About 10 years ago, just after the Wall Street crash of 2008, Satoshi Nakamoto—the pseudonym for an anonymous person or group—released the Bitcoin Whitepaper. a The whitepaper outlined a new solution for the movement of money (or any digital asset) without the need for a central third party. The role of financial institutions as brokers of trust between counterparties would be eliminated through the use of a blockchain, a form of open source software.
A blockchain is a time-stamped registry that securely records and shares information across a network of computer “nodes.” The information shared on the ledger can be transactions or events or data points that the network actors find valuable.
The reason it is called a blockchain is because these chronological records are held in blocks. The bitcoin blockchain closes a block of bitcoin transactions every 10 minutes, at which point that group of transactions is “hashed” (i.e., assigned a unique string of letters and numbers), and the hash is recorded in the following block. This hashing function is like encoding the DNA of all the previous parent blocks all the way back to the beginning. By chaining the blocks together using hashing, bitcoin creates a one-way, immutable, censorship- resistant record of transactions that is open and public. That record is stored on thousands of nodes across the world. As long as nodes are running, the bitcoin blockchain never stops. It has never been hacked. It operates like an ultra-secure, leaderless, community-owned, decentralized financial institution—and it now is worth more than Goldman Sachs. b
The original bitcoin blockchain is perfectly designed for bitcoin transactions. It is secure because it is so energy-intensive. It is embedded with a libertarian belief system around the borderless freedom of value exchange. However, it also is slow, it is hard on the environment, it has a narrow definition of what the digital asset can be, and it is not designed to be used as a development platform.
In 2014, Vitalek Buterin released the Ethereum whitepaper, introducing the world’s second blockchain protocol. c This protocol adjusted some of Satoshi Nakamoto’s principles to broaden the definition of digital assets on the blockchain and introduce the concept of using the blockchain as a shared source of truth that could be leveraged as a market-level development platform. Ethereum introduced a blockchain that could be used to track new kinds of digital-native assets and write code that programs the movement of those assets. Thus, the “internet of money” was born.
Since then, there has been a Cambrian explosion of innovation—first in financial services and then in healthcare and other industries. “Blockchain” has come to represent a spectrum of technologies from true blockchains that comprise open and decentralized systems, to blockchains that are operated by private consortiums, known as distributed ledger technologies (DLTs). This growing variety of approaches offers an expanding range of tools designed to solve specific problems. We now have a toolkit that enables us to optimize a shared ledger for censorship resistance, immutability, throughput, speed, payload, privacy, and a number of other use-case characteristics.
Blockchain in Health Care
Efforts in health care started in earnest in 2016 with the launches of a number of healthcare-focused companies, some of which entered the industry from other industries. Instead of the digital asset being bitcoin, innovators began the process of using a blockchain or a distributed ledger to track real and virtual healthcare assets such as medical records, claims, products, clinical trials, data, and even patients moving through an episode of care. In 2016, as a result of a “Blockchain Challenge” whitepaper competition mounted by the Office of the National Coordinator for Health IT (ONC), early thought-leaders developed numerous use cases for health care, which catalyzed the industry’s first blockchain adoptors. d
In the early days, much of the focus was on decentralization, disintermediation, and open blockchain concepts that empower the consumer. Since then though, healthcare organizations have realized that the meaningful work in the short term will primarily be done using private, permissioned DLTs. The near-term demonstrations of value are taking the form of business-to-business infrastructure projects.
These near-term projects may or may not be disruptive, but they are sure to change how business is done in areas such as the supply chain, the revenue cycle, credentialing, and provider directory management. These use cases may not be the “flying cars” that many were promising in 2016 and 2017, but they are important to watch—and they are likely to set the stage for more disruptive concepts to come.
See related article: The Truth About Blockchain and Its Application to Health Care
a. Nakamoto, S., Bitcoin: A Peer-to-Peer Electronic Cash System.
b. Kharpal, A., Bitcoin’s Market Value Is Now Larger than Goldman Sachs and Morgan Stanley, CNBC, Oct. 13, 2017.
c. Buterin, V., Ethereum White Paper: A Next Generation Smart Contract & Decentralized Application Platform, 2014.
d. HealthIT.gove, “Announcing the Blockchain Challenge,” Content last reviewed Sept. 22, 2017.