The Metaverse: An Incubator for Free Cities?

by | Mar 18, 2024 | Blog

Free cities are on the rise, both in the West and in the East, in wealthier countries and aspiring economies, in established democracies and more turbulent ones. And that is excellent news: more urban experiments mean more opportunities for visionaries and a wider choice of rules for us all. However, getting a green light from the host country has always been (and still remains) the ultimate obstacle. What if there were a place, a kind of innovation playground, where new governance models can be road-tested without the usual red tape or democratic wrangling? A place where ideas can go from a lightbulb moment to real-world action at warp speed? There probably is one: the metaverse.

Prosperity Goes Digital: The Virtual Reinvention of Charter Cities 

Experiments in the ‘real’ world are costly and time-consuming. In a hostile environment, the road between an idea and its implementation may take decades. Consider the story of Honduran charter cities. Half a century ago, the Francisco Marroquín University (UFM) was founded in Guatemala to become Latin America’s intellectual bastion for free-market thinking. It was within the UFM walls that the idea of “prosperity zones” in Central America has been brewing for decades. One day, the late UFM president Giancarlo Ibárgüen mentioned it to a friendly circle of Honduran politicians, and it fell on fertile ground. Still, it took a couple more decades of political and legal fighting (and even actual street fighting!) before the first charter city, Próspera ZEDE, finally broke ground

It’s not just seaside residences that Próspera offers its citizens, but a unique legal framework. And the latter can be enjoyed remotely. The system of e-citizenship allows anyone to become a virtual citizen of Próspera or register a company within a ZEDE without ever visiting Honduras. The first corporate residents were academic institutions, fintech startups, and software developers—those who chose Próspera not for its stunning sunsets but for the ease of doing business. Even if the Honduran government cracks down on charter cities (as they tried in 2022), they can survive as prosperity hubs by simply moving their activities entirely into the virtual realm. That brings Próspera closer to a non-territorial jurisdiction—not tied to the land and, therefore less vulnerable to political shocks, which happen in Honduras every once in a while.

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Timber-made modular homes designed by Zaha Hadid Architects for ZEDE Próspera
Zaha Hadid Architects

Non-Territorial Governance: Unbundling Land and Laws

Projects like Honduran charter cities can be a massive game-changer for developing economies. McKinsey calculated that the creation of just a few ZEDEs could spark a job boom, potentially adding a whopping 600,000 new gigs. But there is a vicious cycle: to construct a city, you require permission from the government. Yet, to obtain this permission, you must demonstrate that you have enough supporters. However, to accumulate supporters, you need to first build a city. 

The Network State evangelists believe that you can do things in a different order: assemble a community first and acquire the territory later. Network States, as explained by Balaji Srinivasan in an eponymous book, start as online communities of volunteers who share a common vision for society. These digital collectives aim to eventually gain physical territory and official recognition, transitioning from online clubs to politically autonomous entities. This approach relies on the principle of non-territorial governance, whereby political jurisdiction is separated from physical territory, allowing people to move between political regimes without actually packing their stuff and moving anywhere.

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Balaji Srinivasan, an Indian-American entrepreneur and investor who popularised the idea of Network States. Source: Flickr

When your nation’s success hinges on natural resources like oil or gas, you’re bound to the land where those resources are stored. However, when the key to your wealth is a set of well-crafted rules, you are much more mobile. Unlike an oil well, rules can’t be seized in a police raid. They aren’t anchored to a particular location on the globe. This is the advantage of non-territorial jurisdictions: they are not limited by geography. Still, your e-citizens need to gather somewhere, even if that ‘somewhere’ is a virtual space. They need a platform to exercise this freedom, a place that would combine the perks of physical cities — the dynamic synergy of agglomeration — with the boundless, inclusive nature of the internet. 

Here comes the metaverse: an ideal platform for these emerging virtual communities to pilot their ideas. The word comes from a sci-fi book from the 90s called Snow Crash by Neal Stephenson. But fast forward to today, and it no longer seems a piece of fiction. Think of the metaverse as a constellation of 3D online worlds, each with its own mini-society, enabled by VR and AR tools. No governments, no red tape, no pre-existing jurisdictions—the metaverse is a realm of permissionless innovation. Here, rules emerge from voluntary agreement and market competition, making it a seamless, immersive testing ground for non-territorial governance models.

Liberland’s Metaverse Experiment

Back in 2015, a group of freedom-loving activists decided to start their own country, calling it the Free Republic of Liberland, on a no-man’s land in the centre of Europe between Croatia and Serbia. In just a week, over 200,000 people applied for its citizenship. Despite all the buzz and thousands of supporters worldwide, this piece of land remained empty for more than eight years. Until the summer of 2023, every attempt to set foot in Liberland had been suppressed by the Croatian police. Eventually, Liberlanders chose another path—they set foot in the metaverse. With the help of Zaha Hadid Architects, they developed a virtual master plan, a digital copy of Liberland, with a city hall, co-working spaces, an NFT gallery, and an array of community areas for citizens’ personalised avatars to mingle.  

The virtual microstate is a mirror image of the physical territory that the Free Republic claims. If Liberlanders ever get the chance, they’ve got all the maps and designs ready to start building in brick-and-mortar. In the meantime, the space functions as a non-territorial jurisdiction where one can do all sorts of things: start a company, buy and sell services, build on virtual land, settle arguments, or just meet fellow freedom fans. 

For instance, Liberland is experimenting with unconventional land-use regimes. It’s got a central area that is all planned out from the top, surrounding neighbourhoods where everyone gets a say in how things shape up, and then the wild outer zones where the individual is free to decide unilaterally and anything goes. Trying something this bold in the real world would mean getting approval from city officials and dealing with NIMBYs. But in the metaverse, anything is possible as soon as you can convince enough people to get on board.

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The Free Republic of Liberland inaugurated its metaverse digital twin in 2022
Source: Zaha Hadid Architects

The Digital Dawn of Free Cities

Today, supporters of Free Cities are scattered across the globe, divided by national boundaries. Yet, as our daily lives move increasingly online, distances and borders are becoming less significant. The idea of non-territorial governance, where laws aren’t tied to a specific location, enables urban entrepreneurs to bypass traditional barriers and begin creating virtual communities without the need to sway government officials or gather in a single physical location. Professor Tom W. Bell, a scholar and visionary who drafted the legal code for Próspera and assisted several other special jurisdiction projects, envisions the metaverse as a laboratory for testing the rules before launching a project “in the real world”:

“[In the metaverse], people will be engaging in business transactions, using avatars, and entering contracts. Money will be changing hands, and conflicts will arise. This will allow us to run the simulated versions of our city, test our legal code, architecture, traffic flows, residential patterns, and things like that, and start generating revenue early.”

The metaverse, a space of unrestricted innovation, offers us the chance to explore our visions for the cities of the future without getting bogged down in bureaucracy or political fights. And if these virtual experiments prove successful, they could shake up the status quo in the ‘real’, physical world, challenging established institutions along the way.

This article is based on “Private Cities, the Metaverse and the Future of Non-Territorial Governance” by Vera Kichanova, a publication in the Journal of Special Jurisdictions, Vol. 4 No. 1 (2023).

Cover image by Zaha Hadid Architects