The Covid-19 pandemic has had an impact across all countries and businesses regardless of size. The blockchain industry is no exception. Yet the pandemic has shown the unlimited potential impact blockchain has on major industries.
The Organisation for Economic Co-operation and Development (OECD) forecasted large downward growth revisions in numerous countries especially the ones linked to China. Major European economies will also experience dislocations as the virus spreads and countries adopt restrictive responses that curb manufacturing activity at regional hubs. As a result of depressed activity, the United Nations projects that foreign direct investment flows could fall between 5 and 15 percent to their lowest levels since the 2008–2009 global financial crisis.
At the sectoral level, tourism and travel-related industries will be among the hardest hit as authorities encourage “social distancing” and consumers stay indoors. The International Air Transport Association warns that COVID-19 could cost global air carriers between $63 billion and $113 billion in revenue in 2020, and the international film market could lose over $5 billion in lower box office sales. Similarly, entertainment giants like Disney expect a significant blow to revenues. Restaurants, sporting events, and other services will also face significant disruption.
Blockchain playing its part on global recovery
The COVID-19 crisis has caused major disruptions across global supply chains. Many factories have shut down due to safety concerns and there is unprecedented demand for certain goods, especially essential supplies. This high demand forces many users to source for supplies without knowing their origin or quality. Long supply chains make it difficult to forecast and plan supply accordingly, and thus this is where blockchain comes into play. Blockchain is particularly suited to supply chains because it can connect all stakeholders in a supply chain and provide a single source of truth. It provides transparency and breaks down data silos while guaranteeing security. This is why many of the blockchain solutions deployed in the wake of the COVID-19 pandemic are in supply chain management.
One such example of this is Alipay. Alipay has created a blockchain-based solution that helps charitable organizations collaborate more efficiently and transparently. One of the features is to track donations of relief supplies and help allocate them more efficiently.
In these difficult times, where contact tracing is necessary to deduce the local community spread of the virus, the right balance needs to be struck between data gathering and protection of privacy. Blockchain can be used to both gather and collate patient data more efficiently, monitor patients’ movements to guarantee social distance, and protect their identity at the same time. In the blockchain, there is no central authority, and users are given control of their personal data. They can selectively share information that is important for coronavirus mitigation efforts while protecting their identity and other sensitive information. A German-based blockchain company MYNXG has created a blockchain-based solution that enables mobile phone tracking while guaranteeing user privacy. Governments and healthcare organizations can gain useful information through coronavirus tracking, while users can be assured that their personal information will not be shared.
As countries worldwide enforced compulsory lockdown to combat this pandemic, many physical stores have closed down, demand for most products except essential ones have plummeted. In Singapore, it is reported that about 3,800 companies have closed down due to the virus. In such times of distress, governments worldwide have taken drastic measures to combat the steep economic downturn, such as providing loans and insurances. Blockchain is used in the loan and insurance industry to simplify and shorten complicated applications and shorten processing time, which results in faster processing time, lower costs, reduced operational risks, and rapid settlement for all parties involved.
Blockchain technology can be integrated into multiple areas. The primary use of blockchains today is as a distributed ledger for cryptocurrencies, most notably bitcoin. There are a few operational products maturing from proof of concept. Therefore, businesses have been thus far reluctant to place blockchain at the core of the business structure. However, the Covid-19 pandemic has compelled businesses to take a closer look at the technology and understand how it can be implemented to serve consumers better in an age where technology reigns.
As such, Blockchain has shown that it has great potential in many Covid-19 impacted scenarios, especially in the supply chain sector, and we can expect many other industries and sectors to utilize such technology in the near future as businesses and governments find new ways to adapt to changes in the global environment.