Are Blockchain-based Covid-19 Passports Good for Crypto at Large?

The relevance of this question has been underlined by the arrival of blockchain-based Covid-19 passport systems. National governments and various organizations have increasingly been announcing plans to use blockchain to facilitate some kind of system to register coronavirus vaccinations, and while this may be a strong seal of approval for distributed ledger technology, it’s not necessarily great for crypto.

Why? Well, Covid-19 passport systems represent a highly controversial and contentious issue, with the arguably illiberal nature of such systems clashing with the decentralized and liberating ethos associated with most ‘real’ cryptocurrencies. At the same time, passport databases will become a highly prized target for hackers, and if any of them are hacked, this may harm the reputation of blockchain technology, and crypto.

Blockchain Covid-19 Vaccine Passports Are Coming

At the beginning of April, South Korea’s government announced it will issue Covid-19 passports to citizens who’ve received a coronavirus vaccination. Accessible using a smartphone app, these passports will be registered using blockchain technology in order to prevent counterfeits.

“The introduction of a vaccine passport or ‘Green Pass’ will only allow those who have been vaccinated to experience the recovery to their daily lives,” said Prime Minister Chung Sye-kyun.

South Korea isn’t the only nation or area to propose or entertain the idea of harnessing blockchain technology in order to roll out a Covid-19 passport system. Singapore is to begin using the International Air Transport Association’s blockchain-based passport system from May. Malaysia’s health passport also uses blockchain tech. And in the United States, the State of New York launched a passport app at the end of March which uses IBM’s blockchain technology to verify and secure information.

In fact, IBM is a name that’s likely to recur frequently when discussing passport systems throughout the globe. It will spearhead Germany’s digital vaccine as part of a consortium which also includes Ubirch, a German blockchain start-up. IBM has been marketing its blockchain-based Digital Health Pass heavily since launching it in the second half of 2020, giving promotional interviews with tech media (and also bidding for contracts, as above).

It’s therefore likely to win a few more contracts in the coming months, particularly when most other developed nations are gearing up to launch a digital Covid-19 vaccine passport. This includes the United Kingdom, Australia, Sweden, Canada, and the European Union (not to mention states in the US). Given that IBM isn’t the only organization offering a blockchain-based system, so it’s highly likely that a big proportion of nations will use distributed ledger tech.

In some ways, this is a very big win for blockchain. Just as the current macroeconomic situation has driven savers and investors towards bitcoin and other cryptocurrencies, it seems that the current public health situation is driving governments towards blockchain. Assuming that a sizable chunk of the world’s nations adopt blockchain tech for their Covid-19 passports, this could quite possibly open the door for them to adopt such tech for a wider range of uses.

In the process, the spread of blockchain could, in theory, help expedite the spread of cryptocurrencies, insofar as at least a portion of adopted blockchains may use their own native tokens.

But…

But — and this is a big ‘but’ — blockchain-based Covid-19 passport systems aren’t necessarily good for crypto. In fact, they could be damaging, in various ways.

Firstly, there’s the issue of reputation. As any good Bitcoiner would tell you, cryptocurrencies are about decentralization and (arguably) enhancing personal freedom. This seems to be entirely at odds with the idea of a Covid-19 vaccine passport.

Concerns surrounding such passports were articulated very clearly, and forcefully, in May 2020 by Elizabeth M. Renieris, a Harvard legal expert who resigned from the ID2020 Alliance after the organization began working on a Covid-19 passport. Writing on Medium, she argued:

“A poorly executed immunity certification effort, particularly when not grounded in an established scientific and public health knowledge base, and when tied to the ability of people to economically support themselves and their families, is often rife with corruption, desperation, and perverse incentives, such as intentional self-infection with a potentially deadly disease.”

In other words, making passports the condition of work may end up incentivizing people — particularly those who haven’t been able to receive a vaccine — to seek Covid-19 infections. And as the UK-based Big Brother Watch charity noted in a recent report, passports risk creating “a two-tier society where the poorest, the most marginalised, and anyone who does not comply with unprecedented demands for medical interventions could be denied basic socio-economic opportunities and afforded fewer liberties than their neighbours.”

On top of this, Renieris also pointed out a number of privacy and security concerns:

“At this time, we know of no specific or general legal frameworks which would provide individuals with sufficient clarity and precision as to how any data processed in connection with such blockchain-enabled immunity credentials would be governed or processed, or that could provide individuals with sufficient safeguards or protections in respect of their use.”

This should be a big worry for crypto: if one of these blockchain-based passport systems suffers a leak or breach, it could dampen public trust in blockchain and cryptocurrencies more generally. This is a distinct possibility, with the State of New York, for instance, stating in the terms of its Excelsior app that it isn’t obliged to protect personal data in accordance with HIPAA rules.

And given that most of these systems appear to be pretty centralized, there’s also a risk of hacking, something which would certainly damage the public image of blockchain (and crypto).

Conversely, given the centralization of many of these systems, it’s clear they have only the most marginal of connections with actual, decentralized cryptocurrencies. This is a bad and a good thing: bad because the adoption of blockchain for vaccine passports may end up having little positive effect on crypto adoption, and good because crypto may end up being unscathed in the event of blockchain-based passports becoming unpopular.

Still, with such passports proving highly controversial, they may end up tarnishing crypto’s reputation to some degree, showing that immutability can become a force for civil harms when used by centralized agents.