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8/14/2018
1
Blockchain: The Foundational
Technology Behind Cryptocurrencies
Healthcare Financial Management Association Conference
Friday, August 23rd , 2018
Dr. Zach SteelmanAssistant Professor
Information Systems
Department
Blockchain Hype• Significant amounts of public investments in blockchain technologies
– Cryptocurrencies (e.g. Bitcoin, Ethereum)
– $26 Billion in April 2017
– $800 Billion in December 2017
– $330 Billion in April 2018
– $214 Billion in August 2018
• Blockchain was the most searched term on Gartner.com for 2017.
• 25% of CEOs see blockchain as “major” and “transformational”.
• 85% of projects with “blockchain” in the title will deliver value without actually using a blockchain.
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But what is blockchain?...• Blockchain is an evolution of database technologies.
• Blockchains are distributed ledgers of time-stamped
transactions backed by cryptography and consensus
mechanisms to validate and permanently store
transactions in a peer-to-peer network.
How about we compare to existing IT systems…
AUDITOR
AUTO DISMANTLERLEASING CO.DEALERMANUFACTURER
• Multiple versions of the data.
• Lack of transparency through
network.
• Duplicated efforts of reconciling.
• Potential for fraud and delayed
response to partners.
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Now with a blockchain…
AUDITOR
AUTO DISMANTLER
LEASING CO.
DEALERMANUFACTURER
• Peer-to-Peer Network
• All participants share
information directly.
• Distributed Ledger
• Shared ledger of all transactions
• Cryptographic Hashing
• Automated record reconciliation
• Consensus Mechanisms
• Single version of the truth
Consensus Validation and Storage• Each peer stores a copy of all transactions.
• All transactions are sent to each peer in the
network.
• All new transactions are combined with prior
transactions, hashed, and compared with
other peers.
• If any peer attempts to change prior
transactions, the hashed values do not match
and all peers reject the changes.
• Consistent, distributed, single version of the
“truth”.
Hash
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FU294-20-38DFK-2893
Hash
DKDU739472048FJKSL
FU294-20-38DFK-2893
Hash
DKDU739472048FJKSL
FU294-20-38DFK-2893
Hash
DKDU739472048FJKSL
FU294-20-38DFK-2893
New Hash
346G739472048FJKSLF
U294-20-497864-JFDW
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How exactly does it remove third parties?
• Cryptography and consensus mechanisms to automate record
validation and reconciliation.
• Smart contracts are pre-defined set of rules to a transaction
that automatically executes on the blockchain network.
• Smart contracts can eliminate the need for trusted third
parties to initiate and validate the rules of a transaction.
The Messy Music Industry
MUSICIANS MANAGERS MUSIC LABEL RETAILERS CUSTOMER
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The Next Wave of the Music Industry
MUSICIANS
MANAGERSCUSTOMER
MUSIC LABEL
RETAILER
DEVELOPED
BLOCKCHAIN
SYSTEMS
10%
90%
The smart contract
executes instant micro-
payments for each song
The Distributed Music Industry
MUSICIANS
MANAGERS
CUSTOMER
DISTRIBUTED
BLOCKCHAIN
MUSIC
SERVICE
10%
90%
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Cryptocurrencies and Blockchain• Cryptocurrencies (e.g., Bitcoin, Ethereum, etc.) are digital
representations of assets stored on a distributed ledger that can be instantly transferred, validated, and audited on a blockchain.– A digital record of ownership that can be 100% verified
• Monetary focus – Bitcoin, Ripple, Tether
• Application focus – Ethereum, EOS
• Utility or Service focus – Dentacoin, Medishares
• But what are some specific use-cases when we might use these…
https://i.redd.it/mqso53gfwhvy.png
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Leading Healthcare Use-Cases
• Patient health data exchange
• Clinical trials and mass population research
• Insurance claims, billing, and adjustment
• Drug supply and traceability
• Provider licensing and credentialing
Healthcare Blockchain Projects
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Healthcare Blockchain Projects
Blockchain Opportunities and Issues
• Technology poised to restructure, reallocate, and revolutionize data governance and validity.
• Only the beginning of the blockchain revolution and the next “killer app” hasn’t been created yet.
