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Does Cryptocurrency Have a Future in Healthcare? – HIStalk

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Does Cryptocurrency Have a Future in Healthcare?
By Curtis Bauer

Curtis Bauer is chief product officer of Sphere of Nashville, TN.

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Cryptocurrency seems to have found itself used in some capacity in just about every industry. Well, every industry except healthcare.

Healthcare has been hesitant to adopt cryptocurrency, such as the well-known bitcoin, primarily because of cryptocurrency’s various nuances that are not inherent with more traditional forms of electronic payments. Those nuances include volatility, lack of consumer demand, increasing government regulation, and most importantly, challenges with reconciliation.

To understand cryptocurrency and its future in healthcare, you must first understand the underlying technology. Cryptocurrency is built on what is known as blockchain technology. Blockchain can be difficult to understand, in part because blockchain is not a plug-and-play technology, a silver bullet standalone technology solution, or an app that can be easily installed.

Blockchain is a decentralized, distributed, peer-to-peer network. As opposed to a system in which applications are controlled by one entity, a blockchain network enables control to be shared across a group of decentralized computers and networks.

Blockchain is built on distributed ledger technology, which creates a record of transactions over time while allowing for tracking and analysis, documenting the transfer of ownership, and ultimately serving as a means for proving ownership. The advantages of blockchain include the elimination of a need for third-party intermediaries to verify transactions and a high level of security.

As it relates to healthcare, although there are significant challenges that need to be overcome before cryptocurrency will ever become mainstream, there is a strong likelihood that the underlying blockchain technology will become a staple in the world of payments and other business segments that have a need for authenticating transactions and minimizing the risk for fraud.

Blockchain is changing the world in several ways, as there are 300 million estimated global cryptocurrency users, according to a report from the US Department of Health and Human Services’ Office of Information Security. Consider bitcoin, which is itself just one of thousands of cryptocurrencies in existence. Approximately 17% of the US adult population owns bitcoin. It has a global market cap of $775 billion. It is accepted by more than 15,000 businesses for payment globally.  Crypto-economics, which is a field of economics based on blockchain technologies, is now a recognized academic field. Non-fungible tokens, which are also built on blockchain, are selling for millions of dollars.

Yet if blockchain and cryptocurrency are so innovative, exciting, and cutting-edge, then why have they been so slow to penetrate the healthcare market? There are several reasons, and they begin with the extreme volatility of cryptocurrency.

The value of cryptocurrency fluctuates wildly in short periods of time, sometimes by the minute. In general, cryptocurrency lacks the stability of traditional government-issued currencies, and that is unlikely to change any time soon.

Similarly, given cryptocurrency’s extreme volatility, exchange rates with other types of currency are constantly in flux. For example, between the time a transaction is agreed upon and the buyer obtains the product, the cryptocurrency-to-dollar exchange rate may have substantially changed.

The next problem is regulation. The federal government views cryptocurrency not as legal tender, but more like a piece of property or even gold from a tax perspective. Every time cryptocurrency is bought or sold, it must be reported to the Internal Revenue Service, so attempting to use cryptocurrency similar to cash or credit cards becomes a tax and accounting nightmare. Healthcare providers who begin to accept cryptocurrency would be subject to the same accounting and income tax implications when they move to convert or exchange the cryptocurrency back into fiat money or government-issued money that is not backed by a physical commodity, such as gold or silver.

Finally, there is the Catch-22 situation of consumer and merchant demand when it comes to cryptocurrency. Consumers are reluctant to embrace it because merchants don’t accept it, and merchants are hesitant to devote time to learning how to accept it because so few consumers use it.

The credit card is likely to remain king well into the future for healthcare transactions, making cryptocurrency unlikely to make much of an impact on healthcare any time soon, and possibly ever. But the blockchain technology that undergirds cryptocurrency is another story. Due to the premium that the technology places on security and transparency, there are two notable use cases for blockchain in healthcare.

  • Patient record-sharing. The healthcare industry has traditionally faced substantial barriers in ensuring patient access to all their health records across all service providers in order to have a complete view of medical histories, while ensuring their records are secure. However, blockchain-based medical record systems can be linked into existing medical record software and act as an overarching, single view of a patient’s record without placing patient data on the blockchain. This approach provides patients with a comprehensive, single source for accurate medical records.
  • Supply chain transparency. Blockchain is ideal for enhancing the transparency of the healthcare supply chain, particularly for pharmaceuticals. To combat prescription counterfeiting, the industry must be able to track each package’s end-to-end movement from the point of origin, including manufacturers, wholesale, and transportation. Blockchain enables stakeholders throughout the prescription drug supply chain to verify the authenticity of medicines, expiry dates, and other important information.

For healthcare transactions, the credit card is likely to remain king for some time. In that regard, one concrete step providers can take now is to steal a page from retail and focus on minimizing shopping cart abandonment. In other words, providers must ensure a convenient and easy buying experience that enables patients to quickly submit payment. To this end, providers should store payment information electronically for patients, so payment is fast and seamless when they log into patient portals and practice websites.

Though cryptocurrency will likely continue to grow in popularity across many sectors, it’s unlikely that healthcare will embrace it as a mainstream payment option any time soon.

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