A parallel world is developing on-line, increasingly free of its physical component. In the face of this expansion, nations are finding that a number of their traditional roles are being limited. In this project, we intend to develop a number of different scenarios to predict the future of the nation-state. Part of this will entail reviewing the current efforts by nations to position themselves relative to the Net.
Nations are inherently geographically defined; they exist to protect the interests of the people living in a certain area. Since the Net is not restricted by these borders, the current nations must somehow define themselves on-line. If the Net succeeds in overcoming geographical barriers, nations may find themselves growing increasingly irrelevant, as most of the economic action moves to the Net.
For example, the advent of electronic money presents the possibility that nationally backed currencies may no longer have a monopoly in the financial market. Nations may lose currency manipulation as a key element of financial policy. Area for research: what would the economic effects of widespread use of purely electronic money?
Electronic commerce, hidden by virtually unbreakable cryptography, could make possible massive financial transactions entirely outside the regulation and taxation of nations. A whole segment of the economy could effectively disappear.
If nations prove incapable of defending the interests of their citizens and businesses on the Net, international third parties will arise to provide these services. For example, the kind of trade wars that now take place between nations might in the future take place between international blocks of interests in which nations are only one type of participant.
While economic conflicts like these might be resolved peacefully, more severe conflicts are undoubtedly still going to be a part of man's future. We have not yet seen what a 'war' on the Net might look-like. Undoubtedly, we will see something along these lines in the near future. Small, rebel nations will realize that the increasing dependence of the first world on the Net means that there will be some golden opportunities to stab the rich guys where it hurts. If this kind of conflict develops, one possible result is the fragmentation of the Net along national lines, as nations endeavor to protect the information infrastructure from outside attack.