My favourite tweet on Blockchain goes something like this: “Blockchain is the answer, now tell me the question?”. Fueled by the unceasing hype around Bitcoin and cryptocurrency, Blockchain has been regarded as the silver bullet solution for everything – hacking, threats to democracy, poverty and world hunger. No wonder then, that the moment the COVID outbreak became a pandemic with its ensuing lockdowns, Blockchains started to be bandied about as the cure that could miraculously bring the world back up on its feet.
While it is apparent that no one technology can ‘solve’ a pandemic, Blockchain along with a slew of others, could definitely help us manage the post-lockdown situation. Taking a clear-eyed view on this, here are the five ways Blockchains can help mitigate the COVID crisis:
Building more resilient supply chains: Perhaps the biggest blow to industry and agriculture has been the abrupt supply chain disruption, getting raw material to the factory and finished goods to customers. Usually, it is not the entire supply chain which is disrupted, but one critical piece of it, say lack of drivers to drive trucks at one place in the chain, or a specific warehouse not being accessible. While blockchains cannot produce drivers for trucks, like wine from water, an end-to-end supply chain on blockchain, combined with digitization and IOT, can make the chain transparent and traceable, and tell us quickly as to where the problem is to be fixed. That blockchains can make transparent, traceable, cheaper supply chains has been known for a while, but cost, data sharing hesitation, and lack of incentive has prevented the players setting this up. A crisis like COVID can change these mindsets to build supply chains far more resilient and transparent for the next big crisis.
UBI and Digital Currency: This is also an idea bandied about for long, but whose time has come. Universal Basic Income has been discussed by multiple governments, and COVID has made that discussion more urgent. UBI would have been a welcome relief for the migrant, farmer and destitute that COVID has disproportionately hit. A blockchain-based digital currency (Bitcoin-like, but more stable and backed by government) is an apt UBI solution to the millions who are unbanked but have some sort of mobile or internet connectivity. This has health benefits too, especially when paper currency is looked as a virus-carrier.
Tokenization and Fractional Ownership: This is another idea whose time has come. Blockchains have brought in a great innovation, asset tokenization which converts rights to an asset into a digital token. So, a Rs. 10mn apartment can be ‘liquefied’ into, say, a million tokens of Rs. 10 each. This can enable fractional ownership, fractional sale, etc. In a cash and capital starved, post-COVID society, tokenization can enable liquidity and fractional ownership of real estate, industrial and farm equipment, etc.; though, of course, the right laws and regulatory framework around it is needed
Global Health Record repository: There is no greater problem than having universal electronic medical records (EMRs), but there is no other time when there has been a greater need for them. Health records on blockchain have been the Holy Grail, with the security, transparency, privacy benefits that it brings, but this has been excruciatingly difficult to do. The hope is that a crisis like COVID will bring the right incentives for this to happen at a country level (say a Health Stack in India, or an Aadhar card for Health), and hopefully at a global level, as we realise that a pandemic knows no national boundaries.
Fundraising: I can feel the ears of startup founders perk up here. The much reviled ICOs or Initial Coin Offerings came up as an alternate way of raising money, through blockchain-enabled crowdsourcing of funds. In their first avatar, they became a playground for fraudsters and con-artists and died a necessary death. However, the underlying concept of decentralization of venture capital is even more relevant now, and hopefully we will see the emergence of authentic, safe ICOs as an alternate fund-raising mechanism for startups.
In an earlier column, I had talked about how decentralization (in work, retail, education, healthcare) is a powerful tool to build resilience against crises like this pandemic. Blockchain as a technology and a philosophy is a great de-centralizer and distributor – of money, assets, data, records – and therefore, while not being the mythical silver bullet, is definitely a technology whose moment has come.
(This article was published as an oped in Mint)