First came bitcoin – the digital currency experiment. This was followed by the blockchain – the realisation that the underlying the technology behind bitcoin has other more commercial uses. Then came smart contracts – attributed as the next evolution of the blockchain system.
This was followed by proof-of-stake – replacing miners and their data centres with complex financial instruments for a higher degree of security.
Blockchain scaling is touted as the next iteration of the technology as industry clamour for the technology to fix one of the biggest flaws of the blockchain system – its inability to scale.
Ten years on, is blockchain losing its steam?
But along came the double-whammy of the crypto winter of 2018 and COVID-19 and things aren’t looking so good for the blockchain industry. Or is it?
Worldwide blockchain revenues fell 35% between 2018 and 2020. ABI Research calculated the potential loss to hit US$2.8 billion.
The 2018 crypto winter wiped 80% of the total aggregate market cap, and since then, more than 2,000 cryptocurrencies have collapsed. This dampened blockchain adoption significantly in other markets, with many startups folding and different verticals showing a distinct lack of uptake.
Further, the COVID-19 pandemic had a significant impact on investment opportunities and appetite for new blockchain applications.
This dramatic dip in revenue will be short-lived. These adverse events culled much of the hype and effectively ended the blockchain rush.
“Many speculative offerings were purged from the marketplace. However, this will be relatively beneficial for the blockchain ecosystem overall, strengthening existing startups and ensuring sounder and more valuable business models emerge over the next few years. ABI Research expects the market to get back to 2018 revenue levels by 2023,” explained Michela Menting, Digital Security Research Director at ABI Research.
Capitalist blockchain industries?
The vertical markets poised to take advantage of the new traction are those where successful business use cases are currently applied.
The pandemic has had some positive impacts on select blockchain applications, notably supply chain and logistics management (due in part to the international scramble for medical and healthcare equipment, such as masks, Personal Protective Equipment (PPE), ventilators, testing kits, etc.).
“The pandemic also revealed the inadequacies and flaws of existing procedures, especially in terms of transparency and quality assurance. Blockchain is now a technology that is recognized as capable of addressing these issues. As such, interest and demand will boost revenue for blockchain applications focusing on manufacturing, transport, and storage, as well as on retail and consumer,” concludes Menting.
Beyond that, interest in blockchain applications for healthcare is soaring, notably for sharing timely, relevant, and authenticated information on the pandemic (including regarding the spread of infection, containment practices, hygiene-based information, data related to trials and vaccine research, etc.), especially in light of misinformation increasingly being spread online and through social media.