Note that an earlier version of this piece was published in 2019. The version below has been updated with new data since 2019.

In 2019, I once and forever declared that the tokens—as currently imagined by, at the time, the 143 healthcare ICOs identified by Vince Kuraitis—were useless in enhancing patient engagement or modifying patient behavior. I stand by this statement and will go further to say that the Ethereum-based health care blockchain ecosystem as imagined by Consensys, Equideum Health, and others is, at best, an impossibility, and at worst, has been a colossal waste of resources.

Fundamentally, blockchain tokens are a bad business model for core health care interactions.

This statement presents a problem, perhaps, for Satoshi purists, but it is a fact nonetheless. The alignment of incentives for medical-related transactions do not fit into the “miners” model established by Satoshi Nakamoto in Bitcoin: A Peer-to-Peer Electronic Cash System. While the ecosystem has produced an incredible amount of creativity surrounding incentives and “re-imagining” of health care delivery in a blockchain-enabled world, the fact is that most of these projects have failed gloriously in delivering implementation of systems used by real world patients.

There is good news on the horizon, though, if we look a bit beneath the surface. First and foremost, we have learned that transparency through a decentralized ledger model may be a good thing. Furthermore, emerging models for blockchain implementation that do not rely on computational proof of work, or that go beyond cryptocurrency-based tokens, have the potential to address many health care sector challenges as imagined in recent years, particularly as we better understand the value of health care data and how we can use these new technologies to harness it. But it won’t happen via speculative crypto tokens, ICOs, or NFTs.

Patientory was the first health care specific ICO focused on electronic medical records (EMR); it raised $7.2 million in May 2017 and was valued, at the time, at over $40M. Today, PTOY, the Patientory token, is worth 1.4 cents and the valuation of the company is far less than $1M. Many people look at these types of valuations from an investor point of view and think about the dollars lost, but imagine if these tokens were distributed widely among a patient population performing tasks in accordance with the Patientory Whitepaper. What would patients think? Do we want doctors to provide “financial advice” to their patients about tokens? Would the loss in token value adversely impact patient access or patient care? Have we learned anything from the FTX debacle?

Another commonly cited tenet of the health care token economy has been that somehow, tokens will enable patients to sell their own medical data. While the underlying theory here is not wildly off base, the implementations that attempt to link medical data transactions to a crypto token have been, and the understanding of health data value has been horrendously lacking among those who have attempted to implement. What is a reasonable valuation for any particular subset of health data? Clearly, any individual patient believes that their medical record is extremely valuable, but the medical token markets and the market rates for health data on the dark web have varied wildly. It is hard to peg a value for a specific patient record, as demonstrated by Experian’s $1 - $1000 valuations of medical records sold on the dark web.

As the Experian graphic demonstrates, even criminals have a hard time placing a price on this type of data, even when it includes personal financial information that could be more easily exploited. An alternative, non-criminal, well-meaning and business-focused scenario was presented in a Wired article authored by Gregory Barber from December 2018. Mr. Barber decided to sell his medical record data for cryptocurrency tokens. The bottom line: Barber received the equivalent of 0.3 cents in 2018 money for all of his medical record data.

Beyond the blockchain world, life sciences executives look at their data spends (millions of dollars each year) and the valuations of health data aggregation companies. The market capitalization and revenues of United Health Care subsidiary, Optum, present one example. In 2018, Optum generated about $100 billion in revenues derived from 92 million patients served. A quick “back of the envelope” analysis prices the value of a single patient record at approximately $1000 per year.

Another potential analysis of the value of medical data to life sciences companies is derived through the value of a patient record to a pharmaceutical company for a clinical trial recruitment campaign. In the pharma case, the value of a single patient participating in a clinical trial can vary widely. In fact, some very active clinical trial participants claim to receive as much as $40,000 per year, others receive considerably less, such as: $50 for going through the screening process $500-$700 for some three-day trials An antidepressant trial paid participants around $2,000 per week Participants in a study of malaria vaccines received between $2,000 to $4,000

The value of medical record data, in regular old fiat currency that is used by health care companies today, is all over the place, and is even harder to price across different perspectives and business rationale. In fact, in the case of 23andMe, millions of people have given up their data at no charge and allowed 23andMe to monetize their most personal, impossible-to-anonymize genomic information without regard for whether or not an insurance company, let alone a malicious actor or an authoritarian government, might buy up all of that data, about millions of people (and tangentially millions more of their close blood relatives), at a later date. Yes, 23andMe, and related genomic and molecular sequencing companies across the genetics, molecular diagnostics, and similar fields have created million-to-billion dollar businesses by harvesting data from patients (data that is literally created by patients’ bodies and is the most personal and identifiable data in existence) and marketing this data to biopharmaceutical companies while purporting to maintain privacy. What is the value of that data, and why is it accruing to these companies, and not to the patients?

I worked on a project over the past few years that saved patients hundreds, and in many cases thousands, of dollars on medical bills. We spent a significant time analyzing the potential of incorporating a blockchain token into this use case. It became 100% evident to us that the value of a patient saving significant, real world money on their bills far outweighed any perceived value (or pegged-to-exchange value) of a cryptocurrency token.

Looking back on the graveyard of health care ICOs, whether truly dead or in a half-dead “zombie” state, and what I wrote in 2019, I am actually still a believer in the utility of distributed technologies and data economies in health care. Maybe in 2019 we just didn’t have the right tools or know how to implement them to make the changes we imagined. Although there’s a lot of partnership activity in the Ethereum health space, the bottom line is that no one is paying anyone for applications based on Ethereum.

Back then, I proposed that to make a real market for health care tokens of any stripe, we needed to have a serious rethink about how this would work, and also a bulletproof use case that likely taps into secondary data silos and reduction of health care inefficiencies rather than trying to blockchain-ize primary patient-provider medical interactions. As I said before: We have to stop trying to force these round tokens into the square hole of health care. Sorry Ethereum, but the blockchains of yesteryear won’t be the ones to solve this problem.

Edward Bukstel, CEO Giupedi, Inc.