Benefits the Healthcare Industry Reaps from Block-chain Technology

How will blockchain technology benefit the healthcare industry? Originally appeared on Quora: the place to gain and share knowledge, empowering people to learn from others and better understand the world.

I’m sure there are many ways that blockchain CAN be used to improve healthcare, but the lack of technical solutions isn’t a gating factor for healthcare improvement. More fundamentally, we’re gated by systemic, entrenched, and lucrative business models that permeate all of healthcare.

Let’s start with a definition

A blockchain is a distributed database that maintains a continuously-growing list of data records that each refer to previous items on this list and [that can be] hardened against tampering and revision.

Ok — but similar, robust technologies exist that can handle all of the core ingredients of a “blockchain”:

Distributed database (robust and cheap — often open source)

Industrial strength security (using cryptographic signatures)

Tamper-proof timestamping (to create irreversible transactions)

The reason for all the hope and hype around blockchain is how these technologies were integrated in a way to solve a fundamental problem in digital currencies — the problem of “double spending.”

Double-spending is a failure mode of digital cash schemes, when it is possible to spend a single digital token twice. Since, unlike physical token money such as coins, electronic files can be duplicated, and hence the act of spending a digital coin does not remove its data from the ownership of the original holder, some other means are needed to prevent double-spending.

A blockchain (like bitcoin and others) solves this elegantly, but we then have to find other “industries” that are plagued by the “double-spending” challenge. I see none beyond cryptocurrencies — which is (not surprisingly) because cryptocurrencies are where all the blockchain action is.

Yes, blockchains CAN be used for other business reasons, but that exposes a more existential question — why?

Smart contracts you say? Sure, but that’s not a “double-spending” problem, and I would argue that other (robust and cheap) technologies can be used just as effectively (and probably at less expense) than a new “blockchain.” Also, one of the first successes of smart contract (DAO) based on a blockchain (ethereum), also exposed a fundamental flaw — and fundamental technical question.

Is a code “fork” a bug or a feature?

These are all first-order, technical challenges.

The second-order problem is perhaps even larger because in order for a “blockchain” to produce industry value at scale, you have to get industry consensus between competing commercial business interests. That’s just enormous — and why healthcare suffers from a lack of interoperability today.

It’s a little reminiscent of the history of Vehicle Identification Numbers — or VIN’s. Back in the 1950’s — each automobile manufacturer created their own VIN. Chaos ensued — until the National Highway Traffic Safety Administration stepped in and mandated the use of a standard number. There was never a technical challenge to that problem — only a business one between competing commercial interests. That’s exactly what permeates all of healthcare today.

Yes, blockchains CAN solve many business issues — except one. Legally binding agreement between competing commercial interests. The core premise of “blockchains” is a decentralized consensus that increases efficiency and reducing friction — but also (potentially) reduces revenue.

In fact, much of the “value” of a blockchain is specifically designed to eliminate a centralized authority (like a single bank or institution).

There are LOTS of blockchain experiments today, and some are even in healthcare, but if the experiments succeed, they won’t be because of some unique capability of blockchain technology, but rather because industries (like healthcare) agreed to use it in a legally binding way that shares financial risk. That’s a fundamental (core) business problem that’s entirely independent of a technical solution — AND — existing technologies could just as easily be used to create “smart contracts” that don’t rely on blockchain technology at all.

Contributed by Dan Munro, Author of Casino Healthcare and Forbes Contributor