Blockchain Assignment Type 1
Blockchain Assignment Type 1
While there are differences, oftentimes the terms blockchain and DLT are used
interchangeably, especially when discussing the business value of the solutions.
If a bad actor were to change the content of a block, the block’s hash would change,
which would then break its connection to the subsequent block. This would require
the bad actor to then re-hash the next block, and all subsequent blocks in order to
cover their tracks. However, since there are multiple copies of the ledger, the bad
actor would have to simultaneously change every version of the ledger at each
location, which is practically impossible especially as networks grow large and risk of
collusion becomes negligible.
To correct or remove data from the chain, one may append a new record with
corrected data that supersedes the original, or one may append a record that marks
a previous record as deleted. However, the original records added earlier remain as
is. This is an intentional characteristic that enables verification by all parties in the
consortium and helps to build trust.
As this technology is not a panacea for data quality and accuracy, we recommend
reviewing data storage considerations for an overview of what to store on-chain.
A Decentralized Solution
A Focus on Transactions
The technology holds significant promise as a solution for a number of use cases in
various industries, but as with any emerging technology, it still has its drawbacks. It’s
important to weigh both strengths and vulnerabilities to determine suitability for each
use case.
The primary benefit of the technology is its ability to provide a single source of truth
for those who participate in the network. Since all nodes must reach consensus, this
ensures that all participants are in agreement about the nature of the data contained
in the network. Its ability to settle disputes and provide a ledger of all activity on the
network gives it a unique transparency that eliminates the need for middlemen.
Its transparency and immutability also makes it ideal for industries that have regular
audits of their data.
Lack of Privacy
Blockchains, especially those available publicly, are not ideal for storing private
information due to the transparency that they provide. For the use of blockchain in
healthcare, privacy considerations for protected health information (PHI) are critical
when considering the technology for certain transactions.
Security Vulnerabilities
The technology provides resilience to certain types of attacks but are by no means
entirely secure. Since they are essentially just code, they are still susceptible to zero
day attacks and technical bugs. Also, the technology is almost always accessed by
people, making it susceptible to one of the greatest risks in information technology,
social engineering. Due to this, the technology needs just as much scrutiny towards
information security as any other network or piece of software, especially for
blockchain in healthcare.
Blockchain Components
Blockchain is a type of DLT. DLT is a decentralized data structure where the data
are distributed across all computers or nodes within a network and every node in the
network stores a copy of the ledger. There is no central administration of the data
and the data are agreed upon by consensus by all nodes in the network.
DLT components include data models to describe what data are captured in the
ledger and agreement for protocols, such as a consensus protocol to determine how
transactions are accepted into the ledger.
Ledger
Similar to the common use of the word ledger, a ledger in the context of DLT is
simply an electronic record or collection of transactions.
An important distinction is that the ledger is not a collection of assets. While assets
are a part of transactions, the ledger records the transactions of those assets. For
example, bitcoin is a well-known asset and transactions involving bitcoin are
recorded using a distributed ledger.
A block is a set of transactions that are bundled together and then appended to a
chain of other blocks. Hence, the name blockchain. When the blocks are chained
together, each new block contains a reference to a unique identifier from the
previous block called a hash code or a cryptographic hash. Blocks can include one
or more transactions. In other words, it is possible to batch transactions into blocks,
and this is often done to improve the transaction throughput rate for a blockchain
platform with a given block throughput rate.
Merkle Root Hash: Merkle tree root hash for all of the transactions included in the
block
Nonce: Stands for “number only used once.” The nonce is the cryptographic
challenge number that nodes are solving for in order to propose a new block. It is a
number added to a hashed block, and, when rehashed, meets the difficulty level
restrictions. This number is related to consensus algorithms.
Cryptography
Message or Payload (also called plaintext): The actual data or payload within the
message that the sender and/or receiver wish to keep secret.
Secret Key: Data used for encrypting and decrypting the message. In DLT, reference
is often made to public and private keys.
Cipher (also called ciphertext): The output of the encryption function, which is the
encrypted version of the message that is sent between the sender and receiver.
The cryptographic algorithm uses the message and the key to create an encrypted
version of the message called the cipher. The cipher can be exchanged by the
sender and receiver. A key is then used to decrypt the cipher back into the original
message.
Public key cryptography is often used in DLT for data validation and user
authentication through digital signatures. User authentication is achieved through a
combination of a user’s public and private key through a Public Key Infrastructure
(PKI) framework. A public key represents the public identity of a user that can be
shared with others. The user also holds a private key stored in a wallet that stores
the user’s private credentials.
Mathematical algorithms generate the pairing of the private and public keys, and
these make it possible to encrypt and decrypt a message. In PKI, it is mathematically
improbable to calculate or derive a private key from a public key. The pairing of the
public and private key enables the authentication of a particular user or node. Public
and private keys can also be used in a way that preserves the anonymity of users.
