Balaji recently said he was in favor of reducing military capacity. Whether that's a good idea or not, it shows that his preference with a cloud country is a non-violent one.

One interesting aspect of a cloud country, or networked state, is that it would be distributed/decentralized. In theory it would be hard to attack in the real world as there may not be traditional borders at all. If if distributed globally it's certainly resistant to nuclear type attacks. A country with a capital "in the cloud" has a digital defensive structure similar to the Củ Chi tunnels from the Vietnam war.