Four Phases of Mass Adoption for Blockchain

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Blockchain is still in its infancy, but many believe it could revolutionize business and government, creating new foundations for our economic and social systems. Some scholars compare block chain’s possible evolution to that of the internet communication protocol called TCP/IP. TCP/IP was originally invented for small-scale, two-way email exchanges. But it ultimately evolved to become the basis for the entire internet.

Similarly, blockchain was invented as a peer-to-peer network that enabled two-way payment transactions of the cryptocurrency bitcoin. But like TCP/IP, blockchain has outgrown its original purpose. It now has the potential to become the system of record for all internet’s transactions.

In other words, it could become what is called a foundational technology, creating a new technological infrastructure for our economic and social systems. However, this radical change won’t happen overnight.

Some scholars suggest that blockchain will likely pass through several phases before fully reshaping the economy.

The Perfect Curve

1. Single Use

The first is the single-use phase. In this phase, the technology is used in application low in novelty, and not requiring coordination among different parties. For TCP/IP, email was an in-expensive single use application. For blockchain, bitcoin offered immediate value to those who used it simply as an alternative two-way payment method.

2. Localization

The second phase is the localization. Here the technology spreads to more novel innovations that need only a limit number of users to create immediate value. We see this now in the financial services sector’s use of local private blockchain networks to connect through a local distributed ledger.

3. Substitution

During the third phase, substitution, the technology faces the highest barriers to adoption. It’s used in new applications that build on existing ones, but intense coordination is required. For blockchain, think cryptocurrencies that have grown out of bitcoin. They need widespread adoption to be of any value, but they also pose challenges for governments, institutions, and consumers.

4. Transformation

In the last phase, transformation, truly novel emerged that require coordinating may actors and unifying institutional standards. The most transformative blockchain application to date may be self-executing smart contracts that can automatically trigger a payment to be sent to a supplier as soon as a shipment is delivered.


Blockchain faces many hurdles, and executives should think carefully about the risks. However, there is little doubt that blockchain will affect your business. The big question is when to stop the experiment and really press on the button of accelerating.

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