We live in the information age that began in the mid-20th century. It can be characterized by a rapid shift from the traditional industry established by the industrial revolution to an economy primarily based upon information technology. The onset can be associated with the development of transistor technology. Computers, together with new communication options, started a new social evolution. It can be said that the Internet is definitely one of the most successful technologies that influence our daily lives. Many industries are completely reliant on the Internet. Including banking and payment sectors. Nowadays, we can pay without touching physical money. You can receive your salary in digital form and spend it also digitally. Many of us use it every day at work or we use it as a source of amusement in our free time. Communication with friends and family is often running over the Internet as well.

The internet allows us to exchange information quickly on long distances. Information can be shared, stored, analyzed, and used for a variety of purposes. The Internet reshaped and facilitated the interaction between us. As social interaction is a very key need of humans the Internet quickly became an irreplaceable tool for us.

People trust the Internet. It is a key prerequisite. Trust is needed for the adoption of new technologies and it must never be breached. People can trust technology when they know its advantages and also disadvantages. People must know the border of trust and all related risks. Using technology should be straightforward and secure. In most cases, it is like that and the Internet is relatively easy to use for the majority of people.

The perception of blockchain in the context of the Internet

Blockchain technology is fully dependent on the Internet. Blockchain can be perceived as the next layer of the Internet. The internet is a layer that provides blockchain networks a quick and reliable exchange of data. Transactions and blocks are propagated via the Internet. The adoption of blockchain technologies is relatively straightforward since it keeps the basic principles of the Internet. Blockchain facilitates digital interaction between participants. In simple terms, blockchain is a shared database that is maintained by participants via the Internet. It is a distributed network that is fully dependent on communication between participants. The mutual agreement of participants about the current state of the database is the key attribute of blockchain technology.

The question of many of you might be what the new blockchain brings to us. Blockchain is able to create a brand new trust layer upon the Internet layer. We were able to transfer value via the Internet before the blockchain was invented. Money and many other assets are transferred over the Internet every day and volumes are huge. Blockchain introduces these major innovations:

  • We are able to create new values.
  • We are able to maintain values without a central authority.
  • We are able to transfer values without a central authority.

The creation of values always requires effort and resources. This process cannot be fully decentralized. Blockchain protocols must have been developed by a group of people including all rules and parameters. For example, the maximum number of ADA coins has been set by the IOG team. The value of ADA coins reflects the qualities of Cardano technology. It is the ability to maintain and transfer values without a central authority that gives value to ADA coins.

The value of ADA coins depends on the Cardano network’s existence. The network will exist only if people are willing to maintain it. The maintenance of the network makes sense only if people use it for transferring and creating new values.

The IOG team decided to have only 45,000,000,000 ADA coins but people are responsible for keeping the rule unchangeable and possibly use the value of ADA coins for other things. Transferring of ADA coins is basically the usage but it is not definitely the only purpose of ADA coins. There is a tight bind between the Cardano network and ADA coins. Cardano can be used for creating new values that will require the key attribute of blockchain technology — decentralization. The more useful usage we find for the trusted layer of the Internet the more valuable will be the Cardano network. The value will be automatically reflected by the ADA coins as they serve as guardians of security and decentralization.

What kind of disruption can blockchain pose?

The traditional internet services are based on client-server architecture. It means that there is one centralized server that serves all participants. This architecture suits well many centralized services like banks, big IT companies, governments, and other authorities. An enormous amount of interaction on the network level is running every day between centralized entities and users of the Internet. The issue is that centralized authorities hold the power and can make decisions that will be beneficial for them but disadvantageous for users. Centralized entities often misuse their position and it can happen without letting users know. To change that it is necessary to get rid of the client-server architecture. A server can be perceived as a source of decision power since it is under the control of centralized entities. The server can also be perceived as a network entity that can be misused. A decentralized network is a great concept that can give decision power and freedom back to users.

It is needed to realize who are the current centralized entities and which technologies they use. The client-server architecture is centralized but scalable and relatively secure technology. To be able to disrupt the client-server architecture, decentralized technology must also be secure and scalable. It is a technological challenge but it is naive to think that we can achieve mass adoption with blockchain technology that is slow and has expensive transactions. People using the Internet are used to quick response time and they think that services are for free. Scalability is not an issue. Services based on decentralized services need to have the same qualities. The IOG team is capable of dealing with technological obstacles via scientific research and development. Cardano, together with other blockchain projects, is the technology that will be able to compete with a client-server architecture.