Hash Functions
DLT uses a specific type of cryptography called cryptographic hashing. A hash code
is created by a mathematical function that takes a digital object and generates a
fixed 32-character size string of letters and numbers to represent it (e.g. a
transaction represented as
d7w0993waty9n33234qw949g02b9o34238878501032ff2si04d3d99sq93jzwa9).
Cryptographic hashing is used by DLT so that the data can be proved without
actually sharing the contents of the data. Each party can prove the data by matching
and validating that the calculated hash matches each other.
Hashes are used to maintain the immutable characteristic of blockchains. Since any
change to the original object will generate a new hash, changes are easily
detectable. For each block, a hash code is computed as a combination of the data in
the block plus the hash code of the previous block. In this way, hash codes are
chained. Hash codes are easy to compute and can be verified by all participants that
the data have not been altered. Any attempt to delete or alter the data on a block
renders the chain of hash codes invalid and easily detected by the participants.
Merkle Tree
Merkle trees are used to reduce the volume of data and enable efficient validation of
data on the blockchain. A Merkle root hash is stored in each block and created by
hashing transactional data that are included as part of the block.
In the diagram below, there are four transactions (Tx). Each of these transactions
are represented by a hash 1-4. Each pair of hashes are further hashed (Hash 12 and
Hash 34), which are finally represented in the parent block as the Merkle root hash.
The Merkle root hash is used so the validation of transactions is more efficient.
Rather than having to validate all of the data in a block, data for a single transaction
can be sent along with the relevant hash values. The validating node can calculate
the hash values for the given data and confirm that the transaction is valid without
needing all of the data in the block.
Zero-Knowledge Proof
Blockchain Networks
Peer-to-Peer Network
The “distributed” in DLT refers to the idea that it uses a peer-to-peer (P2P) network
structure. Compared to a central server network, nodes on a P2P network are
connected directly to each other rather than to a central server. There are no
intermediaries, such as a bank or clearinghouse, to process the transaction.
With P2P networks, since there is no central control, trust between nodes becomes
an issue. One solution that is widely used in applications to increase trust is the use
of a permissioned, private or consortium network, where only well-known and trusted
organizations are allowed to participate, and only their nodes are allowed to join the
network. In permissioned networks, participation is controlled by an authority who
provides a membership service for user authentication and identity management.
Beyond clear-cut private and public networks, some semi-private networks are
emerging with use cases leveraging elements of both public and private aspects.
Distributed Storage
A blockchain is essentially a type of data storage, but very different from a traditional
database that many of us are used to. The characteristics are quite different from the
well-known traditional, relational and noSQL databases. It is important to understand
these differences when considering blockchain in healthcare and if this technology is
appropriate for your use case.
The technology is designed to store transactions grouped into blocks that may then
be queried concerning the characteristics of those blocks and can be public or
private. For public, the database is read/append by anyone on the network, and
therefore uncontrolled. In contrast, if private, read and append capabilities are
controlled.
Data Sizes
The amount and types of data that can be practically stored on the blockchain are
determined by the particular solution. Data storage restrictions imposed by public
networks typically are enforced by technological or practical limitations or for
economic or ethical reasons. In private networks, these restrictions may not
necessarily exist. For example, it may not be economically feasible to store a large
data set on a public network. However, it is potentially feasible or desired using one
of the private, permissioned technologies. Performance, as well as privacy, security,
and compliance should be taken in to consideration in determining what data should
be stored. General guidance is to store only minimal but sufficient (for the use case)
data.
Off-chain storage refers to the storing of data off the blockchain, for example, in a
relational database. The on-chain data can store metadata about this off-chain data,
together with pointers to where the actual data resides, and hash codes that may be
used to verify the integrity of the off-chain data. The technology can also be used for
identify and access control, in other words as a mechanism to control access
privileges to this data stored off-chain.
Smart Contracts
While the technology was originally used to exclusively record transactions, it has
evolved to where it can now also enable the running of programs or functions, similar
to how users may run software on a computer. Smart contracts constitute self-
executable code on the network, triggered upon predefined conditions or actions.
Within the network, each node must execute the code in order to remain in sync with
the rest of the network. The role of a blockchain node is to maintain the consistency
and validity of the shared ledger.
Speed and Savings: Smart contracts can be executed faster and at lower cost without
the need to rely on brokers or intermediaries. They are automated, accurate and
save time and money.
Security and Trust: Smart contracts inherit the properties of residing on a blockchain.
Hence, they can be trusted given their immutable nature, which eliminates the
possibility of any alteration to the contract. The smart contract is transparent and
accessible within the blockchain, while also offering a reliable backup due to its
distributed storage.
