The Evolution of Blockchain and its Place in Healthtech
In 2018, there is currently no hotter topic in the world of technology than blockchain technology. Blockchain is a digital ledger that monitors transactions being made with digital currencies, such as bitcoin, between two or more parties. Blockchain was initially a theory conceptualized in Japan in 2008 which envisioned a way to increase transparency for online transactions while also calling for the removal of middlemen. It was first put into practice by Bitcoin; a digital currency that circulates in a peer-to-peer decentralized network of so called “miners” to validate and verify the authenticity of any online financial transaction in real-time rather than through a centralized ledger. Since 2008, it has also evolved into a solution that eliminates the risk of double-spending and other potentially fraudulent transactions with digital assets.
As technology has become more prominent in industries like financial services, blockchain is being heralded as the “missing piece to the puzzle” by already proving that it improves workstreams in the digital realm. Globally, institutions seek to work more and more with fintech companies and over the last year, we’ve seen that they’ve become more receptive to using blockchain as a means for both innovation overhaul and a medium to access the digital realm. In fact, between 2012–2016, blockchain startups have raised over $279M through an ICO or an Initial Coin Offering — a digital means to raise funds for blockchain projects. Through two quarters in 2017 alone, this number has nearly quadrupled to $1.3B, with three individual startups raising $100M+.
While still in its relative infancy, ICOs are unregulated but have recently caught the attention of the PE/VC communities. Some startups that have used ICOs for fundraising have gone on to experience massive returns, like Ethereum, which went from $15/share at the start of March 2017 to over $900 in February 2018, while exceeding a $20B market capitalization. While investors do see an opportunity to invest in blockchain, many will be turned off due to the incredible volatility that cryptocurrencies currently present (the aforementioned Ethereum suffered a 20% in just a couple of hours on July 16th, 2017).
Despite this, even if ICOs become regulated or sanctioned by governing bodies in the near future, we’ve reached the critical mass in the evolution of blockchain in the sense that its usefulness for applications across multiple industries has already been uncovered and it will only be a matter of time before we see this unfold. This is evidenced by the fact that through the first half of 2017 there are at least 25 blockchain startups representing 9 industry verticals that raised $10M+ to disrupt their respective industries. In 2015 there were only 9 blockchain startups raising that type of money across 5 industries.
Beyond monitoring financial transactions, blockchain provides a unique infrastructure that allows precise control over all processes within a closed network of users. The core of blockchain technology is built upon transparency and accuracy via a decentralized peer-to-peer network that can monitor any type of record in real-time without risk of it being falsified or altered.
That means that its applications extend beyond monitoring the exchange of money and can include the tracking of sensitive information such as updating electronic health records, monitoring personal IDs and even the executing of legal agreements between multiple parties. ‘Smart contracts’ as they’re known are self-executing protocols that can be programmed to execute actions of varying degrees of complexity. They can be used to automate bureaucratic processes that would otherwise require the involvement of intermediary services. Transactions or settlements that would normally take several days and a substantial fee can be completed in mere moments with smart contracts. This feature is also what makes blockchain secure and trustworthy, by automating processes that would otherwise be at risk of fraud or corruption.
For healthtech innovators, the ‘Smart Contract’ component to blockchain is incredibly promising as about 35% of healthcare related companies expressed interest in its adoption. Much of healthtech today seeks to figure out ways to use technologies that will digitize existing workstreams and make the overall healthcare system much more transparent and efficient. As part of the initiative to move towards a quality-based system of care in the U.S, blockchain has the potential to allow all relevant stakeholders in the healthcare system to readily access any patient’s medical record and update it accordingly, keeping the record and providing up to date transparency for the involved stakeholders in real-time. Additionally, blockchain can play an important role in HIPAA compliance, curation of medical data and analytics, and even improvements in the way medical charts are documented.
Though the process to digitize healthcare has been slow, strides have been made. This process, however, will be expedited once we begin to see the results of the market’s adoption of blockchain technologies in fintech. Until that happens, and until we begin to make sense of its impact on ordinary people, only then will blockchain be seen as a solution that will further transform healthtech, making healthcare a more transparent system.
Note: This piece was originally written on behalf of WeFund Health
