Don't get me wrong, I'm not talking about the shot that supposedly pierced Trump's ear. Rather, I'm referring to the shot Trump fired in support of Bitcoin at the recent Bitcoin conference.

At the 2024 Bitcoin Conference, former U.S. President Donald Trump made a surprising declaration: if re-elected, he would designate Bitcoin as a strategic reserve asset for the United States.

This marked a stark shift from his previous skepticism toward cryptocurrencies, a stance he expressed in 2019 when he dismissed them as "a house of cards."

Now, Trump is proclaiming that the U.S. should become the "global hub for cryptocurrencies." This bold move has stirred the markets, much like a large stone dropped into a calm pond, creating ripples of excitement and speculation.

Trump's proposal to incorporate Bitcoin into the national strategic reserves is undoubtedly a challenge to the traditional trust systems. This isn't just a policy statement; it's a pivotal moment in the reshaping of global trust mechanisms, positioning Trump as a key player in what we might call a "trust revolution."

This term, "trust revolution," might sound grandiose, but its core is quite simple: people are rethinking how to build and maintain trust. Traditionally, trust has been placed in central institutions like governments, banks, and the media. However, the credibility of these institutions has been eroding, particularly in the face of crises like the pandemic, racial issues, and political polarization.

A 2023 survey revealed that trust in the government and media in the United States has reached an all-time low, with less than 20% of respondents expressing "a fair amount of trust" in these institutions.

Globally, a crisis of trust has become a widespread phenomenon. People are increasingly disillusioned with opaque government policies, corporate scandals, and biased media reporting. This erosion of trust not only hinders international cooperation and social progress but also exacerbates domestic social conflicts and instability. Against this backdrop, there is a growing search for new, more reliable mechanisms of trust.

Trump's bold statement, although surprising, reflects this reality: trust, as the foundation of social interaction and cooperation, is undergoing a revolution.

This "trust revolution" aligns with the rise of decentralized systems.

Thanks to the development of blockchain and cryptographic technologies, decentralized systems are creating new forms of trust that don't rely on central authorities.

Cryptocurrencies, as the first products of the trust revolution, have already achieved significant success. The Bitcoin and Ethereum ETFs represent breakthroughs in traditional finance. Decentralized finance (DeFi) is reshaping the financial landscape in profound ways.

While the trust revolution began with cryptocurrencies, it is poised to go much further. It will not only transform traditional finance and commerce but also reshape the socio-political landscape of humanity.

This article begins with the concept of trust and explores the future landscape of the trust revolution.

1. What is Trust?

Trust is the core foundation of social interaction and cooperation.

Trust refers to an individual's or group's expectation and belief that others or systems will act consistently and fulfill their commitments in specific situations (Mayer, Davis & Schoorman, 1995).

This trust is evident not only in personal relationships, such as the promise of punctuality between friends, but also plays a crucial role in complex economic and social systems.

• In business transactions, consumer purchasing decisions often rely on trust in companies, which can be built through brand reputation, past transaction history, and third-party reviews (Gefen, 2002).

• In the financial system, investors trust the stability of financial institutions and markets, a trust that is essential for the normal functioning of the economy (Guiso, Sapienza & Zingales, 2008).

• In public governance, citizens' trust in the government is closely related to the transparency and fairness of policies, which affects overall social stability and governance efficiency (Rothstein & Stolle, 2008).

Trust, as a form of social capital, can reduce uncertainty and transaction costs, facilitating cooperation and collective action. Today, our discussion will focus on interactions based on third-party trust, such as e-commerce platforms in business, banks in finance, and the state in politics.

Before we delve deeper, let's clarify a few key concepts.

2. Trust, Belief, and Credit

Trust, belief, and credit are interrelated but distinct concepts, significant in both daily life and academic discussions.

• Trust is a psychological state involving expectations about the consistency and reliability of others' or systems' actions in future situations. It's a blend of emotions and cognition, based on past experiences, observations, and an understanding of someone's character or the structure of a system. Trust can reduce uncertainty and promote cooperation and social interaction. For instance, we may trust a friend because they have been punctual and reliable in the past or trust a brand because it consistently delivers high-quality products.