Some U.S. states have legally recognized the use of smart contracts under specified
conditions; however, there is much work to be done to ensure both clarity of
enforcement and uniformity of definition. Since a smart contract is stored on chain, it
is automatically trackable, nearly immutable and distributed by nature, and holds
each party responsible for their role.
How mature is blockchain in healthcare and what are the barriers for adoption?
Currently, private networks are more mature than public networks for healthcare.
Certain use cases are seeing traction with adoption. Most barriers are not related to
the technology, but rather relate to:
Business
Governance
For example, the technology may provide traditionally adversarial organizations the
opportunity to work together to create new business opportunities within a
consortium. This may create challenges in aligning culture and establishing
governance across these organizations. From a regulatory standpoint, antitrust
considerations and cross-border collaborations face compliance challenges because
of differing regulatory environments.
Some current solutions simplify the supply chain and administrative processes in
healthcare, such as streamlining prior authorization, which may decrease costs.
Ultimately, organizations can expect some added technology costs that are prevalent
in the adoption of any new technology or solution, including implementing workforce
training and change management requirements.
The type of data stored on-chain is dependent on the needs of the specific use case.
However, for blockchain in healthcare, we generally suggest implementers adopt a
minimal but sufficient approach to determine what is included on-chain.
Organizations should strongly consider the ramifications of storing any PII or PHI
when considering the data for each use case. Examples of identifiable information to
keep off-chain also include data outlined in the Payment Card Industry and school
health data regulated by the Family Education Rights and Privacy Act.
Keep in mind its immutable nature when considering data stored on-chain. Storage
may also be a consideration when determining data included on-chain, especially if
the data files are large or change often. Some states also include regulatory
requirements for medical record storage that can influence decisions regarding on-
chain data.
In many scenarios, the blockchain includes data that serve as identification for
access permissions and pointers to data off-chain. This means that the majority of
data that is stored on-chain consist of metadata, information about the data records
together with pointers and a hash to verify integrity. To be useful, solutions must use
identifiers for people, but these may be generated IDs used only on-chain and
useless off-chain, instead of sensitive PII elements such as name, Social Security
number, date of birth, and so forth.
While your use case will determine what information is needed to be stored on and
off-chain, these guidelines can help inform a minimal but sufficient approach for your
needs.
On-Chain:
High Level Data: The ideal transaction typically takes the form of higher level data,
metadata, transactional information, audit records, pointers and hash codes.
Off-Chain:
Large Data Files: The architecture of the distributed ledger should keep large volumes
of clinical information off-chain and in secure access-controlled enterprise systems
where they exist today, and reference these data records as required from the
blockchain with pointers and hash codes that can be used to verify their integrity.
PHI and PII: This information should be stored in secure access-controlled enterprise
systems. Referencing these data records as required from the blockchain would be
an acceptable way to get the benefit of the technology while maintaining HIPAA and
other privacy standards.
Utilization of existing data stores allows organizations to leverage their existing data
storage investment while capitalizing on the advantages of blockchain for
decentralized data exchange.
For example, metadata and pointers are used to search and discover data records of
interest, locate off-chain records, and verify the integrity of these records using
hashes stored on-chain. Systems using the technology can leverage existing
standards to facilitate interoperable exchange between systems. Smart contracts also
provide solutions to facilitate data exchange since they provide the executable logic
for validation and processing of data records as required to support data
exchange. Zero-knowledge proofs can also be leveraged together with blockchains to
exchange information in a manner that preserves privacy.
What are some common considerations when integrating this technology into
existing systems?
Initially, interface engines and connectors are likely needed to provide input, output,
verification and validation of data between blockchain systems and the existing
systems of record; this is until future versions of applications are able to use
application programming interfaces (APIs) to interface directly. A robust patient
matching system and/or decentralized identification system for integration is
important to ensure validity of data. Furthermore, a relationship should be defined
between the data on the blockchain and the data that live within legacy systems that
may be linked.
For example, when used as a decentralized record location service, the technology
could enable patients’ access to their longitudinal record across providers and grant
access to appropriate parties. If patients want to have others verify and validate their
data to ensure provenance and accuracy, hashes should be able to provide this
capability.
Adopting Blockchain in Healthcare
Now that you have a basic understanding of the technology, it is essential to identify
real-world scenarios in healthcare where this technology may be relevant and
valuable. Organizations must consider existing problems or needs that the
technology may help address instead of looking to implement a solution without a
problem to solve.
When implementing this technology, organizations must be aware of and open to the
new organizational paradigms that accompany these solutions. Fundamental to
assessing this technology is understanding the paradigm shift to decentralized,
distributed solutions. Referred to as the new economy, this may not align with
existing business models, regulation at multiple levels of authority and multiple
locales, and technology infrastructure. Since the transition to any new paradigm will
be gradual as many stakeholders engage at different times and velocities,
blockchain will find application to existing business use cases and new opportunities
in parallel over time.