Blockchain

Distributed database technology that securely maintains a growing ledger of transactions, potentially useful for its inherent security, data integrity, and decentralized nature.

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Blockchain has great potential to transform a variety of industries by unlocking the power of the Internet of Things, and addressing data management challenges in applications like healthcare, but right now is highly experimental, without obvious ROI in most cases today.

What's New

Lux Research analysts and the Lux Intelligence Engine have added the following recent blockchain developments.

New Lux Content

A Digital Transformation Framework: Applying Digital Tools to Improve Business Operations: One of the key elements to a successful digital transformation is laying out a clear vision. This involves designing new digitally-enhanced products and customer-centric digital business models to go with them as well as identifying business processes that are suitable for digitalization. In a previous report, we presented a framework that B2B and B2C companies across different sectors could use to create customer-centric digital business models. In this report, we present another framework that companies can use to identify suitable opportunities for digitalization in internal processes as well as the right digital tools to enable that transformation. We use case studies from various sectors to highlight how to use this framework.

The evolution of direct-to-consumer genetic testing: Blockchain, sequencing, and new business models: Direct-to-consumer (DTC) genetic testing (GT) companies have been around for more than a decade, with 23andMe kickstarting the personal genomics era in 2006. Since then, more than 200 DTC GT companies have appeared, offering health and wellness, fitness, nutrition, and ancestry services. Traditionally, these companies operate similarly to one another: The consumer provides a biological sample, usually saliva, which is then genotyped and gets back genetic data together with a report on the insights from the test. More recently, new sequencing techniques, business models, and data management strategies have started to technically differentiate companies:1)  Sequencing costs are rapidly dropping: Most of the established DTC GT players, such as 23andMe and Ancestry.com, use DNA microarray-based genotyping, which analyzes specific genetic variants in the consumer's genome. This technology generates a small amount of data with limited value, whereas sequencing captures much more information with exact determination and length of DNA code. This is particularly important for less-studied populations, as genotyping arrays have been designed based on highly studied populations. For example, many arrays are based on Caucasian-centric populations and don't perform well on Asians or Africans or can miss out on very rare diseases or traits. Interpretation of sequencing data, on the other hand, can be continuously updated as new insights are gained by scientists.Historically, sequencing has been costly and time-consuming, but the cost has dropped rapidly due to advances in second-generation or next-generation sequencing (NGS) technologies. Today, a whole genome can be sequenced for under $1,000, while a whole exome (entire protein coding region of the genome) can be sequenced for half that cost, within one to two months. Several new companies in the DTC GT space, such as Veritas Genetics, Helix, Dante Labs, Full Genomes, 24Genetics, Sure Genomics, and Gene by Gene are already rolling out whole-genome and whole-exome sequencing rather than DNA genotyping for these prices. While the cost is still considerably higher than that of DNA genotyping, which can be done for around $100, some industry leaders are predicting cost parity in the next few years. As we are approaching the per-run cost parity, microarray-based genotyping will quickly become obsolete. Thus, DTC GT companies not already planning on adopting sequencing technology risk being left behind. 2) New business models coming from genomic data: Helix, a startup spun off from Illumina, offers whole-exome sequencing at $50 to $80 – comparable to, if not cheaper than, current genotyping competitors. Helix subsidizes the cost by developing new revenue streams with its data. Using a dynamic consent model, it works with third-party developers, some of them also DTC GT companies themselves, such as DNAFit, to create personalized products across personalized nutrition, fitness, and, lifestyle. Helix's model transitions from transactional product sales to more relationship-based repeat revenue generation, which is a much more lucrative and stable model for a consumer-focused company.In addition to DNA sequencing, Sure Genomics and 24Genetics claim they can provide additional information and unique insights on genealogical and nutrigenetic traits based on existing DNA datasets. A consumer who had their DNA genotyped or sequenced with a different service provider can upload their raw data and pay about $100 to get additional analysis done on their genetic data. 3) Data management comes to the forefront: Over the years, DTC GT companies have amassed large, centralized databases of genetic data (de-identified and aggregated data) and sought to monetize it in new ways, such as working with pharmaceutical companies to identify new drug targets. This opens up concerns about data ownership and data security, particularly in light of recent data breaches. For example, Ancestry.com reported a data leak of 300,000 users last year, and in an even bigger case, MyHeritage, an Israel-based DTC GT company, was hacked in June 2018, exposing 92 million user accounts.As a result, companies like Nebula Genomics, Gene Blockchain, and Zenome are exploring blockchain systems where genetic data is secured, decentralized, and completely owned by the consumers, but offers the opportunity for them to communicate with potential buyers to monetize their data. These companies are still at the conceptual stage, so it remains to be seen how this will be implemented. Future opportunities around the DNA sequencing side of things seem fairly limited for now. Illumina is currently the market leader, dominating the NGS space and often introducing the new industry standard every few years in sequencing methodologies, speed to results, and costs. One estimate suggests that 90% of all DNA ever sequenced was done on an Illumina machine. Third-generation sequencing technologies, employing fundamentally different approaches, are still under development. Oxford Nanopore Technologies and Stratos Genomics are exploring nanopore technology to sequence DNA. Their machines offer portable, point-of-care diagnostic solutions but are currently not as powerful or accurate as NGS machines. Moving forward, NGS technologies seem likely to be the dominant sequencing platform for DTC GT companies as DNA sequencing replaces genotyping. Overall, there will be a rapid increase in human genomic data, making available a marketplace that developers can build solutions around and creating many new business opportunities for those who support the data acquisition, storage, and analysis and for those who can use this data for new product development. It will also facilitate a shift in how DTC GT companies engage with their customers, from a once passive, monogamous relationship to a more active and engaged one with the DTC GT and third-party developer ecosystem in general.

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