Aim: Adoption of blockchain in conjunction with smart contracts could make obsolete business models used by firms such as Facebook, Uber, Airbnb, Netflix, and travel insurance companies. Srinivasan (2018) argues that blockchain could make the energy production greener and more democratic. According to CBinsight (2018), while the focus has been on the effect of blockchain on banking and financial services industry, there are 36 industries that could be transformed by blockchain.
Given the transformative effect of blockchain on so many industries, the aim of this study is to provide a framework and tools to predict blockchain adoption (diffusion). Predicting the rate of adoption has several practical implications. It would be useful to: 1) Blockchain adopters trying to assess implementation risk and expected duration of competitive advantage. 2) Financial managers and venture capitalists trying to estimate the net present value of blockchain investments. 3) Investors and analysts trying to value expected market reaction to firms disclosing blockchain initiatives. 4) Executives of firms supplying the new technology aiming to calibrate their strategy for the growth and maturity stage of the adoption cycle.

Method: It has been observed that adoption of new technologies tends to follow an approximate bell-shaped distribution, and Rogers (1995) has suggested the following five categories of adopters: innovators, early adopters, early majority, late majority, and laggards. According to Rogers the diffusion (adoption) of emerging technologies reflects adopters’ expectations regarding the expected benefits (payoffs). Given expectations are unobservable; Stratopoulos (2016) has suggested count of Google searches, news stories, book titles, and voluntary or regulated firm disclosures as proxies of revealed expectations. For example, one would expect that web search interest would be positively correlated with the expected value of the emerging technology and the peak would roughly coincide with the transition from early adopters to early majority.

Results based on Google trends and the keyword “blockchain” show that while blockchain was introduced in 2009; the public interest started rising after 2004, reached its peak in 2017 (December), and started to decline after. The problem with these results is that the peak coincides with the spike in the bitcoin hype. The number of book titles is a more reliable proxy, because publishers are more likely to time the release of new books with the maximum number of potential readers/adopters (i.e., early majority). Results based on book titles indicate that the number of titles does not seem to have reached a peak yet. Similarly, several other proxies seem to indicate that blockchain adoption remains at the early stages of the adoption cycle. This means that in spite of the hype, blockchain has not reached yet the stage of mainstream adoption.

Conclusion: Blockchain has the potential to alter the external environment (i.e., customers, existing competitors and potential new entrants, vendors, partners, risk of or opportunity for substitute products, regulatory environment) of firms in many industries. This means that there are opportunities and threats for all possible stakeholders (i.e., blockchain producers and adopters, as well as investors and analysts). However, in spite of the recent hype, the adoption rate is relatively low. This means that adopters are still concerned with technical limitations, regulatory issues, and lack of well defined business models for monetizing the expected benefits.