• Technology that embeds trust into transactions by ensuring agreed-upon rules are executed without bias or fraud.
• Distributed, global nature of blockchain technologies provide economies of scale by reaching global industries previously unavailable.
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Blockchain Opportunities and Issues
• Emerging technology with limited production-ready solutions.
• High market volatility for all cryptocurrencies used as payment, utility, or service.
• Significant data privacy concerns to address.
• Unclear and inconsistent government regulations globally.
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Market Volatility• Cryptocurrencies are an unregulated and HIGHLY volatile market.
• 1800+ actively traded cryptocurrencies on the market, each with varying goals, designs, and stability.
• Coins can have billions of dollars of valuation wiped off the market in short time periods.
• Daily volatility is great for traders, a nightmare for organizational management and investment.
1.60
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Data Access and Security in Blockchains• Public blockchains (e.g., Bitcoin, Litecoin, Ethereum)
allow any individual to participate in the network as well as view the record of all transactions ever made.
• Permissioned blockchains (e.g., Hyperledger, Quorum) require membership in the network and have strict controls to data privacy.
• Why does this matter?...
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Data Privacy and Psuedonymity
• Would you allow
everyone on the
planet to see
your bank
account
transactions?
Data Privacy and Psuedonymity
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Data Privacy and Psuedonymity• “Take your name off a lifetime’s worth of medical records, and
there’s probably still enough to identify you.“ – Jayce Wagner, DigitalTrends
• The amount of data stored about individuals has grown exponentially each year in all areas of business creating a “digital fingerprint” of individuals.
• With this data shared globally in a distributed system, the security concerns, privacy concerns, and traceability concerns expand.
Data Privacy and Psuedonymity• Existing solution is to use private/permissioned blockchains to share
information and have it controlled by a consortium or network.– Requires all “members” of network to agree on processes, data structures, and
governance.
– Retains tight access control on who can see what data with focus on benefits for organizations not individual patients.
– Slow to innovate due to only members or supporting vendor to drive new development and implementations.
• Public blockchains (e.g. Ethereum) forgo some privacy concerns to allow for faster innovation, open markets, and individual-focused applications.– These will not be used in isolation but share data back and forth between
organizational blockchain networks while retaining tight control and access to data that the patient allows to be shared.
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Your Healthcare Use-cases• What areas do you see as opportunities for
blockchain and cryptocurrency solutions?
• Do you have any on-going use-cases?
• Does your organization have interest in accepting cryptocurrencies for services? Why?
University of Arkansas Support• Teaching – providing quality education around the business
opportunities and issues of blockchain across a variety of fields.
• Research – providing leading-edge insights into how successful organizations are managing these blockchain issues.
• Service – providing local organizations with training, support, and innovation through collaborations with our faculty and students to drive blockchain innovation.
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How are we ramping up blockchain knowledge?• 2017 University of Arkansas Blockchain Hackathon
– 2018 Hackathon scheduled for September 28th and 29th in Fayetteville, AR
– Contact me if your company is interested in participating
• 2017 Walton College Blockchain Conference– 2018 Conference scheduled for March 29th, 2019
• Multiple Information Systems Courses– Undergraduate Major and Minor (for Finance, Accounting, Supply-chain, and others)
– Graduate Blockchain Certificate (1 year program)
– Graduate Masters with emphasis on Enterprise Systems (1 or 2 year program)
• Online Blockchain Training Modules – Coming Soon
2017 University of Arkansas Blockchain Hackathon
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Blockchain Hackathon Winning Team
Video Link
Blockchain Conference 2018
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Blockchain Center of Excellence• Mission:
– To develop and establish research partnerships by conducting collaborative industry-university research
– Promote and enable dissemination of knowledge about blockchains
– Accelerate industry adoption of blockchain technology
• Advisory Council: ArcBest, IBM, JB Hunt, Tyson, Walmart– Additional positions available for interested organizations
• Grand Opening Announcement: https://youtu.be/UKFdHvBhd4A
• www.blockchain.uark.edu – Stay up to date with our events and research!
A few books to change your perspective…
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Questions or Comments?
Thank you, and please email
me if you would like to meet
again and talk further about
your own projects.
