If two people use Cardano to interact with each other, they have to trust the technology. These people may not trust each other and yet it is possible for them to perform a financial or other transaction between them. Much has been written about how blockchain can replace inefficient and unreliable intermediaries and can become a trusted tool for communicating with each other. It follows that people need to trust technology. They trust it even more than they trust people, and that is a huge responsibility. But for whom? How important a role can Cardano and blockchain networks in general play for our society? TLDR It is difficult to quantify the importance of the existence of states and fiat currencies in society. States will actively resist the emergence of technologies that would weaken their position. In fact, trust in blockchain technologies is what competes with current institutions. Gradual evolution is better than a violent revolution. What is the value of trust in the state? Trust cannot be easily quantified or added up. Trust is all around us and without it, our world would not function. Yet this quality is difficult to grasp. Trust in the state and in money is largely based on people's desire to live in a hierarchical system. It is on the basis of people's trust in the state that the legislative, executive, and judicial powers were established. Between the people and the state, there are written rules and unwritten rules which we can call the social contract. What is the result of trust in the state and state money and can it be quantified? Yes, it is possible, but only in abstract terms such as peace, social welfare, quality environment, good future prospects, etc. The state system and money can be seen as tools that serve to maintain peace, and order in society, fairness in business, and many other things. All of these things are of incalculable value, but it is only a consequence of the way the system works. The functioning of the state administration, individual authorities, central banks, and other important institutions can be quantified in money. States have revenues and expenditures. It is possible to estimate, at least in theory, how much people pay for public services, the order in the streets, social benefits, and peace. It is possible to calculate the costs of running each institution. It is said that blockchain is a disruptive technology that can change the way our society operates. Specifically, it may mean that current money, which falls under the control of central banks, may be replaced by cryptocurrencies. This can be a huge interference in the functioning of a key tool of our society. In a way, it may weaken the position of states. Can blockchain take over the role of the state or money? Many people believe that Bitcoin can replace fiat currencies or become a reserve currency. Perhaps it can have a similar position to gold. Cardano has the potential to replace financial systems. Many current financial services can be replaced by decentralized equivalents. Algorithmic stablecoins can replace the functioning of central banks. It is theoretically possible to create a currency with fixed and unchangeable inflation. Anyone using the blockchain must pay a fee. This is the income of the network, which has expenses for its operation. Cardano has a reserve that will one day run out. When that happens, the existence of the network will depend entirely on the interaction of users who are willing to pay for it. The operation of the Cardano network, and all others, can be said to be quantified in money. It can be said that the blockchain will make it possible to calculate the exact value of trust between two participants. With higher adoption, however, it can be difficult to quantify the impact on society in the context of what the state currently represents for society. The fee for sending the value can be seen as a service fee similar to paying PayPal. Even with PayPal, you have to trust the company and the value of the fee includes that. PayPal handles a huge number of transactions and is hugely important to the functioning of the financial system. This importance is reflected in the value of the company's shares. If blockchain networks were to replace PayPal, they would take over its financial significance and would probably be reflected in the market capitalization of native coins. Thus, we can say that the value of trust, i.e. the importance of a given blockchain, is very precisely quantifiable. However, the question remains whether blockchain networks can have a similar significance as states in the sense that they will at least participate indirectly in the running of society. The financial and social importance of blockchain networks is expected to grow. Unlike states, it is relatively easy to calculate the cost of running a blockchain network. However, it is very difficult to quantify the social and financial importance of the network and its impact on society. Market capitalization can provide some guidance. For the major IT giants, the network effect is a significant driver of shareholder value. Can the same logic be applied to blockchain? States will want to maintain their control over society. Some more, some less, but it is certainly not going to happen that the state system will disappear from the world. One can assume that states will actively resist the rise of technologies that would weaken their position of power. This is not to say that blockchain technology will not take hold in some form and become more prominent than officials now acknowledge. Just as it made no sense to prevent the advent of the internet, it makes no sense to fight the blockchain industry. It is important to remember that the state defends values such as peace, social harmony, public welfare, and social benefits. People see it that way and, more importantly, they want it to stay that way if the state is successful in these efforts. We should ask what blockchain networks can do for the state. Trust is everything In general, if Cardano is a reliable and safe tool for a growing number of people to interact with their environment, it will earn their trust. This is the first prerequisite for growing financial and social relevance. In fact, trust is what competes with current institutions. It's not so much a particular technology or blockchain, but the number of people who trust these new technologies more than institutions. Institutions mostly resist change. Despite that, they have been forced to adopt Internet services simply because people have used them on a large scale. Blockchain technology will be adopted by states not because a small group of people wants it, but because the majority trust it. This brings us back to the question of what people will use blockchain technology for. This may give us a clue as to what functions of the state they can replace. Bitcoin can be adopted by states as a reserve currency. However, if the state continues to force people to use fiat currencies, nothing will change in terms of the functioning of central banks. The market capitalization of BTC could increase significantly, but the impact on most of society could be negligible. A responsible state cannot replace fiat currencies with highly volatile cryptocurrencies, including Bitcoin. From the perspective of the majority of the population, the state would fail in its role of providing a fair business environment and stable purchasing value of money. What can be done, however, is to use technology to assist central banks in creating an algorithmic stablecoin. If the state has at least partial control over the stability of the purchase price, it may agree to use it. Cardano makes it possible to create algorithmic stablecoins. It does not necessarily have to be a stablecoin pegged to the value of the USD. Some countries use a stablecoin with fixed inflation. That way citizens know in advance what they can expect from the money in the future and the state cannot print more money than the algorithm allows. It is important to remember that states are basically just social systems that must be able to resolve crises. If a crisis occurs and more money is needed, the state must have some way of getting the money. It is not fair to print money according to the needs of the state. The solution, however, is not a system that does not allow an unexpected crisis to be resolved. A happy medium must be sought. People trust Bitcoin as digital gold, but not as money that is ready to replace the fiat system. Bitcoin is neither economically nor technically ready. Cardano will enable the creation of a stable digital currency that can be backed by crypto-assets. This is a way that can earn people's trust. Such a solution may then be suitable for use by states. Cardano will be a social and financial operating system. As such, it will enable the creation of decentralized financial services. This will enable the disruption of commercial banks. If successful, the path to further exploitation will be open. We can imagine voting on the blockchain, tokenization of financial assets, and many other things. None of this will come about with the consent of states that want to have at least some oversight of the technology. That is fine and there is no point in resisting it. It is naive to expect technology to free us from dependence on the existence of states. If we accept reality and realize that states and perhaps fiat currencies are here to stay for a long time, we need to look for ways to improve the current situation. Gradual evolution is better than a violent revolution. Conclusion If fans of individual blockchain projects fight among themselves, the states will win. As long as there are a few major groups adoring a particular blockchain and rejecting any other solution, it will get us nowhere. States can hardly accept a solution that a significant part of the population vocally rejects. Active opposition is a sign of mistrust. People should seek the best solutions to specific problems with intellectual honesty. Such solutions have the best chance of winning the trust of the people. Consequently, such a solution can gain a very significant social and financial position in society. Blockchain technology certainly has the potential to replace fiat money and play a more prominent role in the governance of states. However, what this may look like and what specific technologies will be used are not yet known.
