The Blockchain in Healthcare

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The blockchain is an idea centered around the concept of a secure, digital ledger system that provides a system for efficient, auditable transactions of almost any type between entities [1]. All information related to blockchain transactions is at once both independently verifiable by all (even outside) parties as correct and also inscrutable to entities without explicit permission. The first and probably most well-known implementation of blockchain technology is Bitcoin [2], but there has been a massive expansion of blockchain use-cases since Bitcoin's initial introduction.

What is the Blockchain?

First, it should be clear that there is no one blockchain to rule them all. "The Blockchain," as it is often referred, really is a concept of a series (chain) of interrelated sets (blocks) of encrypted information. Hence a chain of blocks, or blockchain. There are many such blockchains in existence, and one could choose to do transactions on any one of them or create a new blockchain.

An important aspect of most blockchains is that they are designed to be maintained on a distributed network of multiple nodes. Each node holds a complete copy of the blockchain and adds each sequential new block as it is created. This system allows every transaction on the blockchain to be verified by any or all of the nodes in the network, and also makes it very difficult for the information held in the blockchain to become lost or unavailable if any one or even most of the nodes go offline.

Transactions that are set to be added to the blockchain are added to the newest block as soon as it is created. This makes the continued existence of the blockchain dependent on the creation of new blocks. There are several main methods for the creation of new blocks on the network, and the choice of method depends somewhat on the purpose of the blockchain in question. Bitcoin, the first cryptocurrency, uses a method called Proof of Work System (Wikipedia):

  • In the traditional Proof of Work System, each block validator, or "miner," competes to validate the block by processing a task. The winner is the first person to complete this task. The chance of completion of the task is random based on a hash function, but increases with the more "work" a person puts into the task. The system can automatically vary the difficulty of the task to limit the speed of block generation. The winner is credited for his/her work by a small amount of currency.

The blockchain has moved beyond simply processing transactions of cryptocurrency such as Bitcoin. Any data that can be encoded into a cryptographic hash can be added to a blockchain. Various different ideas have been proposed, and I will not attempt to list them here, but they are wide ranging. Melanie Swan predicts three phases of blockchain adoption: Blockchain 1.0, 2.0, and 3.0[3]. Blockchain 1.0 manifested as online currency. Blockchain 2.0 is the near future, where blockchain is used to keep track of contracts, financial records, public records, and ownership of property. Blockchain 3.0 will be applied into science, medicine and education.

Blockchain Development Groups

Certainly a non-exhaustive list . . .

Blockchain Use Cases


Bitcoin (BTC) was the first cryptocurrency based on the blockchain and was developed by someone calling himself (or herself) Satoshi Nakamoto. The protocol was introduced in 2008 after the publication of a white paper[2] describing the algorithm and the mechanisms for generation and distribution of BTC. At this point there are hundreds of cryptocurrencies in circulation according to Wikipedia, many of which are based on the Bitcoin blockchain, but only a few have gone into widespread use[4].

Smart Contracts

One of the major potential functions of blockchain technology is through the creation of smart contracts. Various components of contracts, including proof of the involved parties, requirements for completion, and actions upon completion of the contract can be encoded in blocks. These can then be added to a blockchain and become available for independent verification, which can even lead to automatic processing of contracts when their requirements have been fulfilled.

Smart contracts are scripts which have various rules and logic that automatically execute when those rules are met. Smart contracts allow heavily automated workflows between transacting parties in the network while maintaining anonymity. Once the contract has been executed, one can take custody over assets or pre-defined payments can be issued. [5] They are importantly different in the sense that they are stored on a distributed network and they can be verified as true without knowledge of the contract specifications [6].

The Ethereum Project was one of the first to introduce the concept of smart contracts using their alternative blockchain and currency token, ether.

Securities Exchanges and Finance

One of the hottest arenas for blockchain development currently is in the financial markets, an extension of the original cryptocurrency use cases for the blockchain. Multiple stock markets and other financial firms have initiated investigations and pilot projects into the feasibility and utility of the blockchain for contracts and tracking of financial instruments. NASDAQ has been one of the first major markets to put blockchain technology into use, and has released some information on its implementation, called Linq [7][8]. The cryptocurrency website Coindesk has also produced a list of 10 exchanges using or investigating blockchain technologies[9].

Additionally, financial firms such as Visa have been experimenting with the blockchain for keeping track of transactions as well as with proof of concept applications such as remittance[10].

