The US Department of Health and Human Services (HHS) is soliciting research papers related to blockchain applications in healthcare and health research.

According to a notice published in the Federal Register, HHS is seeking white papers that explore how the technology can be leveraged for healthcare purposes. The submission date is 29th July, with the winners set to be announced late next month.

The only stipulations, the notice states, is that papers shouldn’t be longer than 10 pages and that no more than three papers should be submitted by any one researcher or group.

Further, the department asks that any submission "educate its audience on the technology", explaining:

"The paper should discuss the cryptography and underlying fundamentals of blockchain technology, examine how the use of blockchain can advance industry interoperability needs expressed in the Nationwide Interoperability Roadmap, patient centered outcomes research (PCOR), precision medicine, and other health care delivery needs, as well as provide recommendations for blockchain’s implementation."

The Nationwide Interoperability Roadmap was published last fall as part of a bid to support greater interoperability between healthcare data networks in the US.

Winners will be invited to present their work at a “Blockchain and Healthcare Workshop” that will be co-hosted by the department’s Office of the National Coordinator for Health Information Technology and the National Institute of Standards and Technology (NIST).

Though the date was not listed, the notice states that winner presentations will take place near the end of September.

The solicitation represents the first time HHS has sought entries related to the technology. In the past, other parts of the US government like the Department of Homeland Security and the Department of Defense have actively looked into possible applications.

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HealthcareUS government

A recent report by management consultancy firm McKinsey & Company examines whether blockchain technology will have a positive or negative impact on the insurance industry.

The report, released earlier this month, noted that as many as 20 blockchain startups are focused on some aspect of the insurance market today.

McKinsey breaks down “the most promising insurance-related use cases” into three categories: enabling growth, increasing effectiveness, and reducing cost by automating key processes, all of which the report asserts could have a positive impact for insurance firms.

The report goes on to highlight potential threats, positing that network scalability, security, and a lack of industry standardization remain lingering issues.

The report concludes:

"Blockchain is a technology ready for exploration by insurers. But its exploitation is still a long way off. This is because blockchain is functioning as a distributed system and, thus, its value mostly depends on collaboration with competitors, suppliers, or others."

The full report can be found below:

Blockchain in Insurance — Opportunity or Threat

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InsuranceMcKinsey & Company

The Internet Watch Foundation (IWF) has announced a partnership with blockchain industry startup Elliptic aimed at fighting online child sex abuse.

With the news, the UK-based charity has provided a database of bitcoin addresses associated with sexual abuse content to the startup. Elliptic, in turn, will seek to use the information to "alert financial institutions and law enforcement" of any payments made in support of the illicit activity.

In statements, IWF CEO Susie Hargreaves said that the action follows what her organization believes is an increase in the use of bitcoin by criminals looking to disseminate child sexual abuse material online.

Elsewhere, consultant and former head of regional organized crime unit head Mark Birch sought to position the development as a positive for both bitcoin the digital currency, and the technology’s larger community.

Birch said:

"Elliptic and IWF’s partnership represents a major step forward in bitcoin’s evolution. Elliptic has demonstrated to banks, law enforcement and the public at large that they are taking meaningful steps to eliminate the illicit use of bitcoin."

The announcement is the latest for the blockchain startup following a $5m fundraising in March.

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CrimeElliptic

North Carolina Governor Pat McCrory signed 16 bills into law today, one of which was House Bill 289, which expands the state’s Money Transmitters Act to cover activities related to bitcoin and other blockchain-based digital currencies.

Introduced in 2015, the passage of the law represents the fruition of more than a year of engagement between members of the US blockchain and digital currency industry and local regulators. Though the bill has not been without criticism, in interviews with CoinDesk, prominent advocacy groups largely voiced support for the measure as a step forward for the domestic industry.

Perianne Boring, president of the Chamber of Digital Commerce (CDC), one of the strongest advocates for the bill, sought to position the law as one that had "made history" by providing an alternative, legislative-based model to industry-specific rule-making.

Boring told CoinDesk:

"The fact that this went through the legislative process is a big step forward, the bill also adds more clarity than any other state by a long shot."

Boring said that the CDC’s membership, comprising stakeholders including IBM, Microsoft, RRE Ventures and Ripple, among others, was largely supportive of the bill, which codifies proposals first published in December by the North Carolina Office of the Commissioner of Banks.

