The Diffusion of Blockchain Technology Across Industries
Grover, P., Kar, A. K., & Janssen, M. (2019). Diffusion of blockchain technology: Insights from academic literature and social media analytics. Journal of Enterprise Information Management, 32(5), 735-757. https://doi.org/10.1108/JEIM-06-2018-0132
https://www.youtube.com/watch?v=-UPzqTZktio&t=447s&ab_channel=FoundupsMichaelTrout
We are living the early years of what may become the most innovative technology of the 21st century, blockchain technology. Most people when they hear the term ‘blockchain’ instantly associate it with Bitcoin, which makes sense as it has gone massively mainstream once before and is going mainstream again. The thing is that blockchain technology is applicable to much more than just cryptocurrencies. In a paper published in the Journal of Enterprise Information Management by P. Grover, A.K. Kar and M. Janssen, they explored the different ways in which this new technology is being applied across different industries and how it is diffusing into these industries.
We can consider each industry a cluster, like the ones we talked about in class, each having a unique density. Those industries that are more prone to adopting new technologies will have a lower density, while more traditional industries will have a higher density, meaning they are less likely to adopt a new technology. The finance industry, often an early adopter of new innovations, is an example of an industry with a low relative density because it is constantly changing and is why blockchain has had huge applications in this sector, such as the advent of Decentralized Finance (DeFi).
The authors of the paper identified 5 stages of diffusion. The first stage is knowledge, followed by persuasion, then decision, implementation and finally confirmation. Below is a chart showing the diffusion of blockchain into different industries as per the study, where MANU is manufacturing, PUBL is public administration, TRAD is trading, TRAN is transportation, SERV is service and FINA is finance.
As you can see, more traditional industries like manufacturing and public administration have hardly seen any diffusion of blockchain technology, while the more adoptive financial sector has seen large-scale endorsement of this new technology. .
The authors mentioned the Law of Diffusion of Innovation, a social theory devised by E.M. Rogers in 1962. The Law divides people up into the following categories based on how quickly they adapt to a new technology: Innovators, early adopters, early majority, late majority, laggards. I watched a Youtube video about Rogers’ idea and how it relates to blockchain (cited above) by Michael Trout. He presents the following chart.
In his video he uses the following curve, which is very similar to the normal distribution, to explain the stage of diffusion in which we are now. He concludes that at the time of the video, 2018, society as a whole is in the innovators stage, and come 2020 we would be entering the early adopters stage. This leaves me with much hope and excitement for what is to come this decade in technology and innovation as blockchain is adopted by more of the population.