How Blockchain Technology Works


The blockchain is a distributed ledger, a network of data records that are replicated and geographically disbursed at “nodes,” or physical data servers, to ensure permanence and reliability. When a transaction occurs between two parties, the details of that transaction are securely encrypted and packaged into a “block.” Participants use complex cryptographic methods to digitally sign the transaction to ensure its truthfulness, and the block is added to the copy of the ledger stored at the nearest node. Various consensus algorithms are used to guarantee this change is accepted across the nodes in the network. Users can access the blockchain through specialized software that decrypts and delivers the information that they can access.

Today, medical records are stored on a growing number of electronic health record systems that exist primarily to record medical data for the purposes of doctors and insurance companies. These systems are often incompatible and delivering this data to the appropriate parties is not simple. Blockchain easily solves this problem by storing the data in a decentralized manner, and data exchange is simplified to a blockchain transaction.


The blockchain can also give patients total control over their health information. The distributed nature of the technology prevents a central authority from having dominion over the data, preventing large companies from leveraging that data for profit like Facebook or Google. In fact, there are several medical blockchain concepts, such as Linnia, that offers patients the opportunity to incentivize sharing their medical history to researchers or drug companies. Ultimately, patients will be the final authority over their medical history and will be able to transfer that information between providers and insurance companies with minimum resistance and complete security.


Finally, the ability to maintain a longitudinal health record for individuals will provide a better understanding of personal and global health. People will be able to track the effects of genetic, lifestyle, or any other factors that pertain to their health and can make more informed choices for themselves. This data can also be used anonymously to inform medical models and machine learning algorithms designed to prevent disease and improve fitness in various populations.


Smart contracts are segments of self-executing code that verify that some condition has been met before running. Ethereum is a platform built to facilitate the use of smart contracts, which they explain as “applications that run exactly as programmed without any possibility of downtime, censorship, fraud or third-party interference.” The blockchain that this platform is built on guarantees these claims. Smart contracts will allow medical data stored on a blockchain to be handled securely, so software developers will be able to develop applications that utilize this sensitive information with privacy and truthfulness. Decentralized data storage technologies, like Storj, can be used to place the medical data on the Ethereum network and in the complete control of patients. When a doctor sends a prescription request, the patient and doctor can both attest to it so that the pharmacist can receive it instantaneously. Refills will then be much simpler for everyone involved and there will be almost no downtime where patients will be without life-saving medication. This is just one application of a very exciting technology, and you can look forward to further exploration in future articles.


What other industries do you think blockchain would be useful for? Contact us at, we’re interested to know what you think!

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