This post examines two of the most important factors driving the diffusion of innovations – Relative Advantage and Compatibility – in the context of Blockchains and the Adult Industry.
This is a part of a series on Blockchains and the Adult Industry. Read the first part here and sig-up below for the newsletter to be notified when the rest comes out.
The Adult Industry has always had great power to diffuse new technologies into the mainstream 1 2 and is constantly experimenting with new ones. For instance, with Virtual Reality as a new medium, connected devices for enhanced “UX”, or cryptocurrencies for payment. At the beginning of 2018 the privacy-focused Verge was added as a payment method to Pornhub and in July Pornhub announced to add Tron and zencash. However, not only do blockchain-based payment systems in the Adult Industry make sense because they solve prevalent problems in that industry, their adoption also makes sense because it fits human’s natural process of adopting new technologies. To understand why some context on the diffusion of innovation is needed.
The diffusion of innovations based on Relative Advantage, Compatibility, Complexity, Trialability, Observability
In general, innovations diffuse into the mainstream based on five categories of which Relative Advantage and Compatibility are one of the most important ones. Relative advantage measures how much better the innovation is than the existing solution as perceived by potential adopters. Compatibility measures how similar an innovation is to existing values, past experiences, and users’ needs as perceived by potential adopters. The better and the more compatible the innovation is, the more likely their adoption.
Both, Relative Advantage and Compatibility are given in blockchain-based solutions for the Adult Industry.
Relative Advantage and Compatibility in the Adult Industry provided through blockchain-based payment systems and cryptocurrencies
Blockchain-based payment systems bring the Relative Advantage; as described in Blockchain In The Adult Industry: Problems, Trends, and Solutions the used payment systems are inefficient (fraud, high fees, censoring payment processors, unsuitable infrastructure for pay per minute business models, lack of privacy). Blockchain-based payment systems solve these issues as they allow private transactions, with low fees, micro-transactions for pay-per-minute business models, are permissionless/content-agnostic (i.e. the blockchain does not care for what the funds are used or who uses them), and reduce fraud to a minimum. Thus, because blockchain-based payment systems are better (higher Relative Advantage) they are likely to diffuse.
Cryptocurrencies bring Compatibility; adult sites already use virtual, site-specific tokens for payments. Whereas beyond the hood cryptocurrencies use a different technology (which the user does not see), to the end user they are the same; virtual tokens which they exchange for fiat and use on adult sites. Here it matters little whether it is Verge, Tron, zenchash, or the “Pornhub-token“. Thus, because cryptocurrencies are similar to people’s past experiences with tokens, they are likely to diffuse.
The factors influencing the diffusion of innovations are an old concept (Rogers first proposed them in 1962) and by now they have become common sense to many developers/innovators/entrepreneurs. Nevertheless, I am under the impression that their importance, especially in the context of blockchain innovations, is very often neglected; many projects are simply (yet) to complex for the end user (although advertised for those), to confuse („incompatible“), and simply not better than preceding solutions (lack of Relative Advantage). Furthermore, one crucial nuance in their definition is often overlooked; „as perceived by potential adopters“. It does not matter how „cool“ blockchains are to developers if end users do not see their value in their daily lives. This discrepancy between users and developers represents the often quoted lack of a „blockchain killer app“. However, based on how excited developers get about blockchains, I believe that the „blockchain killer app“ already exists for developers but not yet for end users.