In Balaji's short definition a Network State consists of four elements.
More specifically, it is a social network with a sense of national consciousness, and a recognized leader. This social network has characteristics, such as a quality level of relationships and an integrated cryptocurrency that enables an internal economy.
In more mature stages, when a collective consciousness and organization is achieved, the social network coordinates its action and generates a consensual government limited by a social contract. The community at that point might seek political representation in physical enclaves around the world. Over time this community might have the necessary characteristics to achieve diplomatic recognition.
According to Balaji, the model for creating a Network State includes some essential steps that articulates 4 major phases of creating a Network State: