What Are NFTs and How Will They Change The MedTech Industry?
Mayors of major cities are having their salaries paid in bitcoin.
Teenagers are making hundreds of thousands of dollars selling pictures of pixelated monkeys.
Retail investors are almost pooled enough money to purchase the US Constitution.
And we’ve only just scratched the surface.
What the hell is happening?
This article aims to do two things:
- Educate you in the simplest, most memorable way so you can understand what all this means.
- Extend that knowledge into how this can impact medicine and the medtech industry, as well as your career.
NFTs, or non-fungible tokens, created using blockchain technology, first made a splash in the art world as a platform to buy and sell digital art backed by a digital contract.
But could NFT digital contracts be useful in other marketplaces?
In the era of big data, health information is its own currency; it has become commodified and profitable.
Along with my collaborators Henry Peck and The Mad Device Rep, we are launching medtech’s first NFT project this month.
Before I discuss how NFTs will impact healthcare and the medtech industry, let’s quickly review what they are and how they work.
What is an NFT?
As mentioned, NFT stands for non-fungible token and is a digital asset that represents real-world objects like art, music, in-game items and videos.
“Fungible” is defined as “goods contracted for without an individual specimen being specified) able to replace or be replaced by another identical item; mutually interchangeable.”
For example, the dollar bill in your pocket is fungible because it can be traded with my dollar bill.
On the other hand, my mother is non-fungible. Even though you have a mom and I have a mom, and they’re both “moms” they’re not the same and thus cannot be traded.
NFTs are bought and sold online, frequently with cryptocurrency, and they are generally encoded with the same underlying software as many cryptos.
While they’ve been around since 2014, NFTs became more popular when news of digital art were being sold for hundreds of thousands of dollars. $174 million has been spent on NFTs since November 2017.
NFTs are also generally one of a kind, or at least one of a very limited run, and have unique identifying codes.
Around 33–44% of Americans like to collect things (baseball cards, coins, beanie babies etc)
Some do it for investment reasons.
Others want an heirloom to pass down.
People could only collect things in the real world because digital collectibles were too easy to copy. You just take a screenshot.
Then the blockchain was invented, which allowed us to make digital collectibles immutable, with a record of who owns what that you can’t really copy.
What is Blockchain?
The blockchain is a distributed public ledger that records transactions.
Say you see a digital collectible, like Mark Cuban’s digital monkey from Bored Ape Yacht Club (BAYC) valued at 67.01 ethereum or $173,565.
You can screenshot it, but you don’t own it, and you won’t be able to do anything with that screenshot.
You won’t be able to sell it or trade it.
Plus, as in the case of BAYC, you cannot get access to exclusive in-person events or the discord group channel where Mark and other celebrities have access to.
The proof of who owns it is in the blockchain.
The Psychology Behind “Flexing”
A great way to look at this is from the psychological filter.
Why do we buy designer clothing? Why buy an exotic sports car?
If nobody could see that you owned it, would you still buy it?
Psychologically, we buy these things as a way to signal status in a hierarchy.
It’s a “flex” to show that we are of high standing within our society.
If I owned a car collection, you need to come over to see it.
Sure I can show you pictures but what if they’re fake? How would you know they’re mine?
Contrast that with NFTs, where publicly you can see who owns what on the blockchain.
What’s the Difference Between an NFT and Cryptocurrency?
This is where their similarity ends.
Physical, “fiat” money (think USD) and cryptocurrencies are “fungible,” which means they can be exchanged for one another.
They also are equal in value — one dollar is always worth another dollar; one Bitcoin is always equal to another Bitcoin.
Crypto’s fungibility makes it a trusted means of conducting transactions on the blockchain as it lives on a public ledger.
NFTs are different.
Each NFT has a unique code that serves as a digital signature.
This makes it impossible for NFTs to be exchanged for or equal one another. Thus, they’re “non-fungible.”
A popular example is NBA Top Shot, where clips of basketball players are created.
One NBA Top Shot clip isn’t necessarily equal to another.
How Does an NFT Work?
NFTs exist on a blockchain.
An NFT is created, or “minted” from digital objects that represent both tangible and intangible items, including:
• Videos and sports highlights
• Virtual avatars and video game skins
• Designer sneakers
Even tweets count. Twitter co-founder Jack Dorsey sold his first ever tweet as an NFT for more than $2.9 million.
NFTs have become a fantastic way for talented artists to get funded and focus on creating art.