• Belief is a cognitive state that refers to the acceptance or agreement with a fact or proposition. Belief doesn't always require evidence; it can be based on subjective judgment or faith. It can involve facts (e.g., believing the Earth is round) or morals (e.g., believing honesty is important). Belief is more a part of an individual's belief system and may not necessarily be directly related to specific experiences.

• Credit is a social and economic concept involving the evaluation of a person, organization, or system's ability and willingness to fulfill commitments. Credit is not just about the feeling of trust; it includes assessing the subject's ability to fulfill financial or social obligations. In the financial sector, credit is often quantified through credit scores to reflect an individual or entity's ability to repay debts. For example, a bank decides whether to grant a loan to someone by checking their credit record to determine if they are trustworthy.

The relationship between these concepts:

Trust and belief are psychological and cognitive reflections, focusing more on individuals' attitudes and perceptions of others or systems. Trust is usually based on experience and observation, while belief may be based on a broader belief system. Credit, on the other hand, is an extension of trust, materialized into specific evaluation systems in social and economic contexts. For example, a person may be trusted for their punctuality and sense of responsibility and have a high credit rating with financial institutions due to a good credit history.

Belief is too subjective, and credit is too narrow. We choose trust as the subject of study because it is the foundation behind belief and credit. Understanding trust helps in understanding the mechanisms behind belief and credit formation.

3. How Does the Trust Revolution Happen?

In both centralized and decentralized environments, the essence of trust involves several core aspects:

• Expectation: Trust is built on expectations of future behavior or outcomes.

• Belief: Trust involves belief in others or systems to fulfill their commitments.

• Reliability: Trust's foundation is the expectation of consistent behavior, meaning past behavior can predict future behavior.

The key to the trust revolution lies in how decentralized systems build and maintain these core aspects of trust: expectation, belief, and reliability.

3.1 Expectation from Distributed Consensus

In decentralized systems, expectations no longer rely on a single authority but are formed through distributed consensus. This mechanism makes the system more transparent and resistant to manipulation, while also reducing the spread of bias and misinformation.

A good example is prediction markets like Polymarket. On such platforms, users can predict and trade on various event outcomes. Unlike traditional predictions provided by experts or institutions, Polymarket uses collective wisdom and market mechanisms to form expectations.

For instance, for an upcoming election, users can buy "shares" representing different candidates' chances of winning. As time progresses and new information emerges, the prices of these "shares" fluctuate, reflecting the collective expectation of the election outcome. The final prices often accurately predict the actual results.

The advantages of this mechanism include:

• Decentralization: It doesn't rely on a single prediction agency or expert.

• Incentivizing Accuracy: Users are economically motivated to provide accurate information, as incorrect predictions lead to losses.

• Real-Time Updates: Expectations adjust quickly with new information.

• Transparency: All transactions and price changes are public.

This way, distributed consensus mechanisms can aggregate vast amounts of knowledge and judgment from participants, forming more reliable expectations than a single authority. This principle applies beyond prediction markets to other areas like product reviews and credit evaluations, providing a robust mechanism for expectation formation in decentralized systems.

3.2 Belief from Cryptographic Certainty

Another core element of decentralized trust is belief, not in any individual or institution, but in the system itself—essentially, a belief in the mathematics behind cryptography.

Take the Bitcoin network, for example. It doesn't rely on any central bank or government to ensure its operation but uses complex cryptography and a distributed network to guarantee its security and reliability. Users trust the blockchain technology itself because its transparency and decentralization make tampering nearly impossible.

One of the bases of this trust is the SHA256 hashing algorithm. SHA256, used in the Bitcoin system, has these properties:

• One-way Function: It's easy to compute a hash from input but nearly impossible to reverse-engineer the input from the hash.

• Collision Resistance: Finding two different inputs that produce the same hash is extremely difficult.

• Avalanche Effect: A small change in the input drastically changes the output.