Advantages and Disadvantages of Blockchain

Blockchain is a novel concept and is being explored in various sectors. While there may be several applications and limitations of this technology in future, some of them are highlighted below[11]:


  1. Distributed: There is no single owner of the database. As anyone can contribute and be a part of the network, the risks of data tampering and fraud are minimal. As Nakamoto [2] mentioned, as long as the majority of nodes are honest, a random attacker would not be able to alter the history.
  2. Trustless: As every node in the network will have a copy of the blockchain and they verify the transactions independently. Hence, this system allows transaction even if the parties don't trust each other.
  3. Immutable: Once the transaction is verified and embedded in the blockchain, it is almost impossible to undo it, and the complexity increases with time as more blocks are added downstream. This allows keeping a track of accurate events that occurred through the history.
  4. Decentralized: There is no middleman like banks or data owners. This helps avoid manipulation of the market by the owners.


  1. Waste of resources: As several nodes are running and utilizing a huge amount of computing power and electricity to verify and maintain the blockchain, there is more than required redundancy.
  2. Higher cost for less value: With time, the use of network increases and the complexity of the hashing algorithm also increases. Hence, more resources are required for the same amount of work. This increases the cost of work and transactions gets slower, as miners prioritize the transactions with higher incentives causing a backlog the transactions with smaller values.
  3. Difficulty to keep up with the size of the block: As the size continues to grow along with the complexity to solve the calculation, new nodes with smaller computing power will have difficulty joining the network and likewise, the older and slower nodes will gradually fade with decreasing incentive for the work. Hence, like Darwin’s theory of the "survival of the fittest", a few larger nodes will dominate the network creating more and more centralization of the system.
  4. Speculative market: Due to the lack of proper regulation of this system, the market is subject to a great volatility and thus making it risky for investors.
  5. Immutable smart contracts: As there are clear advantages of having permanent and immutable records, at the same time, there is a bitter flipside to this. For example, if there is a flaw with code that can compromise the system, it is also irreparable and creates the opportunity for the attackers to exploit the same flaw repetitively in future. As time progresses, the capability of repairing the error will be even more complex.

Possible Solutions:

  • The issues with resource wastefulness and diminishing return of investment are mainly an issue with Proof-of-Work Systems, and can be improved with new blockchain innovations such as Proof of Stake (Bitcoin Wiki) or blockchain scaling[12]
    • There are some issues with the original Proof of Work that Satoshi created: 1) it was very resource intensive and 2) as the bitcoin reward becomes harder to obtain as the blockchain grows, there is less incentive to mine. With fewer miners come fewer validators of the block which could allow malicious actors to introduce fake block into the chain. An alternative to Proof of Work is Proof of Stake[13]. In Proof of Stake, the amount of work a user can do depends on their "wealth," or the amount of currency they own (if they own 1% of the currency, they can mine 1% of the block). In order for someone to manipulate the block, they have to own more than a majority of the currency (51% or more), making successful attacks on the blockchain very expensive. Furthermore, the attack would devalue the currency, resulting in a big hit to the attacker.
    • Currently, all computers that participate in mining a blockchain process every transaction. This is very slow and resource wasteful. A solution to this is to calculate how many computers will be needed to validate a new block, and give the task of verifying a transaction to those computers. This will allow parallel processing (scaling) of "blocks" and speed up transactions. At this point, the details behind how to manage this division of tasks without compromising security still being worked out.

Potential Use Cases in Healthcare

Though there has yet to be a breakthrough report or use-case for blockchain technology in healthcare, there are many potential ways that the blockchain could be implemented within the current healthcare structure. Any list will likely be incomplete, but these examples represent some of the published and available literature on blockchain implementations in health.

Health Information Exchange (HIE)

One major area that blockchains may be able to facilitate is the secure access to and communication of patient health records between individuals and institutions. There have been multiple white papers published on the topic, including groups from the Mayo Clinic [14] and MIT [15] who described a system for patient information exchange based on blockchain technology that would allow patient-controlled access to records across institutions using HL7 Fast Healthcare Interoperability Resources (FHIR), JSON, or other encoding system. In these models the actual health care data are not encoded in the blockchain, but are merely references pointing to where the data reside, such as at institutions or in a "data lake" [16]. Similarly, a group out of China described an app called Healthcare Data Gateway (HGD) that allows patients to view and directly control rule-based access to their health records with a smart phone interface and authentication provided by a blockchain network [17]. These ideas support the concept of patient-owned medical data, and would have the effect of decentralization of medical records in ways that are as yet undetermined.

