History is littered with failed libertarian utopias, but PayPal cofounder and billionaire venture capitalist Peter Thiel believes an artificial floating nation-state 200 miles off the coast of San Francisco could change that, according to a profile in Details magazine. And Thiel is putting his money where his mouth is, giving $1.25 million so far the Seasteading Institute, an organization dedicated to launching small countries on oil-rig–type platforms in international waters. Here, a guide to the "vivid, wild-eyed dream" of a Libertarian Island:

Why build a new island nation?

"There is no such thing as unclaimed land," says the Seasteading Institute, so starting from scratch in international waters "is the only option to create new societies on Earth." Essentially, explains Detail's Jonathan Miles, the autonomous island would be "a kind of floating petri dish for implementing policies that libertarians, stymied by indifference at the voting booths, have been unable to advance: No welfare, looser building codes, no minimum wage, and few restrictions on weapons."

How would Libertarian Island work?

At first, the new city state would be built on mobile, diesel-powered floating platforms that house up to 270 residents, but Seasteading chief Petri Friedman hopes to have tens of millions of residents living on hundreds of banded-together platforms by 2050. Within a few decades, the goal is to establish United Nations–recognized sovereign nations that get their food and energy from trading with other countries.

Is this a serious proposal?

Yes. Friedman plans to start next year by launching a flotilla of offices off San Francisco's coast, with full-time floating settlements in seven years. Friedman and Thiel expect the "entrepreneurial zeal" of seasteading to prevail where other libertarian utopias have failed. Many people scoff at the idea, but "that's a good thing," Thiel said at a 2009 Seasteading Institute Conference. "Since they don't think it's possible they won't take us very seriously. And they will not actually try to stop us until it's too late."

What could go wrong?

Let's see, says John Cole in Balloon Juice. Floating cities, constructed under super-loose building standards, in the middle of the ocean? The rest of us will pay a fortune in rescue costs. And these isolated communities will be "populated by people desperate enough to work for less than minimum wage with easy access to weapons of all sorts," says Allahpundit in Hot Air. This could be "the start of a magical utopia where government is small, freedom is plentiful, and the only limit to the pursuit of happiness is your ability to swim. Or, it could be Lord of the Flies." Oh please, put "cameras everywhere!" says Ann Althouse in her blog. "We want to watch your reality show."

What do other libertarians think?

"Jaded curmudgeons such as myself have witnessed numerous of these projects," says Lew Rockwell in his blog. Thiel is welcome to spend whatever he wants on his vision, but "the real battle for the future of liberty and the survival of the values of Western civilization is right here in our own backyard," not in some offshore utopia. "I think this is a great idea," says Dan Mitchell in International Liberty. But you won't automatically "escape the IRS by moving your money to these fiscal havens." And finding "libertarian nirvana" off chilly San Francisco? "I vote for the Caribbean."

Sources: Details, Yahoo News, Seasteading Institute, Hot Air, Donklephant, Lew Rockwell, International Liberty, Forbes, Balloon Juice, Althouse, The Reaction