"It is a business-friendly bill and gives better guidance to businesses," Boring continued.

Other members of the industry offered a comparably more measured take.

Jerry Brito, director of non-profit advocacy group Coin Center, for instance acknowledged that the bill provides clarity to industry businesses, while cautioning he does not believe it should serve as a model for other states to follow.

"It was a good compromise, but it’s by no means the best possible bill," Brito said.

He added that he believes it could have been better crafted to provide an onramp for startups and to more clearly define when a company is deemed to be in control of consumer funds.

For more information on the law, read the full text here.

North Carolina image via Shutterstock

North CarolinaRegulation

Jacek Czarnecki is an attorney at Warsaw-based law firm Wardynski & Partners, where he specializes in areas including FinTech, digital currencies and blockchain.

In this opinion piece, Czarnecki discusses a new proposal in the European Union aimed at terrorist financing, and its potential larger implications for the blockchain sector. 

The European Commission this week adopted a legislative proposal meant to bring virtual currency exchanges and custodian wallet providers under the scope of the EU's Anti-Money Laundering Directive.

This step should have been expected, as it has been clear that the European Commission wanted the AML regulatory framework to be extended. However, the importance of the proposed laws still can go beyond AML regulations.

Perhaps the most far-reaching consequences could be triggered through its introduction of a legal definition for "virtual currencies", the first under EU law.

According to the proposal, "virtual currencies" means:

"...a digital representation of value that is neither issued by a central bank or a public authority, nor necessarily attached to a fiat currency, but is accepted by natural or legal persons as a means of payment and can be transferred, stored or traded electronically."

This definition is broad and also technologically neutral (theoretically not limited to cryptocurrencies such as bitcoin).

Further, it has two main parts: a broad concept of a "digital representation of value" not issued by a public authority, and requirement that it is accepted as a means of payment (without specifying what scale will be sufficient enough) and has electronic form.

It seems that while the definition is broad, doubts may emerge how to treat cryptocurrencies like ether, the native currency on the ethereum blockchain. For instance, ethers are traded on exchanges, but rarely serve as means of payments.

From 1st January, 2017 onwards, the definition will have to be included in all member states' relevant AML laws. In many of these countries, it will be the first time cryptocurrency will be intended to be covered in law.

While the definition will have direct application in the AML regulations, it is probable it will affect other laws.

It means that the introduction of definition of "virtual currencies" can potentially be an anchor in the EU countries' legal systems. Courts and public authorities will no more need to construe their own definition (sometimes tailored to particular aims), but will have to at least take into account the legal definition present in the AML laws.

Still, it could prove a useful instrument for national financial regulators or tax authorities, who until now did not have an anchor point in the law. Now, they will be able to use an established definition.

Whether it's one that will stand the test of time, or enable the technology to grow and compete in the region, however, remains to be seen.

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Disclaimer: The views expressed in this article are those of the author and do not necessarily represent the views of, and should not be attributed to, CoinDesk.

EuropeRegulation

Many supporters have come to see bitcoin as a model of the perfectly secured digital good.

This view owes itself in no large part to the blockchain, the distributed database that secures units of the digital currency by allowing miners to add and verify transactions without a third party. But, as has long been detailed by academics, the balance of incentives that keeps the blockchain in operation is ever at risk of disruption.

Perhaps the most infamous potential attack, known as a '51% attack', would find a single entity introducing a version of the blockchain that it controls and is accepted as valid. While academics have argued attacks can be carried out with a smaller percentage of the network, at 51% of the hashrate, such an attack would be almost guaranteed to work.

To date, this threat has reared its head rarely, but new changes to how the bitcoin network incentivizes key participants have stoked fears that a 51% attack could again become viable.

For example, some are worried that the upcoming decline in the number of new bitcoins minted daily will lead to a corresponding drop in the number of miners that today rely on this income to pay for their operations, thus securing the blockchain. Miners compete to add new blocks to the blockchains, receiving newly minted bitcoins as a reward.

Expected to occur on 9th July, the event brings this theoretical attack into context, given that exactly what will happen when the halving point is reached is unknown.

Practically, with fewer bitcoins being produced per block (from 25 BTC today to 12.5 BTC after the halving), the reward for mining may also be reduced by half, should the price of bitcoin fail to increase. This has led to concerns that smaller miners could be driven out of business, further concentrating the share of the marketplace controlled by the biggest players.

