I have always thought that we'll have some internet courts of arbitration that would cut through the red tape of dealing with many jurisdictions. But can we have sovereign states that exist only in the internet? I doubt - maybe there will be some ingenious crypto systems that would make the systems more and more independent form the physical servers (in a way like the bitcoin system) - but eventually still the physical states will always be able to switch off the virtual states if they wanted to and if they cooperated.
The crucial question here is if the virtual state can do anything that would be in conflict with the state that has jurisdiction over its servers.
I think that with some advanced cryptography this can work to some extent (with servers behind tor and distributed in a manner that there is no one god-admin) - but in the end http://aeon.co/magazine/technology/on-the-high-seas-of-the-h...
