It's unclear how governments will integrate with blockchains. Historically, governments have gained much of their power through land ownership secured by force. However, as humanity ventures further into the virtual, physical land ownership loses importance. With cheap flights, Airbnb, and widespread internet access we will likely see a rise in stateless travelers and "crypto nomads". This could pose a threat to the business model of many governments.
Instead of rent extraction based on physical location, an alternative would be for governments to create blockchain walled garden ecosystems. To gain access to governmental services, users must transact in a government issued token. This governmental token can be easily taxed, selectively privacy preserving, and can even be frozen.
For example, imagine karl.tech was elected chief dictator for the USA. In this universe, the USA would be a system of smart contracts deployed on Ethereum. It might look something like this:
The future will be full of surprises, but it seems to me that these walled garden ecosystems are a pretty logical next step. Countries like Estonia are already headed down this path with services like e-Residency and estcoins. While I do not advocate for this model, this is one way for governments to remain relevant as we dive head first into the virtual universe of digital consciousness. Hold your breath!