While the general feeling is that a 51% attack is unlikely, it is still worth looking at why the threat is a concern for the bitcoin network, as well as all blockchains that rely on an economic incentive for participants.

Understanding how a bad actor can affect the bitcoin community as a whole can help to shed light on the vulnerabilities that lie in blockchain-based networks – and what can be done to reduce them.

Bitcoin's mining makeup

As of today, transaction verification on the bitcoin blockchain can already be seen as being controlled by a small number of influential participants.

As of early June, 70% of all hashrate came from just four Chinese mining pools: F2Pool, Bitmain's AntPool, BTCC Pool and BW.com, a percentage that, combined, represents a majority control of the bitcoin market.

For some, this has long been seen as a failing in bitcoin's design, as it was ultimately supposed to serve as an egalitarian platform where anyone who owned a computer could join and profit from the network.

Whole other blockchain networks have been founded, and alternative technologies created, in an attempt to solve this perceived issue.

So, what does this mean in practice? Should bitcoin's leading participants band together to act in self interest, it could mean that the authenticity of the bitcoin ledger could be compromised.

As demonstrated in a 2014 paper from Cornell University, a colluding minority that intentionally forks the blockchain by keeping their block discovery private can create a situation where other miners find all of their efforts for naught.

This is important as the blockchain remedies conflict between varying versions through contrast; when comparing two blockchains, the longer blockchain is considered the most authentic. A longer private forked branch can – theoretically – give the colluding minority that controls it the power to approve or reject transactions as they seem fit.

This presents the potential to put a blockchain squarely in the control of a centralized authority. While this remains a theoretical possibility, the mining pool Ghash.io did reach 50% of the network’s total in 2014.

To some, events like this mean that network decentralization remains a priority.

"Centralization of miners could definitely pose a threat to bitcoin,” said Adam Draper, the managing director of Boost VC. "It’s a reflection of how human nature can play a role in even the most mechanical of creations."

Political influence

Still, when asked, most bitcoin advocates feel that a 51% attack is not really a realistic threat to bitcoin security, if only because it is economically self-destructive.

In the face of the upcoming halving, market observers like Marco Streng, CEO of Genesis Mining, who operates a hosted mining service, believe that bitcoin's market is likely to consolidate even further.

"The upcoming halving certainly increases contraction of the hashpower to fewer large scale mining farms that are built up at places with the lowest electricity costs and optimal infrastructure for mining," he said.

Streng went on to add that while the major miners could create centralized authority, doing so would betray the individual miners’ market share. According to Streng, the miners are motivated by profit to stay separate entities.

Stephen Holmes, the CTO of the Digital Banking Lab at IT consultant VirtusaPolaris, agrees with Streng. He added that a 51% attack only works if the attacker is willing to sabotage the very currency it controls.

But there are some who believe such large-scale threats are worth monitoring, given that, one day, the goal is for large entities, even whole nation states, to participate in running bitcoin.

Say, for example, that China was to follow Ecuador’s lead and create virtual money based on the yuan? Would it be unthinkable to think that domestic mining pools may collude with the wishes of the state if enough pressure is applied?

These are considerations that might need to be considered when looking at the possible future of the technology.

Bad actors

Ultimately, the true threat in any commercial endeavor is those that would take advantage of it for their own gain.

As anyone that has organized any large group can attest, there is nothing that can really be done to exclude those that – as Michael Caine put it in the film "The Dark Knight" – "just want to watch the world burn".

Still, smaller threats may be just as notable.

When polled on what is the true threat to bitcoin users, many identified bitcoin theft as the most pressing issue.

"The more likely threat comes from exchanges and wallets getting compromised, resulting in stolen coins," said Arian Evans, vice president of product strategy at cloud-based security firm RiskIQ.

As this illustrates, the true fate of a cryptocurrency lies in the good faith of its users, and given the scarcity of bitcoin, an available supply that is dynamic enough to support new additions to the community.

Ultimately, as fiat currency is subject to theft and counterfeiting, bad actors will try to find a way to exploit cryptocurrencies for their own purposes, meaning threats like the 51% attack will always be a concern.

Draper added:

“It is something to be aware of and keep our eyes on.”

Chess piece image via Shutterstock

51% attackshalvingHalving 2016Mining