8 components of blockchain that could aid data exchange
Developed in 2008 to power the Bitcoin currency, blockchain is now everywhere, used for everything from financial services to copyright protection to healthcare. But what exactly is it and how does it work? Tal Rapke, founder of blockchain vendor ScalaMed, which enables patients to receive prescriptions directly from their clinicians and carry the scripts in a digital form, has some answers.
There’s no one in charge
With blockchain, each block has information recorded on it and as it is completed, it’s added to the chain, building on the one before. This means that there is no particular person in charge of a blockchain. Rather, the technology utilizes a peer-to-peer network and a decentralized, distributed database. The processes to record the data are standardized and automated, so while there is no element of trust in people, users need to be able to trust that the code and network have been set up correctly and will function accordingly. Relying on technology with no central authority has implications, for example, in managing what happens when something goes wrong—who do you go to for help?
References, rather than data, are stored
With blockchain, unique references are stored, rather than the data itself. Consider this: transferring digital currency to another person doesn’t mean you physically hand cash. It means that the recipient of the digital currency is now in control of it; only they can distribute it further. It’s the same way when it comes to data. The data isn’t actually stored on the blockchain; references to it are. When it comes to files, it’s a similar concept. Rather than storing data on a private computer or in the cloud, blockchain enables users to split it all up into chunks and spread out on a number of different computers. Data is owned by users and it cannot be changed; it’s just stored somewhere else.
Public vs. private
While public and private blockchains have many similarities, there are some major differences. The biggest distinction is who is allowed to participate in the network and manage the chain itself. With a public blockchain, anyone can join and participate. However, a private blockchain requires an invitation. Any new participant must be validated by the entity that started the network or automatically validated by a set of rules. So, what’s the correct way to go? There are advocates for either approach, yet many claim that problems will arise with a private blockchain because users are simply replicating the issue blockchains are designed to fix, namely that data is privately managed and privately accessible.
It’s still a work in progress
Blockchain is still in its infancy. But many experts believe it has great potential in healthcare. The investment dollars that are being poured into the sector are proof enough. Plus, a World Economic Forum report has estimated that by 2025, 10 percent of gross domestic product will be stored on blockchains, and IBM, Microsoft and many others have already announced services that are based on blockchain technology.
The disruption of the middlemen
For many, the elimination of the middleman is both an advantage and a disadvantage. Some believe that a world without middlemen is a more efficient world; there’s no need to go through financial institutions to transfer money, for example. It’s the same with data. The data is all accessible and there’s no need to search for information in multiple places or input information multiple times. With healthcare, for example, blockchain can enable patient to have access to all medical records, prescriptions and medical information without having to call multiple doctors. Specialists also can see information in real time without having to consult GPs for the relevant data.
Problems with hacking? Not yet
Neither core technology surrounding cyber currencies has been hacked (although programs utilizing their technology have). Blockchain is an open source software, and it’s highly likely that the prize for hacking the database technology is massive, yet the ability to hack it is almost nonexistent. The mere fact that the information is stored across multiple devices limits the ability for hackers to infiltrate. Plus, a hacker would have to breach each block on the chain simultaneously for the network to even remotely be compromised.
Opportunities in finance
Blockchain can be used in financial industries in multiple ways. For example, it can make cross-border payments faster and more affordable by cutting out many of the traditional middlemen. It can also help with smart contracts, executing transactions and agreements automatically and enforcing the obligations of all parties in the contract, not just in finance but also in healthcare and other industries. Finally, by encouraging transparency and traceability of transactions, blockchain helps to improve online identity management—a critical component in healthcare—and manage financial records.
Finally, with secure methods for storing personal data such as health details and a patient’s medical history, blockchain is already disrupting the heathcare industry. Not only does it facilitate better data sharing between providers, it also avoids the possibility of human error, which equates to up to 13 percent of annual healthcare industry spend. It’s known that the average patient has data scattered across 19 disconnected databases, so there would be many benefits to combining that information onto one, secure network, accessible by the patient and every healthcare provider.