The U.S. Department of Health and Human Services hopes to put a new technology to use in its ongoing effort to improve the health and well-being of Americans. The technology in question isn't something one might expect to see in the healthcare IT toolkit; rather, it's blockchain, the technology that underpins cryptocurrency and has primarily been associated with bitcoin. HHS sees blockchain as a potential salve for ills that plague the increasingly complex world of digital health records.
Earlier this year, in a competition called the Blockchain Challenge, the HHS's Office of the National Coordinator for Health Information Technology (ONC) solicited ideas on how blockchain could be used to protect, manage and exchange medical information. The challenge drew 70 white papers submitted by individuals, organizations and companies, and the ONC chose 15 winners from that group.
"We've seen a lot of interest in the blockchain, and we thought it was time to get past the hype," says Debbie Bucci, an IT specialist at the ONC who focuses on emerging technologies.
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U.S. health officials aren't alone in that quest. For close to a decade, blockchain has mostly been thought of in connection with bitcoin, but business executives and technologists in multiple industries are experimenting with the technology in search of ways to evolve or disrupt standard practices.
Some new blockchain-based systems have been deployed, and blockchain experts say that's just the start; they predict that blockchain will be as revolutionary to the status quo as the internet itself was.
"We thought cybercurrency was the killer app for blockchain. But just as we figured out that we could do a lot more on wired networks than talk to each other, the innovation on blockchain is around what else we can do. This is going to drive a lot of efficiencies and innovation, and it's going to lead to the creation of new products and services that really change the way we do things," says Jason Oxman, CEO of the Electronic Transactions Association, which, as an international trade association for the payment processing industry, is active in the blockchain world.
Rise of bitcoin
Blockchain is often described as a distributed digital ledger in which blocks of data are chained together and shared. Cryptography allows each participant in this peer-to-peer network to securely add and/or manipulate the ledger. In 2008, Satoshi Nakamoto (a person or group of people who have yet to be positively identified) ignited interest in the technology with a white paper titled "Bitcoin: A Peer-to-Peer Electronic Cash System."
The subsequent rise of bitcoin as an accepted form of payment fueled further speculation about blockchain's potential. Now a growing number of technologists and business leaders say blockchain's real value goes beyond enabling financial transactions.
Case in point is online retailer Overstock.com. The company's interest in blockchain started in late 2014, when it decided it would start accepting payments in bitcoin, says Jonathan Johnson, Overstock.com's chairman of the board and president of Medici Ventures, Overstock's blockchain subsidiary. Soon thereafter, Johnson says, company leaders realized that blockchain could support more than a new payment method.
"It's great to be taking bitcoin, which we still do, but we should be looking at how we could grow blockchain use," he says, noting that Overstock.com saw "quicker and more immediate settlement of trades" as an area of potential use.
That interest led Overstock to set up a subsidiary called t0 Inc. (tee-zero) to develop blockchain technologies for commercial use. Johnson says the company is working on a public equity offering on the platform.
Benefits and risks
The feeling so far is that blockchain can deliver big benefits, particularly in the financial sphere, Oxman says. It promises to take friction out of transactions, which is appealing for banks that may engage in risky, time-consuming deals involving multiple currencies. Indeed, a prominent player in blockchain is R3, a global consortium of more than 60 financial institutions. R3 designed a distributed ledger platform, called Corda, to record, manage and synchronize financial agreements between regulated financial institutions.
However, there are still risks and challenges with blockchain.
"When you have a decentralized ledger like blockchain, one of the obvious questions is, 'Are there enough safeguards to know who is responsible when something goes wrong?'" Oxman says.
Others say building the infrastructure required to enable wide-scale use of blockchain presents challenges, because systems must be set up in ways that enable blockchain to retain its high level of security and ensure that people still trust the technology. Some just question whether blockchain will be able to live up to the hype.
Still, blockchain experts say its use will only continue to expand.
"People cite everything from [the internet of things] to electronic voting," says Eric Hanselman, an analyst at 451 Research.
When experts list the areas where blockchain has significant potential to shake up existing services and processes, they often cite government and, in particular, how it handles land registries, deeds and titles. That process is currently cumbersome, time-consuming and expensive — with property sales requiring title searches and, just in case those aren't enough, title insurance. But if you put the history of a property's sales and transactions on the blockchain, there would be an indelible record of it all.
Blockchain could play a role in manufacturing and supply chain operations, too, says Hanselman, noting that the technology could be used to create audit trails that allow companies to track the provenance of both materials and finished products. Others note that blockchain could be used to create permanent, transparent logs of industrial and commercial records, such as maintenance and inspection reports.
In retail, Mougayar points to startup Loyyal, which offers a universal loyalty and rewards platform built with blockchain and smart contract technology.
Even media is represented in the blockchain revolution. Just look at Steem, which describes itself as a "blockchain-based social media platform where anyone can earn rewards."
And in high tech, blockchain has piqued the interest of both established giants like Microsoft — which introduced an offering called Blockchain as a Service in November 2015 — and IBM, as well as newcomers like Ethereum, a public blockchain-based distributed computing platform.
"Blockchain is in a nascent phase. Collectively, we have a lot to learn about how the technology will work in business," Mark Russinovich, CTO of Microsoft Azure, says in an email.
But even at this early stage, Microsoft sees an upside. "Blockchain has the potential to completely overhaul business processes, saving billions in direct and indirect costs," Russinovich adds. "We think the potential of blockchain is as unlimited as when the internet began."