Mohamed Hefny
Mohamed Hefny (Senior Program Manager, Virtualization, Systems & Infrastructure Solutions, EMEA)
Carla La Croce
Carla La Croce (Senior Research Analyst, European Industry Solutions, Customer Insights & Analysis)

The COVID-19 pandemic has impacted virtually all businesses, but the effect has not been uniform (watch our webcast on the impact of COVID-19 on the European technology market). While the current disruption may present challenges to the blockchain industry in the short term, it will also unlock new opportunities in the mid and longer-term. By providing help in the COVID-19 crisis and recovery, blockchain can play a pivotal role in accelerating post-crisis digital transformation initiatives and solving those problems highlighted in the current system.

The pandemic and the subsequent lockdown have had a negative impact on many industries and we expect a significant slowdown in technology spending, including blockchain. Before the pandemic, IDC’s Worldwide Blockchain Spending Guide had forecast European blockchain spending of $1.4 billion for 2020 and healthy growth of 58% CAGR to 2023. IDC now expects a number of changes in spending in 2020. Blockchain solutions will see a slight slowdown, with spending decreasing by around 8% in 2020 compared to the previous forecast.

Nevertheless, there are some bright spots where blockchain is used to combat the effects of COVID-19 and aid in the recovery process. These innovative use cases can demonstrate the benefits of blockchain to a wider audience.

Supply Chain Management

The COVID-19 crisis has caused major disruptions across global supply chains. Two factors in tandem play a very pernicious role: many factories have shut down due to safety concerns and there is unprecedented demand for certain goods, especially medical supplies. This high demand forces many users to source supplies without knowing their origin or quality. Long supply chains cause needless opacity and this makes it difficult to forecast and plan supply accordingly. 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.

  • Blockchain solution provider TYMLEZ volunteered its services to the Dutch government and will deploy a blockchain-based solution that matches supply and demand in the medical products ecosystem.
  • The mobile and online payment platform 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.

Contact Tracing

In these difficult times, the right balance has 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 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 team of privacy experts across Europe have proposed a blockchain-based system for COVID-19 contact tracing using Bluetooth. The solution will use decentralized privacy-preserving proximity tracing (DP-PPT), a protocol designed by a number of research institutions in Europe, to ensure user privacy and avoid data misuse.
  • German tech scale-up 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.
  • Genobank, the decentralized biobank for storage of biodata, is building an app using the Telos blockchain platform that enables people to acquire anonymous coronavirus tests and send that information to relevant organizations.

Disaster Relief and Insurance

The enforced lockdown introduced by governments around the world has exacted a heavy toll on many businesses. Most physical stores have closed, while demand for all but the most essential items has plummeted. In these times of financial distress, governments have taken measures to stave off a steep economic downturn. Providing loans and other financial lifelines is a way to keep many businesses afloat. Blockchain is used in the loan and insurance industry to simplify and shorten the complicated application and approval process by removing third-party intermediaries and inherent delays in processing. The benefits include faster processing time, lower costs, reduced operational risks, and rapid settlement for all parties involved.

  • Since the end of January China has distributed loans amounting to more than $200 million to 87 businesses using a cross-border, pilot blockchain finance platform. Henry Ma, CIO at online lender WeBank, said, “The cross-border, financial blockchain services platform can play a bigger role, and help medium and small enterprises improve the efficiency and convenience of getting export trade financing and other financial credit support.”
  • The mutual aid blockchain platform Xiang Hu Bao is making payments to members infected with the coronavirus. Document processing and payouts are made quicker and all parties can observe the entire process.

Missed Opportunity?

Politics, especially elections and voting, have also been disrupted by the pandemic. The traditional political process puts politicians, voters, and all those involved in the related services at risk. The recent Wisconsin Democratic primary in the U.S. could have been avoided by using a secure blockchain voting mobile app, though while the proof of concept is there, no dominant solution from a prominent company has emerged from the many tests and pilots.

Smaller countries have made more rapid progress. Estonia remains the go-to example for electronic voting in Europe, but even this system has been criticized for its identity authentication method. Larger countries such as Germany, Finland, Ireland, and the Netherlands have run trials but have subsequently abandoned them. Blockchain technology can alleviate many of the security concerns that have plagued previous e-voting attempts. However, the biggest hurdle remains the general public’s skepticism and mistrust of voting using digital technology.

In Conclusion

IDC believes blockchain technologies offer great potential in many COVID-impacted scenarios, especially in the supply chain. Due to the pause in investments and the prioritization of urgent expenses, however, blockchain will be forced into a temporary slowdown. Given its benefits in terms of reliability of the supply chain, transparency across multiple use cases, and the tracking of goods, however, blockchain investments are expected to recover once the pandemic eases. The recovery will be bolstered by the European blockchain ecosystem, with the biggest players in the market working together with a variety of smaller, innovative companies.

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