Crypto winter, COVID-19 cost blockchain market $2.8 billion
Worldwide blockchain revenues fell 35% between 2018 and 2020, with global tech market advisory firm ABI Research calculating the potential loss to reach US$2.8 billion. ABI Research’s Blockchain and Distributed Ledger Technology market data report revealed that the 2018 crypto winter wiped 80% of the total aggregate market cap, and since then, more than 2000 cryptocurrencies have collapsed.
This negatively impacted blockchain adoption in other markets, with many start-ups folding and different verticals showing a distinct lack of uptake. The COVID-19 pandemic has also had a significant impact on investment opportunities and appetite for new blockchain applications.
This dip in revenue will be short-lived. The adverse events culled much of the hype and effectively ended the blockchain rush. Michela Menting, Digital Security Research Director at ABI Research, noted that although many speculative offerings were purged from the marketplace, this will be beneficial for the overall blockchain ecosystem, strengthening existing start-ups and ensuring more valuable business models emerge over the next few years.
“ABI Research expects the market to get back to 2018 revenue levels by 2023,” Menting said.
The vertical markets poised to take advantage of the new traction are those currently using successful business use cases. The pandemic has had some positive impacts on select blockchain applications, such as supply chain and logistics management (due to the international scramble for medical and healthcare equipment during the pandemic).
“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 recognised 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,” Menting said.
Interest in blockchain applications for health care is also rising, notably for sharing timely, relevant and authenticated information on the pandemic, particularly in light of misinformation being spread online and through social media. Menting predicts that healthcare applications for blockchain will increase faster than expected in light of the pandemic.
“Blockchain projects launched by the United Nations’ World Health Organisation, alongside many national Centres for Disease Control, show the usefulness of blockchain in these circumstances,” Menting said.
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