Cutting the Cord: New Ventures Building Legitimacy through Decoupling from Pioneers

Today, the ongoing contestation of Bitcoin, particularly by regulators and the media, has become a barrier that is holding back the widespread legitimation of a more promising digital financial ecosystem known as decentralised finance. Perhaps more importantly, many experts argue that Bitcoin is nothing more than a house of cards destined to collapse. If these predictions were to become true, the legitimacy of the entire sector could be challenged. Extant research on new venture legitimation processes has recognised that entrepreneurs benefit from establishing cognitive and sociopolitical connections to industry pioneers, and from disseminating shared growth stories to legitimise the collective identity. However, scarce attention has been paid to the fact that following these pioneers in their tracks can be a double-edged sword, since the association with industry leaders can build but also destroy legitimacy. Within the context of cryptocurrencies, this paper investigates when and how entrepreneurs turn against leading actors when it comes to shaping the collective identity of an industry, and how they decouple from former pioneers to establish or maintain legitimacy.