2020 has brought high-level interest in blockchain technology. The unfettered interest in the technology has not been an anomaly. The COVID-19 pandemic and the resulting challenges have exposed significant shortcomings in existing business processes and systems as well as the technologies that support them. Industry players across all sectors, including economic and health sectors, have experienced significant security challenges and other gaps.
2020 has proven to be a good year for blockchain technology which high levels of interest and growth. Such has been the blockchain technology impact that the Congressional Blockchain Caucus lobbied the US Federal government to use the technology in the fight against coronavirus. The caucus wrote a letter urging the use of blockchain technology in the battle against COVID-19 since it provides identity protection, secure supply chains, authentication of registries, and many other services.
The COVID-19 pandemic has acted as a giant accelerator for blockchain technology. We have different players pushing forward blockchain initiatives across other sectors to address gaps and challenges.
Benefits of Blockchain Technology
The accelerated interest in blockchain technology has not been unexpected since so many challenges have become prominent in 2020, especially during the COVID-19 pandemic. The technology has its unique characteristics that will address many of these problems.
Blockchain is best described as a distributed ledger that is managed by computers in a peer-to-peer network. It is used to keep a permanent record of transaction-based data since its architecture creates a tamper-proof record. The attribute makes it a very secure technology that creates a high level of trust and equity for organizations and individuals.
A blockchain record is accurate since it is impossible to falsify. An ecosystem-based on blockchain technology provides an effective and equitable method of collaboration. The technology creates high levels of transparency, accuracy, and traceability. Other advantages of the technology include lower deployment costs, efficiency, and faster than conventional technologies. Blockchain technology can be easily used in various sectors, including financial transactions, transfer of medical records, identity management, and data sharing. The technology allows for full visibility in a supply chain.
Over the last decade, blockchain technology’s adoption was mainly to support supply chains, contracts, and financial transactions. In all these cases, the only challenge was that it was considered for use in leading-edge cases only and proofs of concept that encountered some success but also significant failure rates.
Some of the early failures in blockchain technology’s implementation arose from a lack of strong business cases. Businesses’ leader and stakeholder enthusiasm for the new technology led to investments in the technology just for the sake of it.
With the events that unfolded in 2020, especially during the pandemic, the dynamics have changed. Businesses and governments have grappled with weaknesses in their systems and processes that have existed for long periods but have been exposed or compounded by the health crisis. Some of the issues compounded by the pandemic include disruption of supply chains impacting the retail industry, challenges with the secure transfer of patient records by health facilities, and the problem of fraudulent claims that government unemployment agencies had to deal with. All these issues forced the relevant authorities to explore ways of addressing underlying issues. The solution for many challenges lies in the use of blockchain technology. More and more businesses are finding applications for blockchain in their systems and processes. The conversation about blockchain has shot to the forefront, according to Melanie Cutlan, managing director at Accenture, a professional services firm, and its co-lead for the blockchain and multiparty system business arm.
Even with blockchain’s surging use has proven its value during the COVID-19 pandemic, sufficient investment in the technology is yet to be seen. The accelerated adoption of blockchain in enterprise initiatives might help push investment in the technology. One area where blockchain has been adopted widely is distributed ledger technology (DLT) initiatives in logistics and supply chains. Accelerated use of the technology has also been seen in areas where businesses must function more effectively and support compliance obligations.
For example, blockchain technology can help governments send out stimulus money more efficiently, cost-effectively, and faster to recipients. The technology will outperform paper checks and direct deposits without a doubt. It can also bring about efficiencies within supply chains and other business areas, significantly when businesses are financially constrained and need to cut costs. In grounding breaking developments, blockchain technology can be used to support digital passports that act as proof of COVID-19 vaccination and immunity status to fast-track lifting of lockdowns/restrictions and support economic recovery.
Many businesses tend to hold back on massive spending during tough economic times. The finding of COVID-19 vaccines and their massive roll-out will help normalize the global financial situation and rebound business. According to a 2020 report by the Everest Group, the pandemic’s resulting economic fallout will only stifle investments in blockchain just in the short term. For the medium term and long term, the ensuing crises — health and financial — will only lead to more adoption of blockchain as firms seek to build resilience into their processes and find risk-optimized models to create differentiated and enhanced value. In fact, blockchain is not just about improving existing methods, but it is also about creating an enabling environment to spur new activities and opportunities.
Finally, the pandemic has pushed businesses further into their digitalization programs or initiatives. In some sectors, it is thought that the pandemic has accelerated digitalization by about three to five years. It has been about adapting to new realities such as remote work, a shift to the cloud, and compliance with protocols such as social distancing and not touching surfaces. All these new measures have set the foundation for the implementation of blockchain. The COVID-19 pandemic has acted as a showcase of how blockchain-supported processes can outperform conventional technologies and bring immense benefits to businesses across all sectors. No stronger incentive is required by business leaders and executives in fast-tracking the migration to blockchain technology to support critical infrastructure and processes.
Author: Alessandro Civati