In 2022, we will build on the virtual existence many of us have been living during the pandemic and enter a world where digital “countries” exist alongside nation states. We will also need to demolish many of the barriers that still hinder a truly global digital existence.
Digital has reduced the effect of national borders on many aspects of our lives. Transcontinental meetings on Zoom, international e-commerce and the ability to stream media from virtually any jurisdiction show how outdated much physical nation-state bureaucracy is.
States hold the keys to many of the tools that facilitate economic life: governments establish and confirm legal identities, keep records of property ownership, set employment rights, define what constitutes legal tender and approve product standards, for example.
Now that we travel further and faster in the virtual world, the limits of these tools are apparent. In 2022, cracks will appear in the monopoly states have in the business of governance. The pick-and-mix citizenship benefits that are currently enjoyed only by high-net-worth individuals and offshore companies will become available to the mass affluent. A new breed of technology-enabled firms will create a kind of “digital state”, which gives its “citizens” rights, tools and the services needed to work, live and consume more flexibly where they want, in the digital as well as the physical world.
Members of these new virtual states, operated by private companies, will be able to set up legal entities for themselves in one country, reside in another and pay themselves a salary in a third. “Governments” of these states will create digital versions of the credentials people need to prove their identity, property rights, vaccination status or residency in a new online world. In turn, they will create new market spaces that their citizens can “visit” to access digital goods and services that are not licensed or approved in the physical space in which they reside. These will be the new offshore, virtual free ports of the digital age.
Drawing lessons from semi-corporate states, such as the UK territories, these digital states will be set up not by existing tech companies, but by new entities backed by private equity and sovereign investors with the power to negotiate contracts with corporates and countries, secure work and residency benefits for “citizens”, and set terms of trade.
Traditional states will have to grapple with increased tensions between those who are able to take advantage of digital citizenships and those who cannot, even as an eroding tax base gives them fewer tools to do so. Tackling the disparity between a physically entrenched nation state and the reality of the digitally integrated world will become a priority for governments and they will have little choice but to grasp the nettle. Next year we will enter a world in which global citizens will be able to make their own choices rather than depend on a local set of rules governed by where they physically live.
Get more expert predictions for the year ahead. The WIRED World in 2022 features intelligence and need-to-know insights sourced from the smartest minds in the WIRED network. Available now on newsstands, as a digital download, or you can order your copy online.
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This article was originally published by WIRED UK
