...money is ultimately trust, if a powerful country adopts a cryptocurrency it will easily rival bitcoin.
I agree.
Government exists because there is a need for it, it brings law and order, stability and a sense of certainty.
This is true, but there is an important aspect that you have fallen short with:
Governments throughout history, attempted and currently running; they use the strategy of creating disorder before stepping in to restore order (at the request of a majority of the players, how poetic).
Don't get me wrong, No one government is an immune player, it's an active game, a game that is deeper than many can imagine.