The COVID-19 pandemic has hit the global economy in unprecedented ways. From the beginning of the year, the western states looked rather relaxed, so it became apparent from March that the virus knows no national borders. But while the global economy is still groaning under the effects of the pandemic, some companies and industries are particularly resistant. For new technology like blockchain, this could be the long-awaited initial spark. Fabio Canesin, co-founder of Nash , highlighted in which three industries an adaptation is particularly likely.
Blockchain technology before breakthrough in three industries
According to Fabio Canesin, co-founder of blockchain company Nash, the world is facing fundamental change after the corona pandemic. The unlimited possibilities of the key technology make it possible for the blockchain to play a key role in shaping the future.
The founder noted that there are currently three areas in which the blockchain could be used in the post-corona world:
- In the government environment,
- for small and medium-sized enterprises (SMEs)
- and with non-profit organizations
Adaptation in the area of the supply chain
As we reported elsewhere, blockchain technology could play a key role in supply chain management. For example, IBM Food Trust has been showing for some time how products in the food industry can be tracked efficiently using the blockchain. However, the distributed ledger technologies could also create added value in the field of cobalt mining – one of the most important raw materials in the field of battery production.
In our view, it is also likely that the blockchain will play a key role in the area of supply chain management in order to provide more transparency and traceability. In particular, the downtimes in the context of the pandemic have shown that an optimization of the supply chains is necessary to prevent such a scenario in the future. But not only the increasing transparency, but also the digital processing of the individual processes, such as the paperless documentation of milestones, can be better represented with the help of new technologies. Basically, the following key questions can be answered faster in the modern supply chain:
- Where is the delivery current?
- When does the shipment arrive?
- Are there transport problems (delays or environmental influences)
- Have there been customs inspections?
- Who caused the delay?
- Who is liable for a defect?
Blockchain technology could revolutionize the distribution of helicopter money
With the announcement by Donald Trump about the distribution of helicopter money, the US president broke a novelty. In the meantime, US citizens have received the so-called stimulus checks.
For Canesin, the distribution of this helicopter money is a possible application for the new technology.
“This could mean using blockchain for helicopter money instead of sending payments through traditional systems that take much longer and are prone to errors. Along with using the blockchain to speed up the process, the current system could begin to allow individual nodes directly on the network without maintaining the need for intermediaries. ”- Fabio Canesin
But the reimbursement of taxpayers' money, the allocation of parental allowance or the payment of pensions can also be easily and securely mapped using blockchain technology. In addition, states could pay funding that goes to developing countries more easily and safely and thus eliminate one of the main criticisms.
A similar application is conceivable in the area of non-profit organizations . In this way, NPOs could pay out the donations in a similar way to the beneficiaries. The advantage of this approach is obvious, because international payments are currently subject to high costs. Accordingly, a not inconsiderable proportion of the donation money is attributable to their transaction costs. In addition, the NPOs must also co-finance themselves. This status quo could be broken through the use of blockchain technology. Payments could reach donors more quickly. In addition, the transaction costs could be reduced.
Donor acceptance could also increase. Today, numerous taxpayers have doubts about the need-based use of donations. It was not uncommon for scandals in which the donation funds only reached the recipients to a small extent. The blockchain would also contribute to more transparency and thus increasing acceptance on the part of the donors.
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Effects of the blockchain on SMEs
Blockchain technology should also be well received in the area of small and medium-sized companies. After all, the technology is barrier-free and can be used internationally. Accordingly, these small businesses could simply recruit professionals from abroad while driving business scaling.
Thanks to the international payments that blockchain technology makes possible without a doubt, salaries could flow directly to employees and drive the internationalization of their own business. The technology also enables barrier-free access to an international payment market. Accordingly, people who do not yet have access to banking can participate in this economic cycle in the future – the growth potential for economic performance is enormous. However, this affects not only SMEs, but also large corporations. Nevertheless, small companies in particular should benefit, as they can open up completely new markets for the first time.
Cryptocurrencies as a safe haven?
In addition, Canesin has on the developments of crypto currencies expressed during and after the corona pandemic. The Nash co-founder noted that cryptocurrencies may be a way to cushion the impact of the pandemic and the resulting crisis. In particular, the idea that cryptocurrencies act as a safe haven seems worth considering.
In particular, Canesin deals with the example of Lebanon. In the economically weak country, the COVID-19 pandemic helped trigger a national banking crisis. Due to curfews and business closures, existing loans could no longer be financed. However, the banks have given very risky loans and overweighted them for profitability reasons. As a result, this development meant that the banks had to write off bad loans and the country was experiencing a banking crisis. Cryptocurrencies could provide protection .
"People are faced with ATM withdrawal limits and are seeing their savings evaporate gradually in an inflation spiral. Against both developments, cryptocurrencies can protect. Not only are they in control of their assets, which means that withdrawals cannot be blocked, but most currencies have built-in inflation protection that is difficult to change due to its decentralized nature. ”- Fabio Canesin
However, this approach must be viewed critically. After all, the course of the corona crash showed that the leading cryptocurrencies correlated with the general markets. Accordingly, the economic crash also led to sharply falling prices for Bitcoin , Ethereum and Co. Nevertheless, cryptocurrencies, especially Bitcoin, could establish themselves as a store of value in the future .
Conclusion: New fields of application for the blockchain after the pandemic
The current pandemic is an exceptional situation that is pushing many countries around the world to their limits. While the number of infections in Europe remains at a manageable level, we can record rapid increases in the USA. Accordingly, there are interesting new approaches that are based on the use of blockchain. This enables governments to distribute helicopter money more efficiently and in a more targeted manner. Giving and receiving donations could also benefit from the new technology. However, the technology is likely to have a particular benefit in the development and internationalization of SMEs. Furthermore, Canesin shows that cryptocurrencies can be used as a kind of safe haven and thus contribute to the fact that inflation spirals like in Lebanon are simply no longer possible.
In my view, the points raised by the author are understandable and obvious. However, I doubt that governments will adapt a new technology to market participants. I also think that the blockchain should primarily be used in the supply chain. When it comes to cryptocurrencies, I fully support Casenin. In my view, cryptocurrencies belong in a well diversified portfolio.