The Crisis of Trust in the Modern World

3.1. The Institutional Crisis

3.1.1. The State

The state was the main guarantor of trust for centuries. But today, trust in the state is at historic lows.

Polls show that in most countries, fewer than 50% of citizens trust their government. In some countries, that figure falls to 10–20%.

Reasons:

• Corruption. Government officials use power for personal gain.
• Ineffectiveness. The state fails at basic functions (security, infrastructure, education).
• Unpredictability. Laws change, taxes rise, the rules of the game are unstable.
• Lying. The state systematically misleads citizens.

When the state loses trust, it loses legitimacy. And its ability to enforce contracts declines. A vicious cycle.

3.1.2. Corporations

Large corporations have also lost trust. They’re seen as:

• Exploiting workers
• Destroying the environment
• Avoiding taxes
• Manipulating consumers

Even companies trying to be ethical face cynicism: “they’re doing it for PR.”

3.1.3. Media

Traditional media lost their monopoly on information. But new media (bloggers, Telegram channels, TikTok) haven’t gained trust. As a result, people don’t know whom to trust. And often just stop trusting anyone.

3.1.4. Banks and Financial Institutions

After the 2008 crisis, trust in banks never recovered. Banks are seen as institutions that deceive customers, profit from their problems, and receive government bailouts when in trouble.

3.2. The Crisis of Interpersonal Trust

Not only institutions, but people have stopped trusting each other. Polls show most people believe “most people cannot be trusted.” This isn’t just pessimism—it’s a rational assessment of risk.

When we interact with a stranger, we assume the worst. We check, double-check, insure. This increases costs and slows all processes.

3.3. Economic Consequences of the Trust Crisis

3.3.1. Rising Transaction Costs

Transaction costs are expenses beyond the price of goods: finding a partner, verification, negotiation, drafting contracts, legal support, litigation.

In a low-trust world, these costs are enormous. By some estimates, they reach 30–40% of transaction value in developing economies.

3.3.2. Distrust as a Tax

Distrust is a tax we pay without even realizing it. We pay it:

• When hiring lawyers to review contracts
• When insuring against risks
• When conducting additional checks
• When unable to borrow on our word

In our model, this tax disappears. Because verification is replaced by reputation.

3.3.3. Lost Opportunities

The biggest losses aren’t costs, but foregone transactions. Deals that would have benefited both sides but didn’t happen due to distrust.

I don’t lend to my neighbor because I’m afraid they won’t repay. They can’t buy what they need. I don’t earn interest. Both lose.

In our model, such deals become possible because reputation provides a guarantee.

3.4. Social Consequences of the Trust Crisis

3.4.1. Atomization of Society

When people don’t trust each other, they stop forming communities. Society disintegrates into atoms—isolated individuals interacting only when necessary and with minimal risk.

This leads to:

• Loneliness
• Declining birth rates
• Rising depression
• Political apathy

3.4.2. Vulnerability to Manipulation

When people don’t know whom to trust, they become vulnerable to those who shout loudest. Populists, demagogues, manipulators exploit the trust crisis to seize power. They offer simple answers to complex questions, and people grasp at them.

3.4.3. Erosion of Democracy

Democracy rests on trust: we trust our votes will be counted, that the elected will act in our interests, that the losers will accept the result. When trust is absent, democracy crumbles.

3.5. Why Old Mechanisms No Longer Work

Let’s return to the three historical trust mechanisms:

Mechanism	Why It Weakened
Tribal	We don’t live in tribes, but in million-strong cities. Strangers everywhere.
Religious	Secularization, pluralism, crisis of institutional religion.
State	Corruption, inefficiency, loss of legitimacy.

None of these mechanisms can be restored in their former state. We can’t return to the tribe. We can’t make everyone believe in one god. We can’t make the state honest with a snap of our fingers.

We need a new mechanism that:

• Works on a global scale
• Doesn’t require a single faith
• Doesn’t depend on the state’s goodwill
• Uses modern technology
• Relies on natural human psychology (fear of reputation loss)

That mechanism is a reputation network based on blockchain.