through regime change is no longer. Don’t get me wrong, the same shenanigans will still be happening, they’ll just be operating under the guise of humanitarian philanthropy or social justice. Also, the supply chain was transitioning to a new model, anyway — I believe it’s called Global Localization. It looks something like this: different communities utilize a global template but on the local level, they are permitted to make small modifications to the global framework from which they operate. Local communities would be allowed to spice it up a tad (they can add a sombrero or some other culturally appropriate artifact to make it unique). And then it can be called grassroots or indigenous and they can sell the merch on Teespring — hurrah.
In my opinion, nation states are becoming obsolete, to a degree (which is why Balaji’s idea of a Network State shouldn’t be ignored). It seems like governments will soon be run by Decentralized Autonomous Organizations or DAOs — all facilitated by smart contracts with disputes settled by oracles on blockchain (also known as digital governance). It will be marketed as transparency and social justice, but it will probably just be funneling individuals into a fully tokenized economy in a digital panopticon — this video here is about digital governance (and much more, so check it out). On that note, I want to share some of my notes on oracles and smart legal contracts before returning to dissecting the interview.
Oracles, Smart Contracts & Token Economy
Smart contracts are sequences of 1’s and 0’s (codes) that run on blockchain. As I have written here, the term smart contract was first introduced by cypherpunk movement pioneer, Nick Szabo, when he was a graduate student at University of Washington. Chainlink’s Decentralized Oracle Networks are, in theory, supposed to secure the services that occur off the chain in order to adequately update the smart contracts (ubiquitous computing). Oracles provide blockchains with “secure gateways to the outside world so that smart contract applications can verify external events, trigger actions on external systems, and leverage computations not possible or practical to do on-chain.”
Input oracles gather the data from the physical world (or off-chain). In this article from the National Law Review, input oracles are called hardware oracles and they include “pieces of equipment that communicate real-world information to the smart contract. RFID sensors, for instance, can detect environmental changes that link to blockchain to trigger a smart contract.” Output oracles send out directions from the smart contract to the physical world (in order to nudge them toward certain actions). Cross-chain oracles are interoperable and can move data across different platforms. In summary, oracles enable the Web3 ecosystem to access existing data (in real time) from legacy systems (to interoperate with the traditional structures).
Let me pose this question: are banks restructuring themselves in accordance with the non-traditional “decentralized” financial institutions — or were the “pioneer” DeFi projects just test cases for legacy institutions to observe and use as guinea pigs for a transition they were always going to make?
Again, this is a transition to the token economy, it’ll be mixed at first, but ultimately, that is the goal. Even the IMF and World Bank are decentralizing and rebranding — which I covered here in the BRICS and Goldman Sachs essay and here on video. The way I see it, the traditional multilateral institutions are aware that their old methods are unpopular and that people want something different — they predicted this and are prepared to transition in a way that doesn’t hurt them. Hence why there has been so much turbulence in the banking sector (or rather, managed turbulence).
Smart Legal Contracts & English Law
The American-Swiss-British law firm, Norton Rose Fulbright Verein (operates using a Swiss Verein structure) released an article about the future of smart legal contracts under English Law. They predict that the laws of England and Wales are robust and flexible enough “to adapt to the use of smart legal contracts, although there will be a period of adjustment, during which incremental changes and adaptations are required.” This was the firm’s response to the U.K. Law Commission report that was presented to Parliament in November 2021.
On the legality of smart legal contracts, I am referring to an article written by Norton Rose Fulbright Verein because that law firm is not only one of the top-ten global firms in the U.S. (established in 1794) but it also functions under the Swiss Verein structure, which basically “enables people to create a legal person for the global partnership or association without transferring legal responsibility to that new entity. This means that individual members can be sued directly without liability attaching to the other members of the group. The structure is used by international law firm Baker & McKenzie and a few global accounting firms, like KPMG and Deloitte.” What I’m trying to say is this: Norton Rose Fulbright’s words hold quite a bit of weight in this space. In their article, they note something important about smart legal contracts that was written in the U.K. Law Commission report:
There is no requirement that a smart legal contract’s obligations be recorded in natural language. Some or all of the contractual obligations contained in a smart legal contract may be defined purely in code. It is also possible that, as well as the terms of the smart legal contract being recorded in code, the underlying negotiations are also conducted either solely or partly in code. For example, two parties may repeatedly exchange iterative versions of the underlying code, with little or no natural language explanation for the changes.
A legally binding contract negotiated and written solely in computer code is a fantastic way to make legalese even less comprehensible. Talk about finding ways to make things worse. A smart legal contract has three parts: the text, the data, and the logic. The text consists of the legal words (legalese) used, the data is any information that is specific to the particular agreement, and the logic is the smart bit—it informs the contract about what needs to happen when certain events occur. These three forms of smart legal contracts are discussed in the Law Commission report summary:
- Natural language contract with automatic performance by code: can also be referred to as an external contract because the code falls outside the scope of the parties’ legally binding agreement.
- Hybrid contract: some of the contractual obligations are defined in natural language and others are defined in code.
- Contract recorded solely in code: all of the contractual terms are defined in, and performed automatically by, the code of a computer program.
