Breakaway Balkans Micronation of ‘Liberland’ Dreams of Crypto-Based Future

Thomson Reuters Foundation

16:10 JST, October 21, 2023

APATIN, Serbia (Thomson Reuters Foundation) — Richard Strauss’ symphonic poem “Thus Spoke Zarathustra” blared over a portable radio on the Liberty, a two-story houseboat off the self-proclaimed crypto micronation of “Liberland,” a muddy Danube island on the border of Serbia and Croatia.

The music — an ode to Friedrich Nietzsche’s novel about the doctrine of the “superman” — played on would-be state radio to celebrate what Liberlanders see as a de facto border deal for their country, founded with a mix of right-wing libertarianism and technology like crypto on the marshy island of Gornja Siga.

Nineteenth century straightening of the Danube left some small peninsulas of the once meandering river that had been part of Croatia stranded on the Serbian side of the river’s current course and the 7-kilometer long island of Gornja Siga, once part of Serbia, marooned closer to the Croatian bank.

Croatia has administered Gornja Siga, but does not want it as that would mean giving up its claims to the bigger chunks of land on the Serbian side. Serbia, meanwhile, is quite happy with the status quo.

Into the impasse stepped Czech right-wing libertarian politician Vit Jedlicka who said the island was therefore unclaimed and declared the boggy often-flooded wetland — home to wild boar, woodpeckers and red deer — independent in 2015.

Liberland is now inhabited by six to eight pioneering settlers who camp in tents on the island in between comparatively luxurious spells on the spartan Liberty, or in houses in nearby Serbia.

But in contrast to the low-tech living, Liberland e-citizens use cryptocurrency to pay voluntary taxes for the upkeep of the island and its navy — the Liberty — to spend at the occasional pop-up in nearby Serbia, but eventually, they hope, to buy plots of land.

Jedlicka, elected president of Liberland by his girlfriend and a friend in 2015, says he has spent some $400,000 on developing a blockchain-based governance system for citizens to vote through, but has yet to roll it out.

Nevertheless, the project has attracted libertarian supporters across the globe who see a natural harmony between an ideology that prioritizes private ownership and a technology that can decentralize government checks on property.

“Blockchain is about freedom, it’s about your individual responsibilities,” said Mladen Milankovic, a Serbian software developer visiting Liberland. “A blockchain is keeping your own keys, keeping your own assets.”

Croatian guards have previously done their sometimes-forceful best to block access to the island, but a precarious, informal border arrangement was agreed in July allowing visitors to step ashore.

Neither the Croatian nor Serbian governments responded to requests for comment, but both have previously dismissed Liberland’s declaration of independence.

Blockchain and bitcoin

With mosquitoes plaguing the homeland, most of Liberland’s activities take place in the “Ark Village,” a permanent, rustic residence in Serbia with shared rooms and kitchenettes, a downstairs bar and an upstairs meeting room, outside the quiet town of Apatin, some 200 kilometers northwest of Belgrade.

Though few have set foot on the island, more than 700 people worldwide have paid to become e-citizens of Liberland, which currently costs the equivalent of $2,500, or 25 days of work toward the fledgling nation.

Every August, “citizens” and supporters host a festival called Floating Man at the Ark Village, focusing on the nation’s core tech foundations.

On the first day of the festival, a clutch of curious locals filed along the road from Apatin, but afterward most speakers drew an audience of only around 20 people.

Talks on bitcoin and blockchain drew most attention — more than 99% of Liberland’s reserves are held in the notoriously unstable cryptocurrency, which policy experts say may be unwise, especially compared to more traditional gold.

“A bitcoin-backed currency is inappropriate for most nations’ developmental needs. Bitcoin is too volatile,” said Bernhard Reinsberg, a reader in international relations at the University of Glasgow.

Christopher Carr, a lecturer in cryptography and blockchain at Exeter University, echoed those criticisms and said Liberland risked the same challenges El Salvador faced since it adopted bitcoin as a currency in 2021, such as a lack of public trust.

“However, this certainly seems like more of an experiment, and it probably would not be too challenging for them to switch to their own native token,” Carr said.

Liberland’s tokens are the Liberland dollar and merit, which can both be bought with bitcoin. They underly the island’s decentralized autonomous organization (DAO) government on the blockchain, a database shared across a network of computers.

Merits can either be bought or earned through work and the more merits you have, the more votes you have. Citizens can stake Liberland dollars as collateral to count the votes and keep the blockchain running efficiently.

Liberlanders see DAOs as transparent and believe their lack of central leadership reduces corruption.

But blockchains can be vulnerable to interference from hackers and in the United States, DAO members have faced liability for security failures.

Reinsberg believes a DAO could be feasible for governance because a decentralized network is less prone to attacks, and technology can make the voting processes more private.

“This is especially relevant in the Balkans where inter-ethnic trust, and hence trust in any government run by a single ethnic group is low,” he said.

However, others were more skeptical. “Voting over any internet protocol is hard to accomplish securely,” Carr said. “Smart hackers may be able to manipulate the vote in a way that is hard to distinguish from normal yet unexpected results.”

‘Building the Liberverse’

Liberland hopes to attract people to the nation through its metaverse — colloquially called the “Liberverse.”

Since getting to the real marshy and mosquito-infested Liberland from Serbia’s capital Belgrade takes two trains, a taxi ride, and then a boat, bike, or car journey, a digital twin of the country has its appeal.

In the long-term, Kaspar and Jedlicka see the metaverse as intrinsically linked to the real-world Liberland, using non-fungible tokens (NFTs) to enforce property rights.

Space on the island — about the size of Gibraltar — is limited, but Liberlanders hope land eventually bought in the real-world would be matched with a digital plot, but that will take time and, Jedlicka said, a million-euro flood barrier to protect buildings on the island nation.

For residents of Apatin, Liberland brings the hope of much-needed investment.

“The city is small, and a lot of the people are leaving,” said David Popovic, 41, who works in IT and has lived in Apatin all his life.

“The people do not yet understand … even the younger people that are here do not understand. Many of them are not educated. Many of them do not know about crypto,” he said.

“When they hear of some foreigner, come here and open this space, and crypto is in the story, they think it is some kind of conspiracy. It is really hard to explain to them.”

On the other hand, some visitors expressed concerns that the influx of people — especially wealthy foreigners — could create income inequality.

“[Liberland is] going to be a rich, free country. There’s going to be inequality. What will the other people living there think about it?” asked a 24-year-old landscape architect from Hungary who declined to be named.

“My fear is that it’s only about money. And I know it’s about new technologies and protecting your data and living more equal and liberal, but if I didn’t know about these things … my first impression would be ‘okay, this is about money.’”