These properties make SHA256 practically unbreakable in real-world applications. For example, even with the most powerful supercomputers, it would take billions of years to crack a specific SHA256 hash by brute force. This mathematical impossibility provides a solid security foundation for the Bitcoin system.

In blockchain systems, SHA256 is used in several key areas:

• Block Hashing: Each block's hash is computed using SHA256.

• Proof of Work (PoW): Miners must find a nonce that, when hashed, produces a block hash meeting specific criteria.

• Transaction Hashing: Each transaction's unique identifier is also computed using SHA256.

This cryptographic trust mechanism allows users to trust

the system's security and reliability without needing to trust any centralized institution. Since mathematics is indisputable, as long as the underlying mathematical principles remain unchanged, the system can maintain its credibility.

Of course, it's important to note that while cryptography provides a solid foundation for decentralized systems, the overall security of the system depends on many other factors, such as network security, software implementation quality, and user behavior. Therefore, trust in decentralized systems still requires a comprehensive understanding of the entire ecosystem.

3.3 Reliability from Self-Healing Capability

In traditional centralized systems, a failure can cause the entire system to collapse. However, decentralized systems possess strong self-healing capabilities, making them more reliable in the face of faults and attacks.

Decentralized systems use distributed network architectures to enhance system robustness and resilience against attacks. In this architecture, data and computing tasks are distributed across multiple nodes rather than centralized on a single server. Even if some nodes fail, other nodes can continue to operate, ensuring the system's stability and reliability.

Decentralized systems often employ data redundancy and replication strategies. For example, in a blockchain network, each node holds a complete copy of the blockchain. This means that even if some nodes fail, other nodes can still provide complete data and services.

An example is IPFS (InterPlanetary File System), a decentralized file storage and sharing system that improves file availability and reliability through distributed storage. Here's how IPFS implements its self-healing capability:

• In IPFS, files are split into multiple small chunks (shards) and distributed across different nodes. Each shard has a unique hash as an identifier. When a user requests a file, IPFS retrieves the shards from multiple nodes based on their hashes and reassembles them into the complete file.

• To ensure high file availability, IPFS stores multiple copies of files on multiple nodes. Even if some nodes fail, the system can still retrieve files from other nodes. This redundancy mechanism significantly enhances system reliability.

• IPFS also has dynamic repair capabilities. When the system detects a node failure, it automatically creates new copies on other nodes to ensure data integrity and availability. This dynamic repair mechanism allows the system to quickly respond and recover, maintaining a high level of service quality.

By leveraging distributed network architectures, data redundancy, dynamic repair, and other mechanisms, decentralized systems achieve strong self-healing capabilities. This allows them to maintain high stability and reliability in the face of faults and attacks.

3.4 Summary

The trust revolution aims to build a decentralized trust system, redefining the concept of trust and offering society a more transparent, fair, and reliable alternative. In a world filled with uncertainty and information manipulation, decentralized trust undoubtedly opens a door to the future.

So, what exactly is decentralized trust?

4. What is Decentralized Trust?

Decentralized trust is the most significant outcome of the trust revolution.

Decentralized trust is a new trust mechanism that, through technological means, particularly blockchain and cryptographic technologies, creates a trust mechanism independent of central authorities. This trust system acts as an omnipresent overseer, ensuring that all participants' actions align with predetermined rules without relying on a single centralized institution.

The main features of decentralized trust mechanisms include openness, fairness, and certainty.

4.1 Openness

In decentralized systems, all transactions and data are recorded in a public distributed ledger, viewable and verifiable by anyone. This transparency is like conducting transactions in broad daylight, with no details hidden from view. For example, Bitcoin's blockchain is a prime example where every transaction is recorded and publicly accessible, reducing information asymmetry and allowing every participant to see how the system operates.

4.2 Fairness

Decentralized trust relies on distributed consensus mechanisms like Proof of Work (PoW) or Proof of Stake (PoS) to verify and confirm transactions. It's akin to a democratic election where all nodes participate to ensure that no single node can alter the data. This mechanism ensures the system's fairness and reliability. For example, the Ethereum network uses a PoS mechanism, allowing all Ether holders to participate in validating transactions, securing the network's stability and security.