Courteous query: would all “legal language” eventually be replaced with computer code? And if oracles can settle disputes—since oracles are the link between the physical world and the persistent scripts (smart contracts)—then will there even be a need for lawyers or judges anymore; because according to the U.K. Law Commission report:
An oracle is an external data source which transmits information to a computer program. In the call for evidence, [they] gave various examples of situations in which oracles might be used…Oracles could also be used to relay information, such as interest rate movements, which impact the performance and payment obligations under a derivative contract. The relay of this information would trigger the automatic performance of these obligations without the need for human intervention.
Moreover, in this video from SmartCon 2021 (hosted by Chainlink), Balaji Srinivasan talks about creating sources of definitive truth with blockchain oracles. “Definitive truth” is always going to be highly subjective no matter how “good” or “accurate” your data is because it is still being interpreted by individual human beings.
Side note (again): in Ancient Greece, one could seek the consultation of a god through an intermediary known as an oracle.The Oracle of Delphi was the most famous—the site where the oracle resided did not lend itself to human occupation; it belonged to the gods. The legend says that people flocked to Delphi to ask about a wide range of concerns from politics and warfare to health and romance. Seems to me like the “oracle” was probably nothing more than a glorified fortune teller. As this article about the Delphic Oracle concluded “oracles did not provide simple answers to simple questions — nor do their modern counterparts. Rather, all attempts to look into the future provide the incentive for us to examine our own expectations, to confront our own desires.” I agree with this analysis—before asking any divine entity whether or not the future you desire will transpire, maybe ask yourself why that’s the future you seek in the first place.
Anyway, in his 2021 Smart Contract (SmartCon) Summit presentation, Balaji described an information ecosystem “where anything [asserted] for the record is posted on-chain via a decentralized oracle. The major advantage of this system…is it enables the separation of facts from narrative through oracles that cryptographically check on-chain data and advocates that write auditable narratives based on on-chain events.” That is what he refers to as the ledger of record—a collection of on-chain (cryptographically verified) data feeds. Again, he keeps separating facts and narrative as if the “facts” aren’t being subjectively interpreted (even if a machine is interpreting the facts, it will still be biased because a person has to program the machine).
According to Balaji, the facts are the metadata, the assertions are the data, and the narrative is just a layer or story on top of the facts and assertions; thus, the narrative can be written by humans or machines based on the facts and assertions (yikes). Just to clarify for anyone unfamiliar with the difference, data is raw, unorganized information; while metadata provides the context for the data/assertions (metadata is basically the data about data). For the record (no pun intended) I’m not reviewing these podcasts featuring Bilaji because I think he is the most powerful individual in the industry — it’s not about him or any one particular person, it’s more about recognizing certain patterns and themes in the start-ups ecosystem, in order to understand and foresee its’ trajectory. It’s the same reason I reviewed Erik Prince’s interview and presentation here and here —
—I was taking the temperature on the private military and logistics business via Mr. Prince. It isn’t just about Erik Prince (to some extent it is, but I also understand that he is playing a character) it’s more about the business networks with which he is affiliated and what that all could mean for the private military/security ecosystem (since that has, or will soon completely, replace traditional nation state armies). Prince’s business ties with China, for example, should be investigated because he is providing military training and logistics for them (this is the same man who started Blackwater). Let us not forget that Blackwater was hired by Walmart in New Orleans (after Hurricane Katrina) to quell the looting; in addition to what they were doing internationally. Enough said.
Now back to my summary of the Green Pill podcast — Bilaji explains that nationalism is a social construct (which is true) and continues to say that nationalism doesn’t have to be based on the ethnic group to which you belong because the lines on a map shouldn’t define a state — that a state should be formed based on people’s shared morals and goals. He suggests installing a moral uptime tracker to gauge the sentiment of the community at all times (I’m not even sure how that would work). Notice how he manages to use these legitimate arguments to then sell a solution that has nothing to do with the root cause of the quagmire? Perhaps he truly believes in his solutions; regardless, I object.
When the topic of intellectual self defense arises, Balaji brings up a game called Civilization and discusses the winning strategies. He explains that the way to win the digital version of the game is to allocate some resources to the project you are building and allocate other resources to critiquing your critics. The host mentions Vitalik Buterin and his idea of making it cheaper to defend (rather than attack) a project or network — meaning, an attacker would have to use more resources to destroy what you are building (creating anti fragility at the base layer). Does this not sound like it’s anti dissent? How will they distinguish between an attack versus a legitimate critique? Balaji says as long as you maintain OPSEC (operations security — a military term) you’ll be passively defending yourself at all times (which he refers to as security through obscurity). Because, as he says, you don’t want anyone to have 33 bits of information about your identity:
Why 33? Because a “bit” is computer lingo for an on-off switch that can have only two values, 0 or 1. And 2 multiplied by itself 33 times is a bit more than the number of people on earth — 6.6 billion. Two to the 32nd power is lower than the world’s population. So, in theory, it takes at least 33 “bits” of information to uniquely identify someone.
