By Mark Wright, OD, FCOVD,
and Carole Burns, OD, FCOVD
March 20, 2019
Blockchain technology has applications that could benefit small businesses, such as independent optometric practices. Here are some of the ways this technology could impact your practice for the better.
First, we need to understand how blockchain works. This is the process.
One party initiates a transaction by creating a block. The block is verified by millions of computers distributed around the internet. The verified block is added to a chain stored on the internet. (Think of this like a spreadsheet that is duplicated thousands or even millions of times across a network of computers where the network is designed to regularly update the spreadsheet.)
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What is created is a unique, independently verifiable and unfalsifiable record. (Any attempt to falsify a record would mean that you would need to falsify the entire chain in thousands to millions of computers. From a practical standpoint, that is virtually impossible.)
Click HERE to watch a video that describes blockchain.
Here are some facts to know about blockchain:
• Blockchain was created by a group of people known by the pseudonym, Satoshi Nakamoto.
• Blockchain allows digital information to be distributed, but not copied.
• A blockchain is a time-stamped series of immutable records of data managed by a group of computers that are not owned by any single entity.
• Each block of data is secured and bound to every other block of data using cryptographic principles.
• The blockchain network has no central authority.
• The infrastructure has a cost, but there is no transaction cost.
• You can choose to have a transaction fee.
• Because there is no centralized version of the information, it’s virtually impossible for a hacker to corrupt the data.
• The information contained in the blockchain is open for everyone to see.
When you use blockchain, your identity is hidden utilizing complex cryptography. So, even though the blockchain is transparent, if you were to look up a transaction history you would not see “John sent a legal document to Karen.” Instead what you would see is: “1MF1bhsFLkBzzz9vpFYEmvwT2TbyCt7NZJ sent a legal document to 7SE1ftyH1bzx5913XcTAwWTrlh129.”
Here’s what an actual blockchain report looks like:
Blockchain was originally built for Bitcoin, but now has expanded to other uses. One of the most important uses is that blockchain can replace all processes and business models which rely on charging a fee for a transaction. Blockchain can also replace the need for matchmaking platforms. To put it in simpler terms, blockchain eliminates the middleman.
To give a practical application to what blockchain can do, consider Uber. Uber is threatened by blockchain. With blockchain the rider encodes the transactional information for a car ride including payment directly with the driver. With blockchain, there is no need for a matchmaking platform (i.e.: Uber) and there is no need to pay the middleman (i.e.: Uber) a fee. Now you understand Uber’s concern.
Another example would be e-books. Let’s use Amazon as an example. Currently, Amazon charges a fee and the credit card company also charges a fee when you purchase an e-book. With blockchain, a book would circulate in encoded form and the blockchain transaction would transfer all the money directly to the author and unlock the book. Both Amazon and the credit card company are no longer needed in the blockchain world for e-book transactions.
A third example would be banks. Blockchain has the potential to eliminate bank accounts and most services offered by banks when the advantages of a safe ledger without transaction fees is understood and implemented.
So, how will this affect our practices? In a blockchain world …
• Patients would pay the practice using blockchain.
• Practices would pay their lab bills and other expenses using blockchain.
• Doctors and patients would transmit reports and information securely using blockchain.
• Direct data commerce from blockchain would permit more types of trusted information to be obtained at a lower cost, which could then be used in targeted marketing.
• A blockchain could be used to track the movement of goods. Patients would know exactly where their glasses are in the process of being made and sent to your office.
• Blockchain gives a highly traceable accounting audit trail.
Blockchain is coming to your practice. It is not something in the distant future, it is being used today. Its use will expand, and it will eventually impact all of our practices.
What action should you take? At this stage, it is enough to start becoming familiar with blockchain and watching for reports of it in the news. When you have a few minutes, Google “blockchain.” When you talk to your vendors, ask them about blockchain. This is the time to learn about blockchain, so we are ready to take further action when it becomes more popular and comes to our practices.