The Pandemic Has Not Stopped the Development of Blockchain Projects

The exceptional circumstances of COVID-19 didn’t halt the development of blockchain technology, which even became more advanced in 2020. An observatory within the School of Management of the Politecnico di Milano studied 1242 blockchain projects, created from 2016 to 2020, and ascertained that 508 of them were implemented and 734 did not develop further beyond their announcement. In 2020, international companies and government agencies initiated 267 projects, of which 197 were successfully launched and 70 did not develop following their announcement. Of those launched, 83 are actually used and 114 were created for the sake of experiment or for substantiating theories.

In comparison with the year 2019, the quantity of completed projects rose by 59%, and the quantity of projects that were only announced fell by 80%. This is pleasing: it means that hype no longer facilitates the proliferation of unpromising projects, so developers are concentrating on practical initiatives. Meanwhile, 47% of projects created in 2020 were launched on existing blockchain platforms such as Ethereum. This is less optimistic: it shows that pioneers continue to focus on the development of blockchain apps and not new platforms.

Blockchain projects in finance

The leading fields of activity

2020 saw an increase in apps, users, and investment in the field of DeFi (decentralized finances). This was also a year of announcements and launches of CBDCs (central bank digital currencies). First off was the digital yuan (or DCEP) — the national digital currency of the People’s Republic of China, which is undergoing pilot tests today. They promise to put it into free circulation by the opening of the 2022 Winter Olympics in Beijing. Hastily following the People’s Bank of China was the European Central Bank as it announced the release of the digital euro. It has already undergone research with analyses and its trial implementation period is scheduled for July 2021. The rush to create CBDCs is linked to the incessant emergence of private stablecoins.

Blockchain projects were created not only in the financial industry and not only for the sake of issuing cryptocurrencies. The situation with the pandemic underlined the benefits which states will derive if they are going to integrate blockchain solutions for the management of identifications in fields of public health, the economy, or in supply chains. The European Blockchain Services Infrastructure has already started working in the EU, in which 36 nodes from 29 countries operate.

The leading countries

Having filtered through those 508 implemented blockchain projects by country, the School of Management’s observatory compiled a ranking of those where more successful projects were realised. Here are the top 5 leaders:

RankCountryNumber of successful launches
1United States72
2China35
3Japan28
4Australia23
5South Korea19

Italy, where the School of Management of the Politecnico di Milano is situated, occupies the 10th position in the ranking. This is not a bad achievement, considering that investments from corporations were decreased there: they amounted to 23 million euros in 2020, which is 23% less than in 2019.

A reallocation of investments in projects occurred due to the coronavirus crisis. Corporate and state sectors of the economy were forced to curb spending to support new initiatives and focused on successful working projects. The distribution of funds in support of projects was as follows:

  • working projects with practical application received 60%;
  • pilot projects — 28%;
  • projects experimenting with concepts — 11%;
  • educational projects — just 1%.

Blockchain projects with applications on platforms

The balance between platforms and apps

In 2020, together with the increased maturity of the technology, blockchain platforms for the launch and deployment of crypto projects took root. Naturally, new platforms have emerged, attempting to compete with Ethereum, TRON, and NEO. However, each second developer still chooses the simple path: creating decentralized apps on a popular platform. The creation of new infrastructures and ecosystems has not yet become a widespread practice amongst developers.

Blockchain platforms

In 2021, platforms are represented by the same 2 types:

  1. For the development and deployment of specific dApps. They are designed for a limited scope of use and are utilised by a consortium of companies from one field of activity for a single, special-purpose application.
  2. For the development and deployment of general-purpose dApps. They are put to use by all sorts of companies for the creation of various applications and are divided into platforms with a permissionless or permissioned blockchain:
    • Anyone can gain access to a platform with a permissionless blockchain, as well as to the public content of the blocks. They are used by many companies in spite of problems with scalability, confidentiality, and safety.
    • One can gain access to a platform with a permissioned blockchain only via registration and identification. For this, permission from the central authority or a network of master nodes is essential. They belong to governments, national or international consortia.

Blockchain apps

The majority of projects created on blockchain platforms in 2020 are still catered for decentralized apps that are connected with existing processes (for example, making payments or tracking supply chains). It is still common for companies to start with a simple but very useful application in order to develop more innovative solutions later. At the same time, few try to arrange for cooperation between their application and third parties, which conceals the potential offered at least within the blockchain of one platform.

Italian researchers from the observatory in the School of Management gathered the following statistics on the purpose of blockchain apps launched from 2016 to 2020:

  • 59% are designed to facilitate the exchange and coordination of data between participants to prevent inconsistencies;
  • 24% are created to improve monitoring of data by other ecosystem participants or a third party (for example, to ensure traceability of products in the agri-food field);
  • 13% use crypto assets which are supported by platforms for trading currencies or other assets.
  • 4% are dedicated to creating transparent processes.

In order for people to harness the full potential of any blockchain ecosystem, it is necessary to improve its elements. Ecosystems have to accept new participants into the network, and platforms, both those which require permission and those that don’t, must become more scalable and secure. Developers need to integrate their dApps with systems from other companies. In this way they will be able to make use of auxiliary services such as digital identity or on-chain cash, relying on clear rules, but at the same time remaining open to innovation.

Your Message has been succesfully sent. We will contact you soon!