The most notable is Michael Winkelmann aka Beeple, who is an American digital artist, graphic designer, and animator.
He is known for using various mediums in creating comical yet ultra realistic works using cinema 4D that make political and social commentary while using pop culture figures as references.
One example is his “GIGACHAD” which shows Elon Musk riding the Doge coin mascot.
For the first 15 years of his career, Beeple committed to making these detailed pieces.
Literally, every day.
He never missed.
Then he published his Everydays: the First 5000 Days, a collage of images from his “Everydays” series, which sold for $69.4M on March 12, 2021. It is the first purely non-fungible token to be sold by Christie’s.
How Can NFTs be Used in the Physical World?
“Shark Tank” investor Kevin O’Leary is a big believer in NFTs and even believes they can become bigger than bitcoin.
O’Leary, the chairman of O’Shares Investment Advisers, said his belief in NFTs stems from the idea that can they prove ownership of real-world items, such as designer watches or flash cars, digitally rather than with paper records.
“You’re going to see a lot of movement in terms of doing authentication and insurance policies and real estate transfer taxes all online over the next few years, making NFTs a much bigger, more fluid market potentially than just bitcoin alone,” O’Leary told CNBC’s “Capital Connection”.
“We’ll see what happens but I’m making that bet and I’m investing on both sides of that equation.”
One example O’Leary uses is watches
Watches grow in value as they grow old. Think of a 1968 Stainless Steel Rolex Daytona, valued at $375,000.
How could you authenticate it? Of course there’s going to someone in person but what if you can’t? What if its being auctioned and there’s no time?
You don’t know if you’re buying a fake watch when buying a vintage watch.
That’s where NFTs come in. NFTs can be used as a certificate of authentication.
NFTs issue exclusive ownership rights, meaning they can have only one owner at a time.
Now that you have a basic understanding of NFTs and the ecosystem, let’s look at some great ways it can be used in medtech.
How NFTs Can Be Used in MedTech
Before getting into how NFTs can be used in the medtech industry, here are some examples of how they can be used in the clinical setting in healthcare courtesy of the articles by Tal Elyashiv, a serial entrepreneur and founder and managing partner of SPiCE VC, the first fully tokenized venture capital fund.
Patient’s Lifetime Medical Record
Patient data is scattered across platforms and is notoriously difficult for operators and patients to access.
Think about the last time you switched health systems. Why does the same information have to keep being remembered and recreated?
Over $1.2B clinical documents are produced in the US every year, yet 80% of that data is unstructured or locked away.
Plus, Americans spend $750B each year on unnecessary treatments.
Worse, many of these treatments are due to misdiagnosis or repeat treatment due to poor data management.
NFTs have the potential to solve these various problems — giving the power of medical records back to the patient and streamlining the healthcare experience.
Imagine patient’s having their data available to exchange real-time updates between their primary care physician and other specialists. This allows for what Dr. Cheng Ruan calls “Collaborative Medicine.”
NFTs could also give patients to access medical tests results immediately.
With NFTs, all of data would live in one place — a patient’s medical “passport” that’s secure and accurate.
Authenticating Pharmaceutical Products to Combat Counterfeiting
NFTs and blockchain help combat those who counterfeit pharmaceuticals by streamlining the authentication process.
NFTs create digital signatures or a “token ID” which would attach to a particular item throughout its lifespan.
This can provide an immutable record on the ledger reducing, and even eliminating, discrepancies and outright fraud.
This means that problems can be resolved much more rapidly, including the identification of black-market prescriptions and eliminating them from the system.
Health Data via Fitness Wearables
Im a big fan of fitness trackers as I am a Whoop member.
Since the pandemic gave rise to home fitness, the market has seen a rise of wearables, at-home workout equipment and other tracking devices.
At my recent annual checkup, I brought my Whoop data on heart rate variability to discuss my sleep patterns and cardiovascular fitness with my physician.
NFTs can be used as a way to decentralize data collection, optimize access, and give patients back control of their health records.
This also allows for patient’s to monetize their data as pharma and medtech companies would want access when developing new technologies.
As the globalization of healthcare continues to explode, the need to track and manage medical and pharmaceutical devices becomes more critical.
All of these factors and more create the perfect opportunity for NFTs to solve problems and improve experiences across the healthcare industry.
How NFTs Can Change How Scientific Discovery and Innovation Are Funded
Medical innovation and scientific breakthroughs have always relied on having access to capital.
