Analysts predict a decline in European business spending on blockchain development in the coming years due to the economic consequences of the COVID-19 pandemic.
In a report released May 5, the U.S.-based market research firm International Data Corporation (IDC) said it expects the slowdown to be temporary and unevenly distributed across sectors.
Before the crisis, the IDC had predicted that European blockchain spending would be USD 1.4 billion in 2020, with a strong growth in the compound annual growth rate (CAGR) of 58% until 2023.
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Carla La Croce, co-leader of IDC European Blockchain Practice, explained that:
With declining customer demand, disrupted supply chains and widespread remote working, many companies are putting innovative projects on hold, even in blockchain, until there is more clarity about the future.
The IDC now expects there to be a slight slowdown in blockchain spending, approximately 8% by 2020 in the European market. However, its revised forecast of USD 1.33 billion represents more than 60% growth year-on-year.
After the pandemic, certain sectors could see increased blockchain adoption
In specific sectors, the IDC anticipates that the impact of the pandemic could instead stimulate growth and wider adoption of the technology.
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during the crisis continues to cause widespread disruptions in production, distribution and global trade. This exposure of the fragility of many supply chains may lead companies to adopt new technologies that can make their supply management more resilient.
As Radoslav Dragov, co-leader of IDC European Blockchain Practice, has described, blockchain can mitigate the „unnecessary opacity“ that persists in most value chains:
It provides transparency and breaks down data silos while ensuring robust security and a single source of certainty.
Complex applications, such as healthcare data collection and analysis and online voting systems, may also see unique benefits from blockchain, as the technology offers strong data protection and privacy features and is resistant to manipulation.
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However, applications such as e-voting will require significant efforts to overcome the apparent lack of public confidence in using online systems to exercise their democratic rights, the IDC acknowledges.
The WEF and IDC see blockchain as a key tool for global value chains
Last month, the World Economic Forum released a new blockchain implementation toolkit designed to help governments, businesses and organizations around the world develop more resilient value chains in the future after the COVID-19 crisis.
Cointelegraph interviewed toolkit co-author Nadia Hewett about the potential of technology to help with post-pandemic global economic recovery through innovative trade digitization.