Balaji goes on to say that the critics can be like “armed robbers and gangs” and their only job is to “morally bully you” into handing over what you have built. Which, he explains, is why it’s vital that developers (builders) in the community be equipped with facts and figures to defend themselves. He stresses the need to have citations and empirical data to shield from the critics because if you have those things then the critics have to counter those arguments before they can say anything about you or what you’re doing. Balaji then claims that most of the people on social media (who criticize him) don’t have much “depth” in their thinking.
Ukraine: A Network State + Hi-Tech Park in Belarus
Toward the end of the podcast, the conversation shifts to refugees and how Network States would allow them to resettle in places more easily (especially Syrians and Ukrainians). Balaji then mentions Diia, the app that facilitates Ukraine’s digital governance — he seemed confident that apps like DIIA are a huge piece of the future. Here is a simple description of Ukraine’s Diia City Project:
A virtual model of a free economic zone for representatives of the creative economy. It [allows] Ukrainian and foreign tech companies to open businesses and R&D centers in Ukraine under simplified procedures, to work according to the English Law, and pay 10% of tax.
The plans for Ukraine’s Diia City had been in the works for several years prior to the current conflict with Russia that officially started earlier this year (2022). The simplified conditions were for attracting foreign investment; a common practice for governments interested in selling their nations to the highest bidder (I wrote about the Central African Republic government tokenizing their resources for the same reason, here). This article is from 2019 and it explains how Zelenskyy’s state in a smartphone will look and work (from digital IDs and passports to pensions and birth certificates — all facilitated through the Diia app). Ukraine’s Diia brand was created:
With the money of foreign donors — the Swiss-Ukrainian EGAP program, the USAID project, the EGOV4UKRAINE project, financed by the EU and its member countries: Denmark, Estonia, Germany, Poland and Sweden.
And according to a Ukrainian official, a brand is the real solution to old problems because it’s a faster, cheaper, and simpler way to build modern startups (they have to think like a state). He continued to say that Ukraine, itself, is like a startup company because of how young the country is (only a couple of decades since independence). Does that not sound similar to what Balaji was describing in The Network State? On the right side of the photo below is a list of tech fields to be covered in Diia City:
In the words of Denis Aleinikov (from Ukraine’s Ministry of Digital Development), the goal was to create “comfortable conditions in [Ukraine] for the work of national talents, as well as to attract foreign talents from the US, EU and other countries…Technological multiculturalism will create conditions for the emergence…of international start-ups focused on global technological trends.” Again, this sounds very similar to Israel. Mr. Aleinikov compares the Diia project with Hi Tech Park in Belarus (also known as Belarusian Silicon Valley) which is reported to be one of the largest IT-clusters in Central and Eastern Europe.
Hi-Tech Park, in Belarus, has a special legal and preferential tax regime for IT and high-tech companies, describes itself as having a regulatory sandbox for crypto business, and provides an overall favorable environment for start-ups. Ok, this post is getting pretty long, so let me wrap this up in the following section.
I’m writing this post for a few reasons: first, because I freaking feel like it. Second, I had a ton of notes on seemingly unrelated topics that I wanted to attempt to weave together in a coherent way (hopefully, I succeeded). I had to split the story I was trying to tell into two parts, so the follow up to this post will be about the myth of American exceptionalism, perception management, and the alchemy of darkness—again, it seems unrelated, but it is actually connected.
Full disclosure, I hadn’t looked into Ukraine very much lately because of the misdirection about the current conflict coming from all sides. I like to approach such topics from the periphery because I don’t know enough about Ukraine/Russia relations to “debunk” every mainstream or alternative headline about the war. I did pay attention to the headlines on a daily basis when there was conflict that involved Ethiopia and Eritrea (recently) because I had more context on that matter and I was familiar with the dynamics there (since that’s home). Not that you have to be from a certain place in order to have an opinion on it, I am just simply unacquainted with the specific cultural and geopolitical disputes involving Ukraine and Russia. That being said, what I am familiar with is the techno-utopia grift and that stench is all over Ukraine’s Diia City (and it’s pungent).
Ultimately, I wanted to explore Ukraine’s digital city within the context of Balaji’s Network State in conjunction with the idea of digital governance facilitated by smart contracts (with conflict settled by oracles) all running “on-chain” (could be blockchain or distributed ledgers, but it doesn’t actually matter because it’ll all be interoperable). The fact that Diia City is governed by English Law, which is unsurprising in itself, led me to discover smart legal contract law as seen by English Law (because that would be the legal foundation of Ukraine’s Diia City). I was actually slightly surprised (perhaps naively so) to find that the U.K. Law Commission was already exploring blockchain oracles and trying to understand how they interact with hybrid smart contracts on which the token economy is being built.
I chose to examine the Green Pill podcast with Bilaji because the topics and concepts they discussed fit nicely with what I’ve been researching lately; thus, it was the perfect video to incorporate into this essay.
I realize that “online government services in Ukraine” and “smart legal contracts as seen through English Common Law” are not the most glamorous topics, but I actually think these types of boring subjects are where much of the juicy details are hidden—you just have to know where to look and which lens to use.
That’s all for now. Peace and blessings.