Today, the two major funders of scientific research are the National Science Foundation (NSF) and the National Institutes of Health (NIH).
According to the National Science Foundation, in 2021, its budget was listed at $8.5 billion, and they fund “27% of the total federal budget for basic research conducted at U.S. colleges and universities.”
The National Science Foundation also provides around 12,000 awards annually and projects usually run for three years.
According to NIH’s website, in 2020, they received 55,038 applications, and 11,332 were approved, leading to a success rate of just 21%.
As you can see, getting funding as a scientist is incredibly competitive.
If you can’t get a grant, the other option is being supported by private funders.
But most private funders like to donate to larger and more well-known institutions like Harvard, Johns Hopkins, and Stanford.
What if you’re at an institute that isn’t a world-leading academic center?
The other option is getting pharma-infused capital. Pharmaceutical companies will give grants to fund specific studies. However, this could create bias regarding their findings.
As you can quickly see, this is how the majority of funding gets “centralized” and goes to the same places and same people more often than not.
This is where NFTs and “decentralized science” can change things.
UC Berkeley is using Nobel Prize winning research, including Jim Allison’s The Fourth Pillar, which focuses on cancer immunotherapy, and Jennifer Doudna’s work on gene editing technology (CRISPR-Cas9) to create NFTs that in turn can be used to fund further scientific research at the university.
According to Bitcoinist, universities using NFTs to fund research can “create a decentralized organizational body or structure that funds critical developmental research without third-party interests taking priority.”
Now let’s bring medtech into the fold.
How NFTs Can Change the MedTech Industry
Taking a medical technology to market is not easy and definitely not cheap. Many fail to make it to market because the simply run out of capital.
This is such a big issue that at the at the third annual Life Science Intelligence (LSI) USA ’22 Emerging Medtech Summit next week the keynote focuses on this topic.
The keynote speaker, David Weild IV, is Founder, Chairman, and CEO of Weild & Co and former Vice Chairman of NASDAQ. He is recognized as the “father” of the JOBS Act and regarded as one the world’s top experts on capital markets and capital formation.
Weild’s keynote will explore the intersection of the democratization of capital and healthcare innovation, which has sparked a new way for medtech startups to raise money outside of traditional venture capital or private equity paths.
“What’s exciting, is that right now early-stage medtech companies have new tools to finance their ventures. We can now fund more companies and get life saving technologies to patients quicker. This is a great movement not only for the innovators out raising capital, but also for their current and follow-on investors,” shared LSI CEO/Founder Scott Pantel.
Taking the JOBS Act and crowd equity further, NFTs can be a catalyst to helping medtech companies that would otherwise fail due to funding have a chance to bring life-changing technology to market.
In order for NFTs in medical device science to be successful, there also needs to be community support that can be used to help scientific projects to reach their full potential.
This can involve expert assessment and community rating systems to decide where funding goes.
These measures, along with marketplaces for science and technology IPs, can also benefit from recommendation and forecasting.
With a changing market and ongoing competition to gain funding, it the industry must develop new channels to raise capital along with supportive communities that nurture scientific inquiry.
In order for this to be achieved, it is also necessary to stay open to new forms of earning revenue that exist outside of traditional grant applications.
The Mad Device Club — MedTech’s First NFT Project
I don’t believe in coincidences anymore. There are forces at play in our world that go beyond the measurement of science.
We’ve all developed communities within medtech — Henry has a 97,000 member group on ClubHouse, Mad Device Rep has 8,000 engaged med reps on Instagram, and I’ve spent the last 8 years nurturing the medtech community along with physicians on LinkedIn.
Medical device sales reps have been the backbone of our industry.
From supporting cases to helping drive product adoption, they’ve been integral to the industry.
However, times have changed.
The pandemic accelerated the trend of digital first preference for physicians. With many reps seeing reduced access to facilities, the concern of driving technology adoption is high.
The focus of our NFT project is to bring that community together through an NFT.
The community will give access to exclusive and exciting in-person events, a closed forum to exchange data and market intel, plus more as the community will likely grow and there will be a need to associate the NFTs to new assets and forms of access.
Remarkably, there have even been physicians who have signed up for our list, which leads me to see a future where medtech reps and marketers can find a way to collaborate with clinicians on exciting medical innovations.
This Friday, Henry, Mad Device Rep, and I will have a live-streaming event to discuss the project and take questions. Register here to join live or watch the recording.
Do you think NFTs can change medtech? Share your comments below and join the discussion.