4.3 Certainty

Smart contracts in decentralized systems act like automated vending machines, executing automatically when preset conditions are met. Smart contracts, written in code, predefine rules and terms, eliminating the possibility of human interference or breaches. For instance, in decentralized finance (DeFi) platforms, lending agreements are automatically executed by smart contracts, ensuring that all participants' rights are protected.

4.4 Summary

In fact, the success of decentralized trust in cryptocurrencies is being replicated on a large scale. Decentralized trust is quietly changing our world. As Stephen Covey said, "Trust is the accelerator on the highway; the higher the trust, the faster the speed, and the lower the cost."

However, the trust revolution isn't just about reducing costs and increasing efficiency; it also brings about changes beyond the economy. The trust revolution will mainly change human politics.

The most valuable aspect is that all of this is gradually becoming a reality.

5. Politics Under Decentralized Trust

Decentralized trust mechanisms are changing human political structures and governance models in remarkable ways. They break the traditional power concentration model, making power distribution more diverse and decentralized.

5.1 Estonia's X-Road

Estonia began developing and implementing the X-Road system in 2001, the world's first national data exchange layer, providing infrastructure for secure data exchange between government agencies, private businesses, and citizens.

The X-Road system was developed and managed by the Estonian Information System Authority (RIA). While X-Road does not use blockchain technology, it achieves transparency, reliability, and certainty through similar technology. Specifically, X-Road uses a distributed architecture, allowing different organizations to exchange information directly without a central database, thereby increasing efficiency and security.

X-Road uses encryption and digital signatures to protect the security and integrity of data exchange. Each data exchange is recorded and encrypted, ensuring data immutability and traceability. This design enhances system transparency and reliability, similar to transaction records in blockchain technology. Any authorized participant can provide or request services using X-Road, but only data owners can access and manage their data.

This system significantly improves the efficiency and transparency of government services. For example, in traditional systems, citizens may need to visit multiple government departments to complete a service, whereas, with X-Road, most services can be completed online in minutes.

Since its implementation, X-Road has processed billions of data exchanges. It has not only improved government service efficiency but also significantly reduced bureaucracy and corruption. Additionally, the system has promoted innovation by providing infrastructure for developing new e-services.

By 2023, X-Road had become the core infrastructure of Estonia's digital society, supporting numerous services from electronic voting to digital medical records. Its success has garnered international attention, with countries like Finland adopting similar systems, demonstrating this technology's significant potential in improving government services and promoting digital transformation.

5.2 Georgia's Land Registry

In 2016, Georgia began integrating blockchain technology into its land registry system, becoming the first country in the world to apply blockchain technology to a national land registry system.

The system was developed in collaboration between the Georgian National Agency of Public Registry (NAPR) and blockchain technology company Bitfury. It records land ownership and transaction information on the Bitcoin blockchain, ensuring data immutability and transparency.

Whenever a new land transaction occurs, the transaction information is recorded on the blockchain. This includes the land's location, area, ownership information, and transaction details. Anyone can verify this information, but only authorized government officials can add or modify records.

This system significantly improves the efficiency and security of land registration. In traditional systems, completing a land registration could take days or even weeks, whereas, with blockchain technology, this process can be completed in minutes.

Since its implementation, the system has processed millions of land transactions. It has not only increased the transparency of land transactions but also significantly reduced land disputes and fraud. Additionally, the system has attracted more foreign investment, as investors have more confidence in Georgia's property rights protection.

By 2023, Georgia had expanded this system to other areas, including business registration and notary services. This demonstrates the broad application potential of blockchain technology in government services and its potential to fundamentally change public sector operations.

5.3 Global Aid by the United Nations

In 2017, the United Nations World Food Programme (WFP) began a pilot project using blockchain technology for aid distribution in the Zaatari refugee camp in Jordan. This was the first large-scale application of blockchain technology within the United Nations system.

