The Differential Diffusion of Exchange and Utility Value Blockchain Tokens

Blockchain tokens are widely used in digital markets, yet they do not spread in the same way. Our research shows that tokens designed primarily for financial exchange and those designed for functional or service use diffuse through fundamentally different mechanisms even though they operate on the same underlying technology. Analyzing more than 200 million transactions across more than 24,000 Ethereum-based tokens, we find that financial tokens spread faster when they are held as part of large, diversified user portfolios yet diffuse more slowly when adopted by highly visible lead users. In direct contrast, utility tokens benefit strongly from early adoption by lead users and from transaction platforms that facilitate repeated use, whereas portfolio diversification inhibits their diffusion. These findings have important implications for practice and policy. For managers and platform designers, strategies that successfully promote financial tokens may actively hinder the adoption of utility tokens, underscoring the need for value-specific design, marketing, and platform strategies. For regulators and policymakers, the results provide empirical evidence that blockchain tokens function differently depending on their value orientation, constituting a strong empirical basis for more nuanced, behavior-based regulatory frameworks rather than one-size-fits-all approaches to digital tokens.