I just now submitted that link, as a matter of fact, before I saw this one. I wondered if you'd have any comment on it.
He had better insight into the legal issues than we (or any of the lawyers we talked to) did.
I still think it failed primarily because the economics changed under our feet (prices went from $2-3k to $20-30 within 2 years), and because we didn't raise enough money. The team could have been a bit better (and would be, today; I was like 20 years old back when we did this, and none of us had done a traditional startup before), but the brick wall we were up against on pricing and financing was pretty much a deal killer.
I don't think any of this is strong evidence against a similar effort working today (not an offshore platform for hosting, but cryptographic systems, or offshore for HR/visa compliance, or just for cost advantages).
The basic strategy of trying to push only a single challenge (technical or legal or whatever) vs. trying to innovate on everything at once, is valid.
I think eventually some smaller nations will catch on and become secure offshore data and processing hubs, just as today there is an entire economy around offshore finance. We will probably look back at DataCo as being a few decades ahead of time.
Do a good job of articulating socially good uses. PGP to protect you from spies is unrealistic, PGP to protect you from the law if you are a criminal is both unrealistic and bad PR, but filevault to protect my SSN when your laptop is stolen, that's a much easier win -- it's just hard technically and inertia, but those are easier than active political or legal opposition to overcome.
In parallel with that, try for political change, ideally using tech as much as possible to support that -- I wasn't an Obama voter, but what the 2008 campaign did with social media was transformative.
If all those fail, sure, consider doing something crazy like Sealand or offshore corporations or whatever, but ultimately I'd rather live in a first-world country WITH good laws, than something with technical or jurisdictional hacks.
Let's say cost is not an issue - some people with deep pockets have things they think are worth it to host outside the law, and will pay you with bitcoin (run through a bitcoin pool operating on the extra-legal territory itself).
How do you get around the fact that all your internet links will be run by companies in real countries subject to legal orders?
How do you get around the fact that any ragtag band of pirates can board and take over your "island" nation? Do you hire a team from G4S to guard your ship? G4S or any other security entity would be subject to laws and court orders, too.
If it's not a ship, but an actual island, you still have most of the same problems. Even if it's populated to provide some measure of physical security (you can't bomb an island with innocent civilians on it without a lot of bad press, not that other governments would need to bomb to shut you down), won't the existing government care more about protecting tourism and/or the interests of the natives before they care about protecting a data haven?
For transaction processing systems which need to be durable, I'd go with something with multiple levels of indirection on the network, using links which are locally secure for short periods of time. Sort of like tor/onion routing with hidden services.
You might still put your processing nodes in a concrete fortress of some kind, but they're basically anonymous data processing equipment. Use tamper-resistant technology and the worst that happens to them is denial of service.
The point of having a published high profile physical location (like Sealand) is to claim jurisdiction there, and thus get some legal benefits in interacting with other jurisdictions. To the extent that everything can be done on the Internet, you don't particularly need that.
Wars happen all the time, and you have no military of your own.