Skin cryptocurrency: Is blockchain dermatology genius or stupid?
A skin-deep look shows a solution wanting a problem. A closer look shows a big problem that needs solving.
The medical industry quickly realised the potential of blockchain technology for handling confidential patient information and has already taken concrete steps to embrace it.
Then there's the widely derided Dentacoin, which from some angles isn't quite as ridiculous as the phrase "blockchain for teeth" would suggest. Now there's OPU, aiming to put skincare on the blockchain.
A first look shows just one more blockchain solution in search of a problem to solve. But a closer look shows that yes, there is a serious problem that needs to be solved.
Crazy like a moisturised fox
In broad strokes, OPU aims to let individuals access personalised dermatologist-quality recommendations online and to assemble a giant library of skin types, problems and solutions that work for them. The token will be the currency of this epidermic ecosystem. Users will be able to earn it by providing useful information to help the system's native AI and each other, while professionals and businesses that use the system will be able to earn it by providing their products and services.
The AI will be helped along by dermatologists to look at how different skin types, lifestyle factors and individual characteristics mesh with certain treatments to eventually allow for personalised suggestions.
A skin-deep interpretation might have it looking like just one more greasy attempt to create an unnecessary cryptocurrency ecosystem around a specific industry. But a subdermal look at the system, and the problems it's solving, might suggest otherwise.
Like many of the problems blockchain aims to solve, quality results are about 50% having a genuinely good solution and 50% replacing an exceptionally bad legacy system. Skincare is no exception.
The size of the problem in dollars
Firstly, skincare is a monumental industry.
In America alone, as of 2012, people were making 5 million physician visits a year at an annual cost of about $2 billion for acne treatments alone. According to the OPU white paper (PDF), the global skincare market is estimated to be a $112-billion-a-year industry. It might be lowballing itself though. Some estimates put it near twice that, driven largely by the remarkable growth of ethically terrifying skin-lightening products.
If its ecosystem works as planned, OPU stands to get a lot of those dollars.
The 5 million visits and $2 billion in expenses incurred by spotty Americans in 2012 is just the tip of the acneberg. It's likely that far more than that are experiencing the same problems but are forced to rely on alternatives. According to OPU, only 12% of consumers end up getting skincare advice from professional dermatologists, but over 80% would like to. The most trusted alternatives to professional recommendations are social media and advice from friends and family.
Across the world and the entire industry, that's a lot of underserved customers and a lot of willingness to get recommendations from other people rather than professionals.
There's also a lot of willingness to get involved personally. OPU finds that consumers are willing to spend hours each month researching and evaluating skincare products, while someone will often spend over a week doing homework before responding to an advertisement.
It doesn't help, or does help, depending on which side of the fence you're on, that the science which underpins the skincare industry is largely controlled by the medication manufacturers themselves.
The state of the industry
- 98% of the prominent Pediatrics medical journal's 2011 revenue came from companies that make acne drugs.
- $528,000 of the American Acne and Rosacea Society's (AARS) $541,000 annual revenue in 2011 came from companies that make acne drugs.
- 13 of the 15 doctors on the AARS guidelines panel that year had financial ties to the Galderma skincare company
One of the AARS's self-appointed responsibilities is making suggestions for dermatologists who are treating acne and rosacea. It's a necessary feature of the medical industry where doctors can't reasonably be expected to stay on top of all the developments, and so instead receive guidance from theoretically impartial industry panels.
That year, the panel gave its highest rating to a Galderma product called Epiduo, and basically recommended that it be prescribed far and wide. The panel justified their decision by saying it only needed to be applied once per day. Coincidentally, the advertising blitz that accompanied it ("It's time for an epi-do-over!") highlighted the same benefit.
Epiduo main active ingredient is benzoyl peroxide, and it retailed for about $1,300 a year. The advertising spree neglected to mention that customers could just get a three-month supply of benzoyl peroxide for about $30.
It seems the supposedly independent AARS believed the once-a-day convenience was enough to justify a hundred-fold mark-up. Given a properly informed choice, customers might have disagreed.
Some might have happily paid premium prices, others would have preferred to start from the bottom of the price ladder and move up similar products until they find one that's effective, while still being the best value for money. An open platform like OPU might allow for this kind of possibility.
The shape of the solution
It's important that OPU goes beyond simply being a kind of skin-product network and integrates a community element where users can hear from others experiencing similar issues, get rewarded for participating in research and trialling new products, and otherwise get more deeply involved.
The research element is important because disrupting the industry means finding a way to induce more transparency into the research process itself. It's not about replacing professional recommendations so much as finding a way to introduce trust back into those recommendations and making it easier for people to access them.
It might be a much more cost-effective way of accessing customers, research groups and brand evangelists in one place.
By offering real value to product manufacturers in a consumer-driven environment, the system might be able to bring the necessary incumbents on board simply because they can't afford to not be involved in the digital skincare hub.
For example, one manufacturer might move into the space with free samples for customers that successfully match with the product. If it proves to be effective, they might have just found themselves a paying customer for life. It will be extremely difficult for a competitor to yank that customer away from a product that definitely works with promises of something that may or may not work.
Both patients and practitioners will use the currency.
"Say a customer submits their skincare data to our AI platform, or signs up for a dermatologist's clinical trial, or a new skincare brand wants to use decentralised data to find a user group for a new product. OPU will become their standard payment method," the OPU white paper says.
The cryptocurrency might not be a vital part of the ecosystem per se, but it does greatly streamline everything, enable micropayments and bring all the usual digital currency benefits.
More cynically, it could also be a significant marketing drawcard for OPU, contributing to a quicker growing ecosystem and giving the AI a lot more useful data to draw from, especially in the emerging economies which are also the quickest-growing skincare markets. Much like people sell hair for wigs, people could also monetise their skin by providing data, participating in paid trials, trialling and reviewing products and earning commissions as brand ambassadors on the platform. This might significantly bolster the token economy and boost circulation while also keeping prices down for the companies that need to buy tokens in bulk.
This doesn't necessarily mean the token is a great purchase or that the project will take off. Not being crazy is a pretty low bar. At the same time, all the moving pieces seem to fit together better than one might initially expect, and one probably shouldn't dismiss outlandish-sounding ideas like blockchain dermatology out of hand.
Disclosure: At the time of writing, the author holds ETH, IOTA, ICX, VEN, XLM, BTC and XRB.
- Phil Wilson: Satoshi Nakamoto was Craig Wright, Dave Kleiman and I
- Hybrid public-private blockchains in the real world – Part 2
- eToro launches 8 brand new stablecoins with eToroX exchange
- Bitcoin SV melts under the spotlight. Delistings, lawsuits and fraud accusations
- 23 highlights from the Ethereum core developer Q&A at EDCON 2019