Health Research Integrity

Academic research is a major driver of advances in health care, but in the setting of limited funding and publication pressures on researchers significant concerns have been raised regarding research integrity[18]. Organizations such as and others have been developed to help drive researchers to define endpoints and analysis prior to conducting clinical trials and other studies. As it represents an immutable, verifiable record of events and transactions, the blockchain has been proposed as a potential decentralized resources for helping to ensure biomedical research integrity. Benjamin Carlisle[19], followed by several researchers from the UK[20], proposed in 2014 that researchers could use the blockchain to record pre-specified aspects of their projects, including the study design, analysis plan, and data structure, among others, which could later be verified by consumers of the literature to decrease bias that may be introduced in post-hoc analysis[21]. The blockchain also offers the potential ability to verify the integrity of actual research data and analysis by outside observers, even if the data themselves are not made publicly available. These types of implementations may lead to improvements in both the integrity of biomedical research as well as bolster public trust in medical research.

Personal Health Records

This concept dovetails with the idea of HIE using the blockchain, but focuses more on the secure maintenance of a personal health record (PHR) by patients. No production PHR has been released based on this technology, but concepts such as MedVault [22] use alternative blockchains such as Colu to store patient data directly on the blockchain. Others such as eHealthWallet have also developed prototype PHRs based on the blockchain. Patients could then share or authorize doctors and other health entities to access and modify their data.

The majority of the proposals leverage blockchain’s ability to maintain an immutable record to place control of patient’s health record into their hand by allowing them to grant and revoke access to their medical records according to their preference[23][24].

  • In a traditional system, patient’s health record is kept and maintained by a health care organization (e.g. hospital, clinic, etc.). Information can be freely shared between the organization and a Regional Health Information Organization (RHIO) or another organization that has a business agreement with the originating institution. If there is no business agreement between the institutions, one-off requests can be made, but this will take time and delay care.
  • As Meaningful Use Stage 3 is being implemented at health care organizations, there has been a push to create patient-facing application programming interfaces (APIs) that allow patient to directly retrieve their record from the institution and share it with the provider as needed.
  • A blockchain-enabled smart contracts controlled by the patient can be used to authorize direct sharing of medical record between institutions. Patient can specify the subset of the record to be shared or set an expiration date on the authorization.

Gordon et al. suggested five features of block chain that allow for successful patient-driven interoperability[25]:

  • Digital access rules: The blockchain-enabled digital access rule is centralized, which makes it accessible by multiple institutions, while facilitating editing of the rules by the patient at any moment via a smart phone-based or web-based application
  • Data aggregation: Patient could also aggregate their data (or metadata) across institutions to a blockchain or another secured location using the digital access rule, thus creating a complete record of their health
  • Data liquidity: Because the change in digital access rules will take effect as soon as the patient (or legal representative) approves it, data can be share rapidly to the requesting institution, allowing access to time-sensitive information such as allergies, “code status,” etc.
  • Patient identity: Even though there is no national patient identifier, institutions can use the blockchain-assigned individual’s public key and match it with their local identifier to start sharing data across systems
  • Data immutability: Since all changes made to the blockchain is recorded and immutable, the risk of loss is minimized, and the record can be audited at any time.

There are several limitations of the current state of technologies for blockchain-based personal health records:

