The Next Silicon Valley

Cities around the world are wondering how to become “the next Silicon Valley.” In fact, if you get a Silicon Valley address and know how to make slides, you can actually have a nice time traveling the world as a consultant advising cities how to do this. I once got to see some consultants give that presentation while traveling abroad. They concluded by saying that no one else could ever be Silicon Valley but thanks for paying us to come tell you in person!

Well you cities out there, I’ll save you a few bucks and tell you why indeed you probably can’t be the next Silicon Valley. Then I’ll tell you how, if you really want, you can.

Bad News

The first thing you need to know is that Silicon Valley exists because the most important industry in recent history was born there. The commercial perfection of the semiconductor gave rise to the computer industry, which made hundreds of billionaires and thousands of millionaires out of tech-savvy people living in close proximity, which in turn attracted even more of the world’s smartest and most ambitious people to the epicenter of all that tech and money and influence.

So unless your city is about to give birth to the next most important industry of our time, forget about it. You might still become a tech-hub or encourage more entrepreneurs, but the next Silicon Valley? No way.

Good News

But while your chances of becoming the next Silicon Valley are slim, they aren’t nil. Because it just so happens that the most important industry of our time is being born right now. And its birthplace is still up for grabs.

What industry is that?

It’s the one, whatever it ends up being called, that is responsible for Bitcoin and a hundred other cryptocurrencies. And as the single greatest upgrade to money in the last five thousand years, I’d call that a fine debut.

Lots of people still don’t get it and enjoy trotting out all sorts of tired arguments for why Bitcoin will fail. Those who do get it hardly have time to refute them, being too busy surfing an innovation wave moving at Singularity-speeds with all of Bitcoin’s grandchildren.

What will that industry roll out next? Probably something along the lines of “decentralized autonomous organizations.” And what Bitcoin will do to government controlled currency, DAO’s will do to governments, corporations, and nearly every other form of contract.

By automating away most of the overhead of governance, these technologies will not simply improve our current regulatory entities, but will obviate most of them. And what will follow will not be chaos but new more efficient forms of governance of unprecedented architecture.

Sound far fetched? Hopefully only to the historically unaware. Remember that the word “computer” originally denoted, not machines, but humans who performed calculations. Remember that our current mode of republic — with its delegates and political parties and representation many times removed — was fashioned in a time when distance was an insurmountable barrier to communication not yet overcome by electronic means.

Well now we have electronic communications… and the open source movement, and peer-to-peer computing, and public/private key cryptography… each having major implications for our current system of governance and together demanding its complete overhaul.

More Bad News

But a rather predictable conflict has begun to slow things down. This new industry, which seeks to automate and supplant our current modes of governance, is running afoul of the current systems of governance that do not want to be automated or supplanted.

Allow me to illustrate:

Florida law enforcement recently set up a sting where they baited some guys to sell them $30,000 worth of Bitcoins. The guys took the bait and blammo! Now they’re in jail. Thank heavens! Now those bad men are off the streets… or not in their homes, I guess.

What these guys didn’t know, is that selling $30,000 worth of Bitcoins without registering with the State of Florida (a pleasure I’m sure) made them money laundering criminals.

Quiz: What constitutes money laundering in your state?

Another case: A new innovative cryptocurrency platform is being developed by a team of developers around the world. The project is expected to remedy a number of the design flaws and limitation of Bitcoin and, moreover, to provide the necessary cloud-based coding language required to make distributed autonomous organizations a reality.

So they decide to fund development by pre-selling units of a future cryptocurrency. People around the world are so eager to see it happen that in no time, around thirty million dollars (in Bitcoins) are queued up to be pledged.

Then it all comes to a screeching halt. What gives?

The team had made the unfortunate mistake of calling their pre-sale an “IPO”. Initial public offering may have sounded like a sensible name for their fundraiser — it was after all the first time the public could invest in their project — till they found out that IPO is a term owned by the SEC, and one you’re not allowed to use without spending ten months and three million dollars on compliance with hundreds of rules buried in a thousand pages of securities law. Oops.

Comply with the SEC? These guys hadn’t even incorporated. As a team of coders from around the world creating a platform to enable the first post-geographic corporations, they hadn’t seen the need to. Nor did the public who planned to invest Bitcoins from all over the world with a few mouse clicks.

Now instead of coding up the future, these guys are spending half their time trying to get a grip on how many different laws they almost broke, and spending the other half of their time trying to figure out where in the world they might be able to sit and type away peaceably without the threat of jail.

Which finally brings us to…

How To Become The Next Silicon Valley

The next Silicon Valley will happen wherever safe-haven is offered to the developers and entrepreneurs of this next great industry.

These pioneers don’t need government funding, or overblown infrastructure, or a glitzy nightlife. They just need an Internet connection and to be left alone.

They need the ability to work freely without running afoul of a thousand counterfeiting, money laundering, securities exchange, and tax laws that, however well intended, do not comprehend and will therefore inhibit the progress of Governance 2.0.

The United States almost certainly cannot be that place. With the largest collection of governing bodies ever to exist under one country’s banner in all of human history, we are simply too vested in the infrastructure of Governance 1.0.

The next Silicon Valley will likely happen in a small country that doesn’t have America’s massive sunk costs in outdated governance infrastructure, or the resources to replicate our menagerie of agencies even if it wanted to.

It may be a place trying to protect its fledgling democracy, a place that is tired of corruption, a place whose people don’t trust a centralized money supply anyway because of what happened during the last coup.

A place like this has the greatest incentive to try governance backed for the first time ever, not by gun-wielding armies but by unbreakable math.

So if you or someone you know runs a small country and would like to out-innovate the United States in one deft move, pass this along.

Invite all the developers and entrepreneurs currently working in the cryptocurrency and distributed autonomous everything space to your country and grant them total freedom to innovate.

In return, your little country will make history instead of becoming just another me-too country shivering in the shadow of the monolithic West. You may even get a pure democracy, rather than a republic of too many removes and a chance to enjoy the smallest, most efficient, least corruptible government the world has ever seen. Because that’s what these developers are working to unleash.

Legitimate chances to become the next Silicon Valley don’t come around often, yet here is a real opportunity to do so. A move like this, at a time like this, could give rise to the next Silicon Valley. It could give rise to the next Cradle of Civilization for all we know.