Earlier this week, healthcare IT firm Change Healthcare became the newest member of the Hashed Health Blockchain Consortium, a distributed ledger consortium whose goal is to advance the use of blockchain protocols in healthcare. The expansion of this group and the quest for the establishment of standards for implementation of blockchain in healthcare are not surprising – the last year has witnessed a sharp uptick in developers looking to bring blockchain to the industry. However, while the number of companies starting to apply blockchain – a distributed ledger technology that claims to offer several benefits over traditional databases, such as improved trustworthiness and automated smart contracts – to healthcare is growing, and while there certainly is a lot of hype surrounding this activity, there still remains confusion on the specific challenges these companies are looking to tackle and on the value they promise to deliver. In the table below, we synthesize currently sought-after use cases for blockchain in health, outline tech developers’ claims, and highlight players in each solution category.
In October 2016, Walmart began testing blockchain’s capabilities to improve food safety across its complex global food supply chain. The initial proof-of-concept (POC) will track two products: one packaged produce item in the U.S. and pork in China. Using blockchain will enable the array of suppliers and distributors across the supply chain to record information on products in one central repository, rather than across a web of siloed, proprietary systems. In theory, this will increase transparency and create a permanent, traceable record of information as products move from supplier farms to Walmart shelves. Continue reading
In 2016, no word produced more fear and excitement than blockchain (besides Trump), leaving executives in nearly every industry to ask themselves whether they now need a blockchain strategy. Blockchain started with Bitcoin, has quickly moved elsewhere in finance, and is now moving well beyond. Many industry participants believe that blockchain is as revolutionary as the internet itself, and that it can solve virtually every problem in every industry. Startups, enterprises, and every hacker with a laptop are building blockchain solutions. Several venture funds have launched dedicated solely to investing in blockchain technologies. These blockchain-dedicated funds, as well as other funds around the globe, are throwing billions of dollars at blockchain startups.
At its core, blockchain is a database technology. The revolutionary element is that data is stored in a distributed fashion, on many (often thousands) of nodes, rather than in one centralized repository. Therein lies the magic: no central authority owns and controls the data and associated infrastructure. Developers are attracted to blockchain for its inherent security, data integrity, decentralized nature, and its ability to simultaneously provide both public openness and effective anonymity. In addition to the perks of decentralization, most developing blockchain solutions provide “smart contract” functionality – this means that users can program contractual terms directly into the blockchain, where they become as immutable as the blockchain itself. Smart contracts are valuable in their ability to automate settlement upon completion of terms, as well as their ability to cut out intermediaries that charge transaction settlement fees.
Given the immediate opportunities for and threats posed to financial services organizations, finance is the leading arena for blockchain innovation; however, developers have begun applying blockchain to solve problems for many other use cases. The power industry is leading the charge, having emerged as an early non-finance test-bed. Blockchain has the potential to disrupt power for several reasons: the power value chain relies on a plethora of cumbersome trading and clearing systems to support complex markets, opening the door for a leaner distributed system that can cut out middlemen and lesson associated fees. Furthermore, units of power and energy are a strong fit for smart contracts, as they are concrete and discrete, and meters can feed directly into blockchain logic. A few forward-thinking companies like LO3 Energy and Volt Markets have already deployed blockchain as an enabler of peer-to-peer electricity trading, as well as for the issuance of renewable energy credits (RECs).
Blockchain is now making inroads into supply chain use cases, where companies like Skuchain are digitizing and automating clunky processes for international trade – in an October proof-of-concept, Skuchain digitized a letter of credit between Wells Fargo and Commonwealth Bank of Australia, which enabled Brighann Cotton to sell a cotton shipment from the United States to China. The two banks set up a smart contract on behalf of the buyer and the seller, then put a GPS unit on the physical shipment in the ocean freightliner. When the GPS unit reported that the shipment had arrived at the port in Qingdao, Skuchain’s system automated a payment transaction from Wells Fargo to Commonwealth Bank.
Healthcare is another promising industry for blockchain – Deloitte is exploring blockchain for electronic medical records, noting a pain around patients who move to new countries frequently and have trouble corralling records from years of previous medical care they’ve received. One group is experimenting with the concept of leveraging blockchain to create a more decentralized medical system, where record ownership and control moves closer to the patient, rather than the medical enterprise.
A robust blockchain value chain is assembling, full of vertical solution providers, horizontal platform developers, a handful of core infrastructure enablers, and enterprises who are developing products or contributing code to other projects. As a result, even when blockchain becomes an attractive approach, assembling the best supplier network is no easy feat.
Blockchain has the potential to be transformational, but just as with any new technology, excitement about blockchain is far ahead of utility. The opinions around blockchain range from viewing it as industry-transforming to a promising option for only a few specific use cases. The truth is somewhere in the middle: blockchain is a promising development that will provide many valuable solutions, but it is dangerous for stakeholders to take a “blockchain-first” approach, one in which they throw blockchain at everything – the right approach is to start with problems, and to apply blockchain where other methods have failed and where blockchain makes the most sense. This is a common risk whenever new technologies garner hype and press, and many venture groups and industry stakeholders will waste precious time and money getting sucked into inappropriate blockchain projects.
For more information contact Isaac Brown at Isaac.Brown@luxresearchinc.com