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How the Corona crisis will affect blockchain startups, corporates, the Bitcoin and the ecosystem

The Corona virus crisis is also affecting the crypto market. In this short article, I seek to present some thoughts about the effect of the Corona virus on the blockchain sector — including startups, corporates and Bitcoin. The key thought outlined below is that established startups — those that have gained some visibility and B2B contacts — now can build on these contacts because initial trust between human beings after first meetings or workshops is there. Social Distancing now will lead to the fact, that newly founded startups or foreign startups will have hardly any chance to tap into the local market, because people cannot meet physically anymore (no meetings, no workshops, no Meetups, no conferences) such that initial trust between human beings cannot be created. This leaves established startups the chance to build on existing relationships and potentially grow — if they can survive for some months without funding. Already built personal relationships between business partners now act as a “trust hurdle” that cannot be overcome by new entrants. — Author: Philipp Sandner

Blockchain startups: dangers arising from the Corona crisis

In general, blockchain startups are facing challenges in the current situation. Funding rounds become difficult or even impossible. The budget of larger companies will be increasingly frozen. Especially startups in the B2B sector will have difficulties with sales activities. The events and conferences, which are crucial for startups, will be cancelled for months. This means that an essential function of conferences, where startups can present themselves and establish important contacts, will be lost. However, this also depends on the individual case: startups will probably find it easier to do business in the field of crypto currencies than those in the field of enterprise DLT.

Very young startups: hard times in the crisis

These are startups that may be a few months old or not yet established. These are also startups that have not yet achieved significant visibility or have not yet found investors. I think that the majority of these early stage startups face insurmountable hurdles. In fact, for a few months from now on, this is a fight against windmills which cannot be won.

Established startups: there are even chances

These are startups that have existed for some time and have made a name for themselves here and there. Contacts were established at conferences or in various workshops. Trust has been built up through initial personal discussions. These startups will have it much easier, possibly they will profit from the crisis — provided they can survive a few months without new funding. Even more so, established startup might even have some unique chances out there.

Effects of the Corona crisis on Bitcoin and the crypto market

It is already clear that Bitcoin can be transmitted without limits, without shutdown. Even during the terrible last few days, the Bitcoin network has reliably produced a new block every 10 to 11 minutes. It is resilient. I think more and more people understand this. Many now have that lightbulb-moment that the resilient Bitcoin network cannot be stopped by anybody, not by a virus, not by institutions. The same is true for other crypto currencies such as Ethereum. Of course, we had network congestion and scalability issues remain. But nevertheless, the decentral networks in the form of e.g. Bitcoin and Ethereum have now proven to be resiliant to stress.

Established companies and corporations

It is already noticeable that companies are beginning to change their priorities harshly. Budgets are frozen after only a few days of Corona virus in Germany. Even more so, the employees in companies must first learn to work digitally. Decision and governance processes have to be restructured if employees work in the home office or are completely absent. Corporate Germany now becomes 100% digitally, learning it the hard way. Of course, this will take some time and will freeze resources.

Remarks

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  • Our two blockchain books: We have edited two books on how blockchain will change our society (Amazon link) in general and the everything related to finance (Amazon link) in particular. Both books are available in print and for Kindle — currently in German and soon in English. The authors have been more than 20 well-known blockchain experts in startups, corporations and the government from Germany, Austria, Switzerland and Liechtenstein — all contributing their expertise to these two books.
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Our two books: the first one on blockchain and the society and the second one on blockchain and finance

Authors

Prof. Dr. Philipp Sandner has founded the Frankfurt School Blockchain Center (FSBC). In 2018 and in 2019, he was ranked as one of the “top 30” economists by the Frankfurter Allgemeine Zeitung (FAZ), a major newspaper in Germany. Further, he belonged to the “Top 40 under 40” — a ranking by the German business magazine Capital. Since 2017, he is member of the FinTech Council of the Federal Ministry of Finance in Germany. The expertise of Prof. Sandner includes blockchain technology in general, crypto assets such as Bitcoin and Ethereum, the digital programmable Euro, tokenization of assets and rights and digital identity. You can contact him via mail (email@philipp-sandner.de) via LinkedIn or follow him on Twitter (@philippsandner).

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Professor | Lecturer | Author | Investor | Frankfurt School Blockchain Center

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