At the Senior Entrepreneur meetup group on Wednesday 18th October, two guest speakers broke the topic of bitcoin down into layman’s language.
The guest speakers explained –
- How the current financial system works
- How blockchain and cryptocurrency will transform banking and
- How health industry will benefit from the implementation of blockchain technology
Modern banks are based on a middle-man structure. They ‘clip the ticket’ as money changes hands back and forth.
There are current 180 different currencies around the world. Each time money moves across international borders, a substantial fee is taken out by the bank or money changer.
Banks store money and data in a relatively out-dated manner – with single point records and little transparency.
Modern banks practices go back to early agricultural periods, when villages wanted to move beyond straight bartering systems. Money was the currency that allowed several trades to take place – animal skin to oil to grain to jewellery.
The village person in charge of managing these transaction was the early form of modern banks. They exchanged goods for promise notes (which is what bank notes are, the promise of goods to a certain worth). These transactions were carefully recorded in a paper record, or ledger.
In today’s global, fast moving and international world, the village based banking system is no longer appropriate.
‘Traditional banks don’t actually lend money, they lend out their credit. Technically, bank customers are an unsecured creditor.’
In contrast, bitcoin does not require a bank account. Transactions are anonymous.
There are no financial intermediaries (and therefore extremely low banking fees).
There is no centralised issuer that dictates the day to day value of bitcoin or interest rates (the way Reserve Banks currently do).
Bitcoin is freely accessible from anywhere in the world. All you need is a web browser and internet connection.
Many people in developing countries do not have bank accounts. They simply don’t have identification documentations or places to withdraw, store and deposit cash. Using cryptocurrency on mobile phones, enables otherwise to quickly buy and sell cheap goods for minimal fees.
‘In underbanked areas, cryptocurrency-based systems are already replacing traditional banking, overtaking it with lower fees, low-cost transfers via crypto, convenience stores that can serve as bank branches, an entirely app-based mobile system and the possibility of speculative trading in crypto.’
Cryptocurrency is growing in Africa
Blockchain is the technology that cryptocurrencies like bitcoin use. Blockchain technology can also be used for non currency based systems like record keeping.
The recording of transactions using blockchain (or leger) is completely transparent, and is done on multiple computers at the one time.
A blockchain is a continuously growing list of records, called blocks. These blocks are linked and secured using complex mathematics called cryptography. Each block typically contains a hash pointer as a link to a previous block, a timestamp and transaction data. By design, blockchains are inherently resistant to modification of the data.
The result is that blockchain is “an open, distributed ledger that can record transactions between two parties efficiently and in a verifiable and permanent way”.
Once recorded, the data in any given block cannot be altered retroactively without the alteration of all subsequent blocks, which requires collusion of the network majority.
Major points –
There are currently over 1,600 different crypto currencies registered. By market capitalization, Bitcoin is currently the largest blockchain network, followed by Ethereum, Ripple, Bitcoin Cash, Litecoin, and EOS.
In cryptocurrency networks, mining is a validation of transactions. It uses considerable computer power. Mining is intentionally designed to be resource-intensive and difficult so that the number of blocks found each day by miners remains steady. Individual blocks must contain a proof of work to be considered valid. This proof of work is verified by other Bitcoin nodes each time they receive a block.
A cryptocurrency exchange is an online platform where you can buy, sell and trade cryptocurrencies.
Government regulations and tax
Exchange fees from cryptocurrency to Australian dollar are approximately 2%. Exchange rates between different cryptocurrencies is negligible
Blockchain security methods include the use of public-key cryptography.
A public key (a long, random-looking string of numbers) is an address on the blockchain. Value tokens sent across the network are recorded as belonging to that address.
A private key is like a password that gives its owner access to their digital assets or the means to otherwise interact with the various capabilities that blockchains now support. Data stored on the blockchain is generally considered incorruptible.
Using an exchange for long-term storage is not recommended. This is due to the fact that the exchange controls the private key to your wallet, so you effectively don’t have total control of your funds.
And with exchanges regularly targeted by hackers, storing bitcoin or any other crypto on an exchange long-term is very risky.
A much safer option is to transfer your coins off the exchange and into a secure wallet that lets you control your private key.
And finally, three ways blockchain will transform healthcare –
- The Pharmaceutical industry
Return on Investment projections suggest a massive contraction of the pharmaceutical industry over the next 20 years. Counterfeit drugs currently cost an estimated $200 billion in losses annually. The development costs for each new drug that comes to market has risen to 2.5 billion.
Blockchain could cut rising costs by reducing counterfeits. It could also reduce developmental costs by making sensitive medical information widely available.
2. Medicare fraud
The USA lost over $30 million in 2016 alone.
The billing practices in healthcare are fragmented, disorganised and wasteful. Many studies in the USA and Australia suggest that one third of Western countries medical bills are being wasted on fraud, over servicing and unnecessary tests.
Blockchain would reduce administrative costs and make fraud virtually impossible.
3. Data security
Between 2015 and 2016, over 140 million medical records in the USA alone were hacked. With the rise of Internet of Things, these figures will rise, unless technology is changed.
Only blockchain has the architecture needed to keep health data private, while reaping the benefits of connected medical devices.
To illustrate the uses of blockchain in health technology, here is a list of twelve companies currently using this technology –
‘56% of healthcare executives expect to implement a commercial blockchain solution by 2020’.
This Is Why Blockchains Will Transform Healthcare
And why would we want to reform healthcare? Just another (brief) reminder:
~ Nearly half of clinical trials in the US are unreported
~ Up to 40% of healthcare provider data records are filled up with errors or misleading information
~ Healthcare data breaches in organizations are estimated to cost around $380 per record in the current times. This amount is expected to increase with the passing of time.
This Is Why Blockchains Will Transform Healthcare – Forbes 29th November 2017
Pharma’s broken business model: An industry on the brink of terminal decline – CB insights 28th November 2017
Blockchain – Wikipedia
Mining – Wikipedia
© Wikihospitals October 2018
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