With the advent of cryptocurrencies, NFTs and the recent surge in startups in the web 3.0 space, blockchain and its applications have surfaced as one of the most talked about technologies in recent years. Some herald it as the next wave of evolution in big tech, continuing the trend of computers revolutionizing how information was stored in the 1990s. Others compare it to the development of the Internet transforming how information was distributed during and after the dot com boom.
While largely blockchain’s applications have been tumultuous in regards to its financial applications, those that are in the healthcare industry are beginning to recognize its potential to transform our healthcare system via various venues. Blockchain’s strongest use case is for identification and maintaining an immutable ledger for recording events, contracts and transactions. Looking within that context, we explore the promises of blockchain as will as its limitations below.
1) Promises of Blockchain – In general, blockchain’s largest success has stemmed from its idealism of decentralization, which necessitates a public ledger that enables complete transparency. Blockchain fundamentally allows for public access to all sorts of information without data being potentially corrupted as transactions are immediately recorded as soon as they are executed. Within the healthcare context, this allows transparency within information systems that do not exist today, such as pharmaceutical trials and insurance pricing data. Decentralization and public ledgers also inherently enables cross-checking, and in turn makes it easier to keep fraudulent information in check.
2) Limitations of Blockchain – Currently, blockchain’s scalability is low, with transaction speed not up to the standard of being reliable for massive amounts of immediate transactions. In addition, there have been security issues for wallets for individual users in its financial use case, which relies on one endpoint authorization. Once a user loses a private key, it is hard to retrieve it and would cause the loser to forever lose access to their wallet. In healthcare, if similar protocols or approaches were to be applied, such security risks for something as sensitive as medical data would displace a lot of trust and jeopardize huge amounts of personal information. This way, reimagined access would need to be multi-endpoints, for which a protocol is not currently widely used. Lastly, on the logistical front, blockchain ecosystems are protocols that require high energy consumption, making it expensive to manage over large amounts of data and networks.
3) Healthcare Tech Lag – It is important to remember that healthcare lags behind many other industries in adopting new and cutting edge technologies. Obstacles such as regulations that have prevented faster paced growth in medical devices, newer drug development platforms, and more recently SaaS platforms, will also encase any new technologies pushing the frontiers of healthcare. Infrastructure issues as well present a challenge in adopting scalable technologies. Healthcare services are only now beginning to become more accepting to tech such as digital health wearables or AI tools for triaging diagnosis within the clinical setting. Stickiness of these technologies is still shaky, in addition to a noticeable lag in buy-in from legislation.
Indeed blockchain has shown huge promise in disrupting the financial industry, but in healthcare there is significant whitespace for widespread adoption. At Tau we are especially excited about the early steps towards increasing transparency in insurance and other health-related records. In part 2 of this article, we will explore case studies in startups in the progressive adoption of AI, cloud computing, and blockchain, as well as recommendations for entrepreneurs interested in this space.
Note from Amit Garg: Primary author for this article is Sharon Huang at Tau Ventures. Originally published on “Data Driven Investor,” am happy to syndicate on other platforms. I am the with 20 years in Silicon Valley across corporates, own startup, and VC funds. These are purposely short articles focused on practical insights (I call it gl;dr — good length; did read). Many of my writings are at https://www.linkedin.com/in/amgarg/detail/recent-activity/posts and I would be stoked if they get people interested enough in a topic to explore in further depth. If this article had useful insights for you comment away and/or give a like on the article and on the Tau Ventures’ LinkedIn page, with due thanks for supporting our work. All opinions expressed here are the authors’.