Let’s be clear here. The current bad scalability of the first and second generation of blockchain projects is a serious obstacle to adoption. Improving scalability is really a needed prerequisite for achieving larger adoption. People interact with internet services literally every day and it generates an enormous number of transactions. Decentralization must not be expensive since it would be basically unavailable for ordinary people. People cannot pay a few dollars per transaction since they often need to send a few of them a day. Cardano will have cheap and fast transactions thus it allows us to build inclusive services. People must be willing to try new services to begin to trust them and require them. Decentralized services must be a preferred and required option to be able to compete with client-server services.

Only if we are capable of competing with centralized services on the network layer we can disrupt the current centralized nature of the world. A bank is an example of a centralized entity with a hierarchy structure. You can open a bank account or decide to install a blockchain wallet. In both cases, you will be able to transfer value. For example, you will be able to pay for goods. Using a bank account, you can pay via a credit card or you can use internet banking. The transaction fee is negligible and you can take bought goods to your home immediately once you swipe by your card over a payment terminal. At the moment, it is impossible to achieve the same quality of service by using a decentralized solution.

It is possible to use a hybrid solution. You can use a card provider that will custody your cryptocurrencies. The card will use fiat for the payment and the custodian will subtract your crypto later. The card provider will basically be a new form of a crypto bank. Nearly nothing will change. The only solution to get rid of middlemen in the financial world is to continue with the development and improvements of blockchain technologies together with second-layer solutions. Luckily, the IOG decided to go in this direction and Cardano will bring that to us.

We were talking about payments since it is an example of the client-server architecture that is used by a bank and payment processors. We need to trust banks to use their services but it is the same with many other aspects of our lives. We need to trust employers, big IT companies, governments, merchants, and many other authorities. We can see plenty of places that can be improved by enhancing trust. Trust is our natural instinct. We tend to over-complicate trust in our daily lives and we create laws or complicated rules. We often need some exceptions from rules. We need to recreate our culture of trust. We need a higher level of transparency in some places but the right to higher privacy in other places. We need a higher level of reliability regarding trust. We must trust that given rules work the same for everybody without exceptions. Nowadays, trust is something that is often dictated or ordered. We do not have trust fully in our hands and it is something that can be changed. People must be responsible for defining the rules including defining the mechanisms that will guard the rules.

Blockchain protocols can become a trusted layer of the internet that can replace middlemen. Many services can work better if they will be decentralized. It is on us to think about the current world and try to use decentralization at appropriate places. We are able to create trust machines that can serve us better than centralized groups of people. Trust is everywhere around us. Everything flows from trust: learning, credibility, accountability, a sense of purpose, and a mission. When it comes to trust, the whole is bigger than the sum of its parts. Trust is the great liberator of time and resources. It is also an essential condition for growth. When trust goes up, speed will also go up and cost will go down. When trust goes down, speed will go down and costs will go up. The speed at which a business or organization can grow is directly proportional to the time that must be invested in creating trusting relationships. We are used to trusting each other but we are also used to trusting technologies. Blockchain can push trust one level up.

How can blockchain enhance trust?

Centralization is often based on a monopoly position on the market or is enforced by the law. Both these kinds of decentralization are bad and the way of disruption might differ. You can choose your commercial bank. Thus, your decision can be to avoid using banking services. When your employer is willing to send your salary in cryptocurrency or stable coins to your blockchain address and you are able to pay for everything you need including taxes then you basically do not need a bank account. In this case, you can completely replace a central entity that uses the client-server architecture with a decentralized network. You will fully trust blockchain technology instead of the centralized entity. When more people are able to do the same then this step will make banks less relevant. When you will use stable coins you do not face the risk related to volatility and will enjoy higher freedom and independence. You will own your money and bear the full responsibility.

When you pay taxes, you still need to use an authority that has the mandate of the government to collect them. It is the government’s decision to allow us payments of taxes in cryptocurrencies. At the moment, it is not a standard. You can always pay taxes by a cryptocurrency-to-fiat bridge. However, you still pay to a centralized authority. Can we require an improvement on the government level? Why not! We are responsible for the governments we have. We can require higher transparency and prevention against corruption. Can a centralized government use decentralized technologies? Currently, client-server technologies are used and there is no reason to be scared of exchanging the technology. Sure, the technology must be matured and 100% reliable. It is a question of time when it will be reality. In developing countries, for example in Africa, there are not often good centralized services. These states can directly start using decentralized services.

