(Thanks for asking.)
It is very hard for people raised in the current era of cultural, political, legal, and economic pseudoscience, to grasp the very simple reality that all forms of property from your body and mind, to your children and mates, to your home and assets, to your political rights, to your country’s territory, and all the patterns of behavior that you count on and benefit from every day, exist because of violence, and violence alone.
Violence and violence alone determines control of yourself, your relations, and anything and everything else. All our organizations and institutions are but proxies for that violence. And only those capable of applying violence to preserve the order are ever in control of that order. And it takes very few people willing to use violence to end that order and replace it with another.
So, a State exists as a State for two very simple reasons: some group of people possesses sufficient violence to prevent other people from having it. And other states prefer those people control that State rather than an alternative group of people.
That’s it. In other words, States preserve other States – usually out of self interest: the preservation of the balance of powers in the region. During the agrarian era of the past, and during the current era where oil regions are so enabling of primitive peoples, we see Iraq->Kuwait and Iran->Syria, and Russia->Crimea (Black Sea deposits) ,and China->South China Sea.
The same goes for digital anything: digital states, digital title registries, digital currency. They exist only so long as the states in which the servers exist, the people who manage them, the means of transforming the digital to the material, the people who use them, allow them to exist.
I’ve written about this for years, but my understanding of history tells me that the digital currency experiment is merely performing private funding of research and development for the next era of state credit when the current postwar order deterministically fails.
There is no escape from violence, or paying the cost of violence, in the form of the organization of violence, we call the State.
https://www.quora.com/Are-digital-states-real-Do-they-enjoy-any-sovereignty-like-real-countries-Where-does-the-European-Union-GDPR-come-in