To say that DeFi underwent a boom at the start of 2021 is technically accurate — but it doesn’t quite convey the scope. In 2019, the DeFi market encompassed $40 million. By the beginning of this year, the total value had spiked to over $40 billion. This niche market has proven its mettle and then some; it’s no stretch of the imagination to think its influence may reach into other industries and reDeFine how we engage with healthcare finance in the near future.
But before we launch into an examination of DeFi’s potential applications in the healthcare sector, it may be worthwhile to briefly reflect on what the technology is and why it rose to such prominence so quickly.
DeFi, or decentralized finance, is an umbrella term used to refer to disruptive financial applications based on the blockchain. DeFi apps (dapps) seek to cut out conventional, “centralized” banking intermediaries and facilitate more secure, accountable, and transparent interactions.
“DeFi is all about utilizing blockchain solutions to provide conventional financial services,” Konstantin Anissimov, the executive director for the bitcoin exchange CEX.IO, wrote for Finance Magnates. “This is done via smart contracts, without government or corporate control, and without the need for intermediaries, which significantly shorten the time it takes to conduct operations.”
“The idea here is that DeFi, with a proper governance approach, can make payments more transparent, democratizing access to global finance for everyone,” Anissimov explains.
But for all of its benefits, DeFi isn’t the most intuitive technology for ordinary consumers to approach, at least for now. Its adoption has mainly been confined to fintech enthusiasts, innovators, and corporate players.
The last is particularly notable — earlier this month, Fortune reported that major financial organizations like JPMorgan Chase, UBS, and Mastercard had contributed to a $65 million funding round for ConsenSys, a software development startup the constructs blockchain infrastructure for DeFi projects. For all that the DeFi industry isn’t immediately accessible to most laypeople, its potential to develop into a significant part of the global financial market.
But What Does DeFi Have to Do With Healthcare?
Right now, very little. However, DeFi’s engagement with healthcare is more of an eventuality than a possibility. As the sector develops and begins to intersect with other industries, it will almost inevitably be used to facilitate healthcare finance initiatives. Some conversation has already been had on the matter, with some suggestions that DeFi might pose a new means for smaller healthcare providers to access financing for expensive equipment.
As DeFi expert and entrepreneur Pradeep Goel wrote in an article for CryptoNews earlier this month:
“Similarly to many other industries, professional equipment financing is available in abundance for larger equipment manufacturers, often due to economies of scale, however the same opportunities are not afforded to small and medium enterprises (SMEs). This results in less and less SMEs participating in the market, reducing variety for customers and overall, debilitating the competition in the industry. Smaller manufacturers could offer revised financing options to their customers through decentralized finance, further lowering the end cost for customers and increasing the availability of access to affordable healthcare equipment to customers and indeed to healthcare facilities.”
However, equipment financing isn’t the only potential application Goel sees for DeFi in the healthcare space. In a different article, he also proposes that DeFi tools could facilitate global funding for everything from research to health investing. These suggestions are, of course, just that — suggestions. To date, few DeFi initiatives have involved or even tangentially intersected with the healthcare sector.
However, there are a few startups in the early stages of exploration.
Case Study: MedicalVeda
Founded in 2018, MedicalVeda is one of the first DeFi pioneers looking to break into the medical sector. The startup is based around the concept of tokenization — i.e., converting physical assets into blockchain-based tokens.
The startup hopes that patients and providers alike will use their token (MVEDA) to conduct global, secure, and transparent financial and data transactions. As company representatives recently wrote in a press release: “By applying DeFi based peer to peer lending, it not only enables patients who need capital for carrying out their medical procedures but also enables other medical practitioners to gain capital for their ventures.”
The company also positions its product as an answer to interoperable EHRs. “For clinical data, the MedicalVeda platform offers permissioned accessibility from all over the world, not only for medical practitioners belonging to any country or medical institutes but to the respective patient as well,” the startup’s representatives note.
Now, MedicalVeda is in the very early stages of its organizational evolution — it hasn’t even been around for three full years yet. It may pivot; it may fail. In a best-case scenario, it could even succeed. The truth is, we don’t know yet. But its presence in the market indicates DeFi products can become applicable in the healthcare sector.
Startups like MedicalVeda serve as the proverbial canary; their success or failure will reveal a great deal about consumer interest, DeFi viability, and the challenges inherent to introducing DeFi to the healthcare sector. A great deal remains to be seen, but one point is clear — DeFi is growing, and it will start intersecting with healthcare finance sooner rather than later.