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There is a tremendous amount of growing interest in blockchain in recent months and GigaOm is currently exploring the business implications of this trend across a number of verticals. While most of the current activity is in the finance or fintech sector, there is growing interest in blockchain’s impact on the IoT, healthcare, sharing economy and beyond. Smart contracts, pseudonymous identity management, transparency and cryptographic security are features that have applications well beyond banking. The most obvious use case of distributed, cryptographic ledger data systems in finance is to make more efficient clearing mechanisms for financial transactions. Securities and banking transactions depend on clearninghouses that can authenticate users on each end of a transaction and enable the transfer of funds or completion of the transaction, but this takes up to three days in most cases. Blockchain transactions can automate this type of transaction and cut out the costs of the middlemen who currently handle the bulk of global financial transactions. A great deal of startup activity in the fintech arena is focusing on mobile money and remittances as well as large collaborative intiatives with the largest banks to build private blockchains (or permissioned blockchains) that are closed networks rather than the standard open or public blockchain. With the growth in prevalence of security breaches across the economy, it is no wonder that many other verticals are beginning to pay close attention to developments in blockchain and how it can be used to improve data management, transparency and certifying provenance of goods or that they are not counterfeit, and address the challenges of un-interoperable technology systems. Furthermore, at GigaOm we are looking at new business models that blockchain is going to enable in the coming years.
We are currently taking a close look at healthcare, insurance and the IoT as the next generation of blockchain startups and applications beyond finance. Healthcare is rife with interoperability challenges that stand in the way of coordinating patient care, patient safety and very onerous administrative costs or waste. Companies such as Gem, a blockchain startup, are heavily focused on data management systems using blockchain that can connect diverse datasets across the silos as well as guarantee authenticity of data. The blockchain can be used to create a type of universal record with a timestamp, a library that enables data retrieval across diverse databases. This will become exceedingly valuable as precision medicine and the explosion of sensors, wearables and mHealth apps proceeds. The current health systems and the legacy health IT players quite simply are not well designed to manage the volume and types of data that are being generated today. This stands in the way of realizing the goals of precision medicine in a scalable, pragmatic manner anytime soon. Blockchain and APIs may enable a post-EHR layer of applications to enhance the functionality of current EHRs and make care coordination and population health management much easier to accomplish but this will take several years to become mainstream.
IBM and others major IT vendors are collaborating with the Linux Foundation around the open source Hyperledger Project to accelerate innovation in the blockchain arena. Much of this is driven by growth in the internet of things (IoT) and the need to manage data and services across devices in this ecosystem. Smart contracts can enable micro-payments for services rendered by IoT devices or those monitored by sensors. The security concerns that the IoT raises are also important features of blockchain data management. Alternative versions of blockchain applications such as Tangle are being developed to bring the cloud closer to the devices powering the IoT. New business models are utilizing smart contracts in the context of micro-grids and solar power to enable P2P sharing of energy and payment systems.
More authentic sharing economies may emerge at the nexus of blockchain and insurance. If efficiencies can be realized to authenticate users and incidents, these may enable new forms of insurance for users of AirBnB as one example, but entirely new forms of insurance that involve crowdfunding and matching funding with needs much in the way that Uber and AirBnB do with taxis and apartments. We are also beginning to see microloans of insurance. The authentication and provenance functionalities of blockchain will have robust use cases in mitigating insurance fraud. In healthcare alone Medicare fraud is a major source of lost revenue for the public sector and source of waste.
GigaOm is conducting original research into this rapidly changing space and are looking for companies to work collaboratively on this syndicated report with us that explores the innovative use cases of blockchain. If your company has a strong interest in this work and would like to share your insights or actual applications we would be happy to discuss collaboration in the coming weeks.
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