Bitnation, Liberland, Puertopia and Other Micronations Are Gaining Independence via Crypto, but Crypto Alone May Not Be Enough

Whether it be the landlocked Liberland or the seaborne Floating Island Project, they've taken cryptocurrencies and blockchains as the basis for a new way of organising how people live, interact and work.

Initially announced in 2013 by the Seasteading Institute, it aims to found an indefinite number of floating cities in and around French Polynesia, with the target-year for the establishment of its first city being 2022.In May, further details on the project were revealed, with the Seasteading Institute revealing that its inaugural island would accommodate 300 houses and be making use of its very own cryptocurrency, named Varyon.

"Varyon is a payment token which will initially generate revenues to fund the last steps of the pilot project and kickstart the ecosystem of Seasteads in French Polynesia. It will also be used widely afterwards as we build seasteads in more locations and establish relevant partnerships."

While Blue Frontiers' planned attempts "To establish Varyon as a useful currency in and around the Seasteads" might imply that VAR will form the essential bedrock of the Project's financial system and economy, Germineau affirms that VAR won't in fact be the only accepted currency on the island and its eventual siblings.

Cryptocurrencies, interference, and taxationIn other words, cryptocurrency isn't actually of indispensable importance to the day-to-day workings of the Floating Island Project, which could still theoretically operate without VAR. Instead, it's using the digital currency in order to kickstart and boost its funding in a way that wouldn't be possible via traditional investment, something which is common to certain other 'crypto-state' projects.

For most of the projects mentioned above, libertarian political values play a guiding role, and while the merits of such values are open to debate, they regard a minimal state, fiscal sovereignty and free trade as the greatest goods a nation can attain.

Aside from the persecuted Liberland, government hostility or indifference may end up impeding the progress of the Floating Island Project.

Another issue crypto-states will encounter is a familiar one for any blockchain project: scalability.

While its COO James Fennell Tempelhof warned Cointelegraph last year that the "Nation state will not give up [its power] easily" to blockchain-based alternatives, it's interesting to note that Bitnation won the Grand Prix at UNESCO's Netexplo Forum in May 2017 for its Refugee Emergency Response project, which began registering refugee IDs on the Bitcoin blockchain in September 2015.If nothing else, this glowing award from a UN agency reveals that the world's governments do see at least some place for blockchain-based platforms to assume certain functions of theirs.

If they permit enough wriggle room to such crypto-state projects as Bitnation, these projects may end up claiming even more, with Susanne Tarkowski Tempelhof affirming in 2016, "We need to outcompete national governments at their original core function: security and jurisdiction."