Headline: How are NFTs used in healthcare?

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Not too long ago, I found myself in the hospital with pneumonia.   While there, they had me constantly hooked up to a 12-lead EKG and all manner of other machinery.   Mainly for this reason, I was interested to read that they are now using NFTs in the healthcare area.  I thought this was worth a deeper dive, so, here it is.

Basic Training

Many might profitably ask, “What is an NFT?”  This stands for “non-fungible token” but that’s not too much help.  Have you ever purchased a gold or silver coin?  Probably commemorative of some occasion?   I have one of the Wright Bothers flying their “kite” in South Carolina, and in case you doubted it was silver, it came with a Certificate of Authenticity.  The NFT is like a digital representation of this certificate, along with some limited rights attached.   Given this understanding, I was curious what it might have to do with healthcare.

Can you provide some examples of how NFTs are used?

In one example, each person who donates blood gets assigned an NFT that represents them.  This is important because with this NFT applied, that blood can be tracked from donor to hospital to done.  So, if there is a problem found later with that blood, the people affected can be easily tracked down and consulted, and the damage  controlled.   This is sometimes called tokenized blood.   Further, a digital “twin” to an organ could be created, leading to less rejection and a much greater sense of safety.  

Both of these foregoing examples are pretty straightforward as positive.  The widespread use of NFTs is allowing patients to monetize their own health data.   Each year, there are $1.2 Billion USD of clinical documents produced, and 80% is still vulnerable to misuse and theft.  This is a great opportunity for drug companies AND patients because it represents a fantastic pool of trackable research subjects (AI is in heavy use here), and it could be easily used as an income stream for the patients, as they could see where their data went, and demand royalties at the appropriate institutions.  Clearly, that information is valuable. “In the era of big data, health information is its own currency; it has become commodified and profitable,” says Dr. Amy McGuire.

It has also been suggested that NFTs could make it more likely that people share lifesaving research.   These days, when people publish their work, they really give up a lot of control over it.  If an NFT could be applied to this research, ownership could be easily demonstrated, and people might be more likely to share research that could be used to save or extend lives.

It appears that the applications could be legion.

Not all people feel positively about NFTs in healthcare.

NFTs can be vulnerable to data security issues and disputes over intellectual property rights.  What if somebody claims that the incorrect NFT was paired with some blood donation?   There might be so much faith, that the sample is not appropriately tested.  Further, we mentioned in the beginning that the NFT was a Certificate of Authenticity.   This means that certain rights attach, and yet, some don’t.  The particularity of which rights attach is something that will, no doubt, be litigated.

And, they’re right, there are challenges using NFTs in healthcare.

The smart contracts related to Ethereum have to be carefully engineered to be interoperable from blockchain to blockchain and work in other systems.   To mitigate this risk, each NFT (and an NFT is at root, just a smart contract) needs to be tested within multiple environments.  Constant auditing of results is also necessary.

There are also privacy concerns.  The smart contracts aren’t always compliant with HIPAA or the E.U. legislation, GDPR.    Vastly oversimplifying, GDPR encodes a “right to be forgotten,” and these smart contracts are on the blockchain, so, they are indelible.   It is still unclear how the smart contracts should be written to accommodate the GDPR.

The final problem facing NFTs in healthcare is a human resources problem.  Frankly, experts are very thin on the ground.   As a result,  there is little to no knowledge transfer to the people who would have to run this program.  The fix will likely be provided by the market.   As NFTs become central to healthcare, there will be firms formed that will specialize in setting up workshops and implementing pilot programs.

The Verdict

I think NFTs within the Healthcare industry is interesting.   There could be many benefits, and most of the problems could be mitigated.     As of right now, I think it’s still a bit early.  But, I think it’s nearly inevitable that this is where it’s going.  The potential benefits are just too much to pass up.

REFERENCES

Tokenized Blood? How NFTs Are Transforming Healthcare (forbes.com)

NFTs in healthcare: Is it a hype or hope? | Netscribes

NFTs could revolutionize healthcare, bioethicists say (fastcompany.com)

NFT in Healthcare: Know Its 8 Game-changing Applications (thescientifictriangle.com)

 Editor’s Note: Please note that the information contained herein is meant only for general education: This should not be construed as Tax Advice.   Personal attributes could make a material difference in the advice given, so, before taking action, please consult your tax advisor or CPA.