Our society will always have some centralized entities. It will be governments, agencies, institutions, companies, and other authorities that will be responsible for some areas. It is impossible to achieve 100% decentralization on all levels of our existence. It would mean that there are only individuals that interact with each other. There always will be bigger entities in our society that have something in common. Centralization on a social level does not mean that we cannot use decentralized services on a technological level. Every centralized entity can be more transparent, ensure a higher level of security, be more accountable and open when it uses decentralized services at appropriate places. As a result, people within the entity will trust more each other and the entity will also be more trusted by people from outside. Transparency is good prevention against corruption and defrauds.

Trust to counterparty and to technology are two different things. When you trust the counterparty the technology does not matter. You believe that issues will be resolved and the counterparty does not cheat. When counterparties do not trust each other then the technology matters. Technology can establish trust between counterparties to a certain extent. In both cases, however, it is smart to use technology that ensures trust. Trust can work until it does not. Mainly in interactions between individuals and institutions, fair treatment for everybody must be ensured and technology can significantly help. Decentralization of some processes can mean that everybody can utilize the service and the decisions of individuals will have no effect.

Some cryptocurrency enthusiasts forget that trust in money is not the only trust we need. We trust in the promise that banknotes can be exchanged for the things we want and they will be accepted for their value. Money is used as a means of exchange and units of account in the first place. To protect the value of money over time low inflation must be ensured. It is the responsibility of monetary and fiscal policy to achieve low inflation. People often think that if we ensure low or even no inflation of cryptocurrencies we are done with trust. It is a mistake. It would mean that we do not need a monetary and fiscal policy at all and we could get rid of governments. People can influence the working of digital technologies but digital technologies have no power in the physical world. For example, law enforcement or authors’ rights protection is something that will always depend on people. We definitely need institutions. Public trust in them is something that can always be improved. Money is not only about the level of inflation. For our society, it is important to effectively manage their flow and it would be beneficial for everybody if we could do that in a more trusted way. Enhancing trust in institutions is not about switching from fiat money to cryptocurrencies. It is about a higher level of control, transparency, and ability to influence their decisions. Losing trust in institutions is probably a bigger problem than the level of inflation. Both these problems are closely related and can be solved together.

Using cryptocurrencies as a digital store of values can solve a problem with inflation for a few lucky individuals but the only result will be a wealth transfer. From the broader context, it does not solve anything and blockchain technology definitely has a bigger potential.

What will institutions look like in the future?

We have written that the biggest advantage of blockchain is to create new values, maintain and transfer them without central authorities. Then we stated that our society needs central entities. How do that match together? Let’s try to answer that.

Disruptive technology usually forces people to change habits, products, or processes since it is beneficial to replace them. New technology should have attributes that are recognizably superior to existing options and it is advantageous to make the change. Disruptive technology supersedes older technologies that are not able to compete with innovations. Start-ups are usually motivated to innovate since they need to compete with established companies that lack flexibility and lust for disruption. Innovations often target overlooked minorities or solve a problem that big companies are not interested in. In the beginning, the potential is often recognized by early adopters. As soon as the benefits of disruptive technology become evident, the companies and big players will become interested. They will fast embrace innovations and start using them in their processes or products as well. They will alternatively start to work on their own solution if it is possible.

We think that blockchain is more than disruptive technology. It is foundational technology with the potential to revolutionize the economy and social systems. Now it is more than evident that blockchain will disrupt traditional businesses and industries with faster, cheaper, more secure, and transparent solutions. By definition, foundational technologies are those that can enable progress and applications in a variety of problem domains. Blockchain definitely can transform not only the world of finance but also many industries, governance, and nations. Blockchain is a bigger invention than we could think and the impact will be enormous within a few decades.

Each technology improves over time to mature for mass adoption and usability across a variety of problem domains. Technology is gradually evolving from simplicity to complexity. This is the key to flexibility and versatility. Having said that, it is hard to predict how centralized entities will look like. It might turn out that some of them are useless. Many of them might completely change.

To understand evolution, we need to have a look at the evolution of blockchain. Bitcoin came to the world with a transactional system and economical model that allows it to be decentralized. To use it basically means to transact with bitcoins. Nothing more. In the context of the Internet, transactions are very slow and expensive. Moreover, price volatility basically prevents usage for payment in daily lives. Bitcoin does not have the potential to disrupt centralized institutions and transform them. The technology is not capable of doing so.

