Blockchain financial geographies: Disrupting space, agency and scale

Abstract

The potential of blockchain-technology to disrupt the financial and related sectors by making many intermediaries superfluous is subject of frequent discussions. We analyze the current and potential structural effects of blockchain-based business models. In order to make “disruption” more traceable, we define three dimensions of it: space, agency and scale. Using a combination of Crunchbase data, interviews and participant observation at workshops and conferences, and case studies we outline areas in which companies are seeking to implement blockchain in financial functions and assess the extent to which this represents structural changes in finance and associated advanced producer services (APS). We find that while the expectations for blockchain as a transformative force in finance/APS are high, the actual structural effects are much less clear as we see established industry players (e.g., banks) capturing these efforts and/or new entrants essentially recreating the existing structures and functions of the current financial sector. We outline a number of possibilities as to why to date blockchain has not met these expectations of disruption. We explore how scale emerges as a theoretically fruitful avenue for understanding which phenomena are actually well placed to fundamentally alter the structure of the financial sector including related advanced services. Three case studies on initial coin offerings, real estate investments and the “money memory” associated with blockchain-based currencies show that potentially transformative effects derive from blockchain technology being able to shift scale.