The Power of Networks in Tech’s Advance
“We got the tech down, just not the business strategy down,” the chief engineer of an acclaimed token project lamented in New York in August 2018.
While his tech project had creative genius beneath it, adoption was lackluster, especially overseas beyond the United States. The project failed to get beyond a saturated U.S. market and potentially eager adopters abroad. His “token-curated registry” token flopped. I should know. I held some of the tokens.
Alas, it’s not just the technology that matters. For adoption, energetic networks are necessary to take technology to the next level.
A network structure can be just as important as the idea itself when it comes to determining whether — and how fast — the idea spreads.
The printing press and the steam engine might not have become so widespread were it not for their well-networked founders, which featured their hyperconnected friends. Historian Niall Ferguson elaborated on the history of technology’s diffusion in his book The Square and the Tower. As Ferguson wrote, “For every idea that goes viral, there are countless others that fizzle out in obscurity because they began with the wrong node, cluster, or network.”
People form networks, and an individual’s power in that network depends on its relationship to others in the network — or, using tech-savvy language, the nodes. We can measure a node’s potency in both degree centrality (number of relationships) and betweenness centrality (likelihood of being a bridge between other nodes). Density, connection to other clusters and being part of larger network matters.
Those with high degree centrality and betweenness centrality are known as “Gatekeeper nodes,” which can influence whether an idea goes viral or not. Their tech transmission depends on their decision whether or not to pass on a recommendation to their network.
Brokers can exploit structural holes in an existing network, especially culturally sensitive, mobile, crypto-experienced brokers.
We have seen the Gatekeeper nodes’ effectiveness depend on their personality, too. The more charming, culturally sensitive, pay-karma-ahead types tend to do better than the stiff, less generous types.
Networks never sleep. Very small changes, like adding just a few edges, can radically alter network behavior — and potency.
A Seoul-based project might not have the connectivity to enter the U.S. market, so it needs a gatekeeper node. A San Francisco-based protocol might not have enough users in Southeast Asia. Or a U.S.-based project might not have the investor network it needs in Singapore or Hong Kong.
Each project should therefore ask itself: How strong is my network? Projects are not just competing on technology but also the potency of their networks. When networks compete, their outcome is determined by relative strengths and weaknesses of rival networks. It’s not just about the cryptography of Dfinity versus Ethereum; it’s about how well connected are each project’s backers.
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