  • The first concern with block chain is its inability to handle the transaction volume of clinical data. Blockchain is great at keeping a record of changes to a small amount of data (such as account balance, owner’s identity, etc.). However, it is not economically practical to store a large amount of data on the blockchain due to cost associated with creating a very large ledger to store this information and to perform proof-of-work on this ledger. Proposed solutions include:
    • Validate data using a different approach to consensus such as proof-of-stake.
    • Store a summary of, instead of a complete clinical report.
    • Patient’s data can be stored on a permissioned (private) regional blockchains that are built to handle large transaction volumes without time-intensive validation.
  • A second limitation of blockchain is the lack of privacy and security. Even though the identifier on the blockchain is the cryptographically generated public key, this is only pseudonymous, as patient can still be identified by matching for other basic demographic information, and once the public key has been linked to the patient, their activity on the blockchain can be tracked. A few solutions to this problem has been proposed:
    • Use permissioned (member-only) blockchain to avoid public exposure.
    • Basic demographic information stored on a block chain can also be encrypted to prevent access.
    • Store sensitive data off-chain, with on-chain data focusing on granting permission to access requested data using pointers and metadata. This would also allow patients to assign different access rule for different users of their data
  • Since the focus of many blockchain-based projects is on patient-controlled health care data, it necessitates more patient participation than the traditional, institution-based paradigm. They must be able to assign certain permissions for different institutions that request access.
    • Having a patient-friendly “app” to manage public keys and permissions will become very important to get more buy-in from patients.
    • Patient will also need to keep track of their password to gain access to their private key in order to make changes to the block chain. There will need to be a mechanism for recovering lost password when this occurs.
  • The largest barrier to widespread adoption of blockchain in healthcare deals with the issue of incentives. Meaningful Use stage 3 requires implementation of patient-facing API, but this does not entail handling access control of healthcare record to patient. Institution has little incentive to pay for the cost of setting up a blockchain just to give patient more control even though this will improve interoperability. To overcome this, a few proposals have been made:
    • Expand federal incentives to patient-controlled medical record.
    • Researchers can be incentivized to pay for the setup of these blockchains by gaining access to patient anonymized data for research purposes.

Storage of Health Care Data

Most of the previous examples use the blockchain not as a direct data storage medium, but instead as a secure reference point for identities, access, and data locations. At least one group from a company called Tierion, which partners with the Philips Blockchain Lab , has produced a concept called Chainpoint[26], which proposes to use a Proof of Existence concept and Merkle Roots[27] to efficiently store actual patient records on the blockchain without imposing excessive transaction demands on the system.

Billing and Claims Adjudication

Blockchain system can help reduce administrative costs and time while automating claims adjudication and payment processing using smart contracts. For example - a smart contract is set up between payer or insurance company, provider, and patient such that when the patient sees a provider, or if a procedure is done, an entry is recorded in the blockchain. Based on the criteria set, the contract can automatically issue reimbursement from the payer as well as co-pay from the patient without having to wait for the insurance approval.[28]

Drug Supply Chain and Prescription Management

Counterfeit drugs are a major problem especially in the developing country where it is estimated that about 1 in 10 medical products are counterfeit [29]. Ensuring the integrity of the drug and maintaining a robust audit trail is a must to ensure patient safety. Similarly, this platform can be used in prescription drug management and track history and authenticate prescriptions using smart-contracts.

Few Examples of Current Use Cases and Future Development

  • MedRec- it is based on Ethereum platform and focuses on medical data management using smart contracts like managing permissions and authentication processes, data sharing in an interoperable environment between healthcare systems and maintaining an audit log. [30]
  • Guardtime- also focuses on medical data management and has partnered with e-Health authority of Estonia to secure the country's database of health records [31]. Also, recently, MyPCR smartphone platform from Guardtime has partnered with Instant Access Medical and Healthcare Gateway in the UK for patient health data management and verification of medication adherence. [32]
  • Blockchain Health- created for healthcare research data management where users can individually authorize the release of their health information to researchers as well as track the use of their data. [33]
  • BlockMedx- it is a startup company which intends to use the blockchain platform to transmit DEA controlled drug prescriptions from physicians to pharmacies and then to patients securely. [34]
  • MediLedger- another pharmaceutical supply chain management startup company who has partnered with several drug manufacturers and aims to provide an open, secure and interoperable network. [35]
  • Drug and Pharmacy Verification - VeriPharm has developed a proof of concept that would help track and verify pharmaceuticals from the raw materials to the final product administered to patients.
  • Care Coordination - Projects such as simplyvitahlth are geared toward coordinating care between multiple providers and at different institutions to ensure that complex care pathways are being followed appropriately.

There are many more potential use-cases for blockchain technology within healthcare, and undoubtedly we will continue to see development in this area in coming years. In 2016, a consortium of sponsors led by Gem (Whitepaper)[36] held the first healthcare oriented blockchain conference, Distributed: Health in Nashville, TN. Similarly, the Office of the National Coordinator (ONC) Tech Lab had issued a Blockchain Challenge in July, 2016.[37]

  • The list of submissions and awards can be found here

As the healthcare blockchain community grows, gatherings such as these will likely increase and blockchain technologies will increasingly be introduced at major medical conferences.


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