The system, named "Building Blocks," is based on the Ethereum blockchain. It uses biometric technology (iris scans) to verify refugee identities and records each aid transaction on the blockchain.

Refugees can use their allocations to purchase food and other necessities at designated supermarkets. Each transaction is recorded in real time on the blockchain, ensuring transparency and traceability.

This system brings multiple benefits:

• Increased Efficiency: It reduces intermediaries, lowering transaction costs. WFP estimates that the system can save about 98% of banking fees annually.

• Enhanced Transparency: All transactions are publicly recorded on the blockchain, reducing the possibility of fraud and misuse.

• Privacy Protection: Refugees' personal information is better protected, accessible only by authorized personnel.

• Flexibility: The system can quickly adjust aid distribution in response to emergencies.

Since the 2017 pilot, the project has expanded to other refugee camps and countries. By 2023, Building Blocks had served over one million refugees, handling billions of dollars in aid transactions.

WFP's success has inspired other United Nations agencies and international organizations to explore blockchain technology's applications. For example, the United Nations Children's Fund (UNICEF) has begun accepting donations in cryptocurrency and funding blockchain projects. This shows blockchain technology's significant potential in improving global humanitarian aid.

5.4 Summary

Decentralized trust mechanisms, through distributed architecture and blockchain technology, have significantly altered political structures and

governance models worldwide. Estonia's X-Road system and Georgia's blockchain land registry system demonstrate the immense potential of decentralization in enhancing government service efficiency and transparency, while the United Nations' Building Blocks project showcases its application prospects in global aid distribution. These cases indicate that decentralized trust mechanisms can reduce power monopolies and corruption while promoting innovation and improving public service quality.

Conclusion

The decentralized trust brought about by the trust revolution is a profound reflection on the principal-agent problem in traditional representative democracies. While centralized systems have provided a stable order for society, they have also led to issues of power abuse and information opacity.

This revolution offers not only a fairer and more transparent social structure but also an effective way to address the principal-agent problem. In a decentralized world, every individual and organization can directly participate in decision-making and resource allocation through open and transparent mechanisms, leading to more dispersed power and reduced possibilities of abuse and corruption.

Of course, this is not to entirely negate centralization; it's just to say that centralization is merely one way to achieve efficient order. However, the issues brought by centralization are no less than the problems it solves. The emergence of decentralized trust mechanisms can effectively correct these imbalances.

Finally, on a practical note, keep an eye on one indicator: the growth rate of M1 versus M2.

Notice the red arrow in the chart, indicating that since 2018, despite increasing liquidity, more money has turned into deposits. The growth rate of M2 has consistently exceeded that of M1. Especially in recent months, M1 growth has turned negative. What does this indicate? Let's take June 2024 as an example.

In June, M2 fell to 6.2%, while M1 declined to -5%.

At the end of June, broad money (M2) stood at 305.02 trillion yuan, up 6.2% year-on-year, down from 7% in May. Narrow money (M1) was 66.06 trillion yuan, at -5% year-on-year, compared to -4.2% in April.

The M1-M2 scissors difference was -11.2%, roughly the same as in May.

Let's calculate: M2 - M1 = resident savings deposits + corporate term deposits + foreign currency deposits + trust deposits = 305.02 - 66.06 = 239.14 trillion yuan.

What does this tell us?

Private capital is viewing the future negatively, preferring to keep money in fixed deposits rather than investing.

You might wonder if we've hit rock bottom and whether things might improve soon. Perhaps not just yet. Look at this chart again and note the arrow; Hong Kong's peak was -25.14% in February 2023.

These last two charts might seem unrelated to today's discussion on the trust revolution, but they are very much connected.

Experts have long pointed out that simply flooding the market with liquidity is not enough; the key is expectations. If people are pessimistic about the future, no one will invest.

Hopefully, Trump's "big talk" will give you a hint:

Because Bitcoin isn't just for Trump or the U.S. government.

[For more content, visit Airdrop Project Base]