The global Coronavirus pandemic has hit most of the world’s economies hard. Blockchain companies and cryptocurrency have been no exception, but like other digital industries, most will adapt.
Half of the world’s cryptocurrency conferences for this year have been cancelled or postponed and crypto miners in China have ceased operations. Many companies have been able to master new opportunities by digitising their business processes and moving operations online. So just how severe will the pandemic be for blockchain and crypto? Read on to find out more.
Project Delays in Blockchain Companies
Statistics are showing that the extent of changes within a blockchain project, directly correlates with the severity of the pandemic in a specific country. In China, the authorities have announced they will go ahead with the launch of a national blockchain network this month. The news came as numbers of COVID-19 in the country have decreased. Many Chinese mining companies have gone back to work after restrictions on their workplaces have been lifted.
In Russia, adoption of a cryptocurrency law has been postponed indefinitely because of the pandemic. The government has also halved the budget set aside for the development of blockchain technology.
In New York, one of the most affected areas in the world, all local blockchain companies have closed their offices. The same has been reported in Cyprus where company representatives at blockchain firms are working online instead.
Staff and Budget Cuts
Blockchain companies have been forced to reduce their operating costs. Large blockchain analytics firms Chainalysis, CipherTrace, and Elliptic have cut their workforce and budgets already. Elliptic let go 50% of staff in the US and UK and Chainalysis said it will cut salaries by 10%.
Token Sales on Hold
The knock-on effect of restrictions and economic consequences caused by the pandemic has left many token sales without buyers. Some projects have cancelled their initiatives, others have postponed until a future date. A recent report by ICOBench said that investments raised over the last months have been much lower when compared with last year.
Investors are more interested in keeping their cash and waiting to see what impact COVID-19 has on the economic and business landscape.
Despite this, some projects have announced successful ventures during these times. Crypto exchange BTSE reported that all its tokens sold out in just four hours. Netherlands-based project Solana also managed to raise $1.76 million.
Most major exchanges report they have been unaffected by the crisis. Exchanges such as Kraken, Gemini, OKEx and Bitstamp even reported a surge in user sign-ups and trading volumes. Market leader Binance reported a staggering 85% increase in trading volumes in January alone.
It seems unlikely that Coronavirus will negatively impact the growth of cryptocurrency exchanges. Due to their online nature and the completely digital industry, it could even signal an increase in the sector and the popularity of cryptocurrency.
Managing the Crisis
A number of industry stakeholders have said the key to keeping business going is quick adaption. A shift to remote and online working combined with careful spending and savvy marketing will ensure ongoing success.
Changelly CEO Eric Benz said that their team is still on course to launch a large project this quarter and that usage is on the uptick. Interwallet Operability is going ahead with its latest initiative, the FIO Protocol Blockchain, showing resilience during these times. Some stakeholders have said that increase is demanding because people have more time to explore their options due to lockdown restrictions.
While many events are cancelled and travel is restricted, businesses are finding a way to adapt. Remote working is becoming the norm and an uptick in internet users means this is a good opportunity to launch a startup.
If you are in the blockchain business or thinking of starting up, now is the time to get expert advice. Fast Offshore has assisted a number of blockchain and cryptocurrency startups and entrepreneurs in navigating these challenging times. To find out more about starting a blockchain company, or weathering any potential stars, contact us today.