5 Ways Blockchain can Mitigate Coronavirus Damages
The COVID-19 outbreak has almost stalled the world. Although it took thousands of lives, another major problem is the crippling of the economy, costing millions of jobs.
Though governments came up with trillion-dollar stimulus to support every affected industry – from finance to aviation – the real challenge would be the distribution process as the scale for that is massive. And blockchain exactly fits here.
Introduced by Satoshi Nakamoto in 2009, Bitcoin is disliked by many in the traditional financial industry, however, no one can deny the benefits of blockchain, the underlying technology of the digital currency.
In fact, many companies and governments are actively developing blockchains for specific uses.
As suggested by many experts, the decentralized ledger technology (DLT) can be used in many ways to pull people up from the damages COVID-19 has made on their livelihood.
Stablecoin for making payments
Fiat-pegged digital currencies can be used in a situation like this when the government is trying to distribute funds to all the citizens.
As explained by Catherine Coley, Binance.US CEO, on her piece on Coindesk, the government can distribute relief funds to all citizens as they do not need mail addresses to receive cheques.
As President Donald Trump is planning to distribute the stimulus in multiple installments, she suggested that the funds can be stored in escrow accounts creating a smart contract, which will instantly deposit the funds to citizen’s accounts.
The process will be fast, secure, and can save millions of dollars as Coley estimated that the traditional way of fund distribution via cheques can cost at least $138 million.
Blockchain to track the movement
Another major utilization of DLT can be in tracking and tracing the movement of goods, making it an essential part of the supply chain.
To maintain an efficient distribution network, the authorities need to ensure proper tracking of food items from the farm to the markets. Thus, the government needs to tie with technology giants working on the development of such networks.
Companies like IBM have already taken an initiative of building a food trust, members of which are using a DLT-based system to track the food movement.
Notably, the United States Homeland Services also listed blockchain managers in food and agriculture among critical infrastructure workers in COVID-19 lockdown.
In China, AliPay launched a blockchain platform, enabling NGOs and federal organizations to collaborate more efficiently and transparently for allocation and donation of relief and medical supplies.
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Blockchain-based document verification
Trough distribution is a major challenge, identifying every beneficiary is now easy either and blockchain can benefit in this front too.
Blockchain-based systems can be used for digital authentication of IDs and certificates effectively, minimizing the load on humans for verification.
The United Arab Emirates government already put up such a system into force following the COVID-19 outbreak to keep the citizens away from public offices for essential work. The country is also using a blockchain platform for storing healthcare and pharmaceutical data and also for health care workers’ credential checks.
During the ongoing pandemic, data has become an essential tool for governments to tackle the spread of the virus.
The Chinese government is using facial recognition technology to identify people in contact with an affected person while the Israeli authorities are using mobile phone location data to track people in close contact with a COVID-19 positive person.
Such use of private data in mature democracies can raise eyebrows as the government can later use the same techniques for their own benefits to curb protests or in election campaigns.
Blockchain, however, can resolve this conundrum as the technology empowers people to give permission of exactly which data they want to share with the authorities in a grave situation like this.
Financial services on blockchain
As COVID-19 is crippling the economy, especially small businesses, they will need quick financial aid from banks and institutions once everything starts functioning.
However, with present centralized technology, banks need days to approve loans. Many startups are trying to challenge this with DLT-based services, providing near-instant financial support.
The decentralized technology can be used for verification which can significantly cut the time of issuing a loan.
Decentralized finance (DeFi) is also getting popular as people can take fiat loans against their crypto holdings.
Though the damages made to the economy by COVID-19 are great and might take months to recover, the governments can utilize modern technologies like blockchain and artificial intelligence for a quick recovery.
This will boost the startups in this arena to get back to their feet and flourish as they are also not immune to an economic slowdown.