Ethereum gives the world smart contracts. The idea came from Nick Szabo long before the invention of blockchain. Smart contracts allowed us to define more complex financial operations. Decentralized exchanges are a nice example of how to avoid centralized entities. Nowadays, it is technologically possible to replace a traditional centralized exchange with a decentralized version. Which assets can be exchanged? Everything that you can think of. Ethereum also enables issuing of tokens. Issuing of tokens is a centralized process but the transfer of tokens is fully decentralized. Stable coins are the solution to volatility. We can even have stable coins that are backed by cryptocurrencies. Due to smart contracts, the exchange of tokens can also be decentralized. Token exchange is the ability that Bitcoin is not capable of. The capabilities of blockchain technology have been significantly improved. DeFi is not about Bitcoin. It is a new space that created new values and services. Not everything is good and we know that there are scams and software bugs. It does not mean that it is a failure. The way is good, the implementation is a bit worse. That can be fixed and improved.

Cardano is the third generation of blockchain. It aims to resolve the most critical obstacle of adoption and that is scalability. Blockchain must have similarly fast and cheap transactions as the Internet. Cardano does not still have resolved that but it is on the good path to success. Cardano has been already running on a fully decentralized PoS consensus. The level of decentralization increased in comparison with Bitcoin. Moreover, Cardano will introduce other great features that will be useful for the disruption of institutions. In our view, the most significant will be the Atala Prysm project. It allows people to work with decentralized identities. We believe that it will be a big step forward. At the moment, when an institution wanted to work with blockchain, it would have to publish a blockchain address on the web pages. You would have no chance to verify the address and every interaction would be public for everybody. It is not what you want in most cases. Using real and verifiable identities will dramatically improve the interaction between people. For example, when an author issues NFT, you will be able to verify that the NFT is authentic. It can work similarly with companies that will issue shares. You can have a list of your friends in your wallet and when you want to transfer assets you can select the name. You do not need to copy an address. The ability to vote is another way to disrupt institutions and make them more democratic. Cardano will have a voting system and it will be possible to use it for everything. Not only for voting within the Catalyst project.

Innovations depend on financial and mental resources. The IOG is a well-established and stable company with a lot of employees. We believe that Cardano will be the leader regarding innovations and the team will build everything that will be needed for success.

For interaction with the physical world, we have a lot of Oracle projects and another will come. It is a question of time when the digital and physical worlds will be more connected. How can all that influence the institutions? Hard to predict. What is nearly certain is the fact that it is going to happen sooner or later. Evolution cannot be stopped. It is naive to think that blockchain can succeed in having only an inefficient transactional system. Bitcoin was just the beginning. Cardano, and many other projects, is the natural continuation of evolution. Our society will be disrupted and blockchain will have a similar effect on society as the Internet had when it appeared.

Trust can also be perceived as a resource or prerequisite for interaction. Trust is something you search for when you need to interact. Trust can be a scarce resource. Blockchain, as a trust layer of the internet, can help to create new values. Scarcity enables us to create new values. You can imagine a new form of money, assets, art, but also a new form of ownership and decision making. The sky’s the limit when it comes to imagination.


Many discussions about blockchain end up by talking about decentralization, scalability, and security. They are technological discussions that are often misleading and missing the point. Technology can always be improved and it will be the case for the blockchain industry. Cardano has a strong team that will deliver the technology that we need. Trust is the topic that should be discussed. Technology allows us to reshape the most important and scarce resource we have and often lack: trust. The Internet is inevitably part of our lives and blockchain will be another layer of it. It will be the layer that will have a huge social impact. Even if we do not know what it will look like, evolution is a natural process that cannot be stopped.

Success is about a network effect. It is about the number of users that will be able to interact with each other and exchange values. The reliability, security, price, and speed will be the major drivers of success. Not nostalgia or custom. The networks that will have the most users will win in the long term. A network must allow creating new values. Thus, the network itself becomes valuable. In the world of the internet, values spring from the ability to communicate. The number of processed transactions is also a necessary prerequisite for the long-term sustainability of a blockchain network. Economic models will rely on transaction fees in the future. It is the network that must be valuable. Coins are just the reflection of values that the network allows us to create.

The biggest paradox we can see in the crypto space is that it is not still clear what exactly are or represent the native coins of the networks. It definitely differs from network to network. The current folklore is that bitcoins are used as a store of value. The Ethereum community slowly considers ETH as money and bitcoiners do not like it. The reality is that DeFi brings new values and the native coin of the network becomes a natural means of exchange. Thus, it is also a unit of accounts and a store of value. Bitcoins are not used since it is a different network. Bitcoins can be used on smart blockchain networks, but in a tokenized way. One network can use values that have been created on another network and enable creation or interaction with values on its own network.

Decentralization must be ubiquitous similarly to the Internet. It must be inclusive and cheap for everybody. It cannot be said about the current biggest blockchain networks. Cardano is the project that will bring decentralization to everybody and pushes power to the edges. Cardano will be a valuable project.