Blockchain has been embraced by healthcare providers for nearly a decade, promising efficiency, transparency and security. However, Nigel Smart, Chief Academic Officer at Zama, warns that without privacy-preserving measures from the outset, the industry risks a dangerous false sense of security.
Like many sectors right now, healthcare has been quietly testing the waters with Blockchain – exploring its potential to streamline operations, enhance supply chain transparency and strengthen data security.
Although some consider Blockchain in healthcare a relatively new development – partly because mainstream adoption is still limited and partly because cryptocurrency dominates public conversations – it has, in fact, been explored for nearly a decade. Organisations were drawn early on to its tamper-resistant, decentralised nature.
In Estonia – often held up as a model for digital governance – Guardtime helped secure patient records using Blockchain to verify the integrity of healthcare data at a national scale, with the project beginning back in 2016.
Another significant example is the MediLedger Project, which launched a Blockchain pilot in 2019 to assist drug supply chain stakeholders in developing an interoperable Track & Trace System for US DSCSA regulations. The pilot highlighted several advantages for pharmaceutical logistics, including improved efficiency, enhanced security and greater transparency.
More recently, in 2023, US-based Avaneer Health announced a Blockchain infrastructure as the foundation for its decentralised network and platform. Its aim was to ‘reimagine healthcare administration and save billions of dollars each year’ by enabling secure, real-time data sharing for workflows such as revenue cycle management and insurance coverage.
While some of these pilots, research papers and consortiums have been in place for years, interest in Blockchain has only recently surged again. The push is being driven by increasing demand for data sharing, pressure to modernise legacy systems and rising concerns over Artificial Intelligence governance. The global Blockchain technology in healthcare market, valued at US$7.13 billion in 2023, is forecast to reach US$595.31 billion by 2032, expanding at an extraordinary CAGR of 63.5%.
Transparency versus privacy
Despite its promise, Blockchain presents limitations – particularly around privacy.
Blockchain’s transparency can in fact conflict with healthcare’s privacy requirements, particularly if sensitive patient data is not properly encrypted. While immutability prevents tampering, it also means that once data is entered on-chain it cannot be removed or hidden.
Blockchain cannot protect against human error, social engineering or unauthorised access, which remain leading causes of breaches in healthcare. Large-scale systems may encounter scalability issues that open fresh vulnerabilities. Entry points for data are also weak spots – if compromised, malicious or inaccurate data can be permanently embedded into the Blockchain.
Privacy-preserving technologies
Privacy-Enhancing Technologies (PETs) are central to bridging this gap. Tools such as encryption, Zero-Knowledge Proofs (ZKPs) and differential privacy, alongside strong access controls including multi-factor authentication and role-based access, should be part of any robust security strategy. PETs are equally relevant for Blockchain and traditional systems, ensuring that data remains safeguarded at every stage.
Hybrid Blockchain models represent one way forward. These store sensitive data off-chain while keeping verification records on-chain, reducing privacy risks while retaining Blockchain’s transparency benefits.
Another promising direction is combining Blockchain with Fully Homomorphic Encryption (FHE). Long described as the ‘holy grail’ of cryptography, FHE allows computations to be carried out directly on encrypted data. This provides end-to-end protection, making it theoretically possible to process medical records or clinical trial information without ever exposing raw data.
Currently, Blockchain and FHE can be used together in limited ways, such as securely storing encrypted metadata or handling access control audits. But as FHE becomes faster and more scalable, broader use cases could follow. These may include encrypted medical record sharing across institutions, privacy-preserving clinical research and secure global collaboration on sensitive datasets.
Avoiding complacency
Blockchain is not a ready-made privacy solution. It has significant potential, but without embedding advanced safeguards such as encryption and access controls, the industry risks overlooking critical vulnerabilities.
Healthcare data is among the most sensitive categories of personal information and public trust is fragile. If privacy is not prioritised, Blockchain could end up repeating the mistakes made by social media platforms and other digital innovations – released without sufficient safeguards, only to create fresh problems.
Looking forward
Blockchain is gaining traction in healthcare, with increasing recognition of its potential to improve efficiency, security and transparency. But as adoption accelerates, it must be accompanied by robust privacy-preserving technologies, hybrid approaches and emerging innovations such as FHE.
The message for healthcare leaders is clear: Blockchain should be deployed where it adds value, but it cannot be mistaken for a comprehensive privacy solution. Immutability does not equal confidentiality. Privacy must be embedded at the design stage – not treated as an afterthought.
By combining Blockchain with PETs and other advanced safeguards, the healthcare sector can unlock the benefits of decentralised technologies without jeopardising trust. The opportunity is real, but only if privacy is treated as a foundation, not an option.
