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A self-sovereign virtual territory —existing independently but in parallel to nation states under the cover of strong encryption—is a latent dream in the seminal imagination of science fiction, cypherpunk, and crypto-anarchist thinking.

In 1994 leading crypto-anarchist Timothy May observed how the combination of unbreakable public key cryptography and virtual communities would disrupt the nature of socioeconomic systems. In his view, personal computers, the expansion of the world wide web, functional pseudonymity, and digital cash would empower the creation of private, self-sustaining virtual communities. These groups would not need to rely on geographic proximity as a basis for cultural values, eventually displacing conventional national identities.

His ideas about the colonisation of cyberspace by independent organisms were echoed in John Barlow’s famous 1996 independence declaration, which claimed that a new social contract was being enacted in cyberspace. This independent society would be founded on the consent of the governed, enlightened self-interest, and freedom of speech and mind, with global governance frameworks adjusted to a borderless world. However, the independence he asserted was impossible without fundamental breakthroughs in the underlying technology.

Decades later, the Bitcoin whitepaper showed a way forward by merging previous ideas such as proof-of-work algorithms, Merkle trees, digital signatures, and David Chaum’s pioneering early blockchain-like architecture. The fundamental innovation involved solving the problem of double spending by using a peer-to-peer distributed timestamp with built-in cryptoeconomic incentives. This created an immutable, trustless global ledger that remains independent and self sovereign.

Ethereum effectively generalised this concept by adding a Turing-complete scripting language. Designed for universality in the creation of decentralised applications, it allowed for the trustless deployment of arbitrary functions with a focus on the consensus layer.