Ver 1.1
Celebrating the 10th Year Anniversary of
Bitcoin Genesis – the First Bitcoin Block
GenomeChain Inc.
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Table of contents
1. Blockchain’s limitations as to the truth of data ........................................................................... 8
2. GeNome Colored Coin ..................................................................................................................... 11
2.1 Selection of genome SNP set and their number................................................................. 14
2.2 Number of SNPs and distinctiveness ..................................................................................... 14
2.3 Gene coloring ............................................................................................................................. 15
2.4 Colored coin’s client app and full-node server ................................................................... 16
2.5 Limited issue of celebrity’s genome tokens ......................................................................... 17
2.6 Genome coloring; Unique identification of agricultural and fisheries products ......... 17
2.7 Encoding genome-wide hash value and family finding service ....................................... 18
3. Coin generation ................................................................................................................................ 20
3.1 Taking a snapshot of bitcoin UTXO ........................................................................................ 24
3.2 Raising a claim for GNC ............................................................................................................ 25
3.3 Lost coins ..................................................................................................................................... 25
3.4 Coin burning ............................................................................................................................... 26
3.5 Use of GENOMECHAIN-held coins ......................................................................................... 26
4. GNC Blockchain ................................................................................................................................. 28
4.1 Private blockchain - incubating .............................................................................................. 30
4.2 Delegated mining ...................................................................................................................... 31
4.3 Public opening ............................................................................................................................ 32
5. Developments in genome industry ............................................................................................ 33
5.1 Changes in the regulatory environment ............................................................................... 36
5.2 Genome sequencing cost ........................................................................................................ 38
5.3 Concerns over data security .................................................................................................... 38
6. Using genetic data to promote social goals and a shared economy platform .................... 40
6.1 Data sovereignty and free sequencing ................................................................................. 41
6.2 Data security ............................................................................................................................... 42
6.3 Information expansion and service offering ........................................................................ 44
6.3.1 Proactive management of potential diseases .................................................................. 44
6.3.2 Personalized diet .................................................................................................................... 45
6.3.3 Personalized exercise planning ........................................................................................... 46
6.3.4 Genome-based social network ........................................................................................... 47
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6.4 Growth of the ecosystem ........................................................................................................ 48
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Executive summary
Blockchain is a technological solution that guarantees the authenticity of records. On the
premise that its nodes are sufficiently distributed, a blockchain is immutable and protects data
from human errors and selfish greed. Blockchain is fueling high expectations that it will bring
significant change to food safety. Across the world, 400,000 people are dying every year from
management failure within the food supply chain. Transparency in the global agricultural and
fisheries supply chain, from production to consumer, will drastically reduce loss and raise
credibility, thus creating more business opportunities.
The authenticity of a blockchain record does not verify the underlying accuracy or truth of
the data it records. This first-mile issue is the Achilles heel of blockchain technology. If false
records are uploaded to a blockchain, they cannot be removed and, decisions and
authentications based upon them will be false. For agricultural and fisheries data, blockchain
presupposes trust in farmers and fishermen and yet blockchain is not a complete solution for
distrusting farmers and fisherman. Genome can be the ultimate solution that verifies the truth
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of data on organisms. Genome verifies variety, breed, place of origin, or mutation. Growing
genome data increases the number and accuracy of identification variables and subsequently
decreases the cost of storing and utilizing genetic data on a blockchain platform. The colored
coin is a type of commemorative coin created by encoding intelligible texts on bitcoin UTXO
which can then be used as a security or a coupon. Colored coins can be encoded with genome
data of agricultural or fisheries products and can be distributed along the global supply chain.
Eliminating the trust issue associated with the production and distribution of agricultural
products, by leveraging immutability of blockchain, will create a new mega industry combining
distribution and finance.
The increased penetration of smartphones into the third world is expected to bring the
global supply chain to 3 billion more global citizens. The biggest impediment in their
participation, as producers or consumers, has been their limited access to financial services.
Creating genome-based global identification has great potential for addressing this issue and
spurring the expansion of global supply chain finance. Genome identification for humans can
be created using the same colored coins, encoded with selected human genome data related
to physical characteristics. Immutability of genome data encoded on colored coins creates
“trust” in the data. Since only the owner of a colored coin can retrieve or transfer stored data,
using an app, the owner’s identification can be verified objectively by a third party. The third
party can view displayed genome data related to physical traits such as hair color, race, height,
gender and iris color and can compare them to the owner’s actual physical characteristics.
Genome data is also facilitating a new trend in modern medicine: precision medicine that
shifts focus from treatment to prediction and prevention. It is pushing the boundaries of
medicine into disease prevention and lifestyle management, as the data gathered enables a
wide array of life-enriching services including disease prediction and prevention, new drug
development, ancestry services, daily routine improvements, and career advice. New
industries are emerging accordingly. In particular, genome-based ecosystems focused on
providing information on the risks of certain diseases, and optimal lifestyle recommendations
are growing fast. However, with genome data being multi-faceted, operators face burdensome
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and ambiguous regulation. Some argue that genome data needs to be strictly classified as
personal information, as they are the most sensitive private information and can be abused in
many ways when leaked. Others argue that determining to what extent individuals need to be
informed of their medical information is in the realm of medical ethics and that experts should
manage genome data. Regulatory uncertainty and low awareness within society are in the
way of burgeoning genome-related businesses. However, these two groups can meet halfway
using a blockchain: the owner will have control over their genome data, whereas they need
to obtain consent from experts in order to access or use medically sensitive information. On
a blockchain platform, rights to access encrypted genome data will be shared between
individuals and the platform and data can be decrypted only with consent from both parties.
The GeNomeCoin project generates genome coins (hereunder “GNC”) to promote the use
of genome data for society by creating a genome-based shared economy platform. The shared
economy ecosystem will help secure vast amounts of genome data, which will be utilized to
accelerate advances in medical and science technologies and industrial development. Based
on transparency, a key property of blockchain, individuals will be rewarded every time their
genome data is used and be assured that their genome data will not be abused or accessed
without their consent. Once meaningful amounts of genome data are collected, various
sectors can come together to create a genome-based ecosystem. The ecosystem will attract
both consumers offering their genome data and organizations from food, cosmetics, insurance,
pharmaceuticals, medicine, research, and other areas.
In the early days of the ecosystem, the coin issuer plays a vital role in distributing coins to
reward those who contribute to our social goal of promoting the use of genome data for the
public interest. For example, patients with certain diseases need to be rewarded if they
volunteer to share their genome data. GNC will be generated by taking a snapshot of bitcoin
UTXO. GNC that are paired to lost bitcoins will be collected into a pool and used to reward
social goal contributors. GNC is generated through the uncommon approach of “snapshot”
because the bitcoin ecosystem and bitcoin holders have proven value which can act as the
underlying asset of the derivative GNC. Bitcoin has more long-term investors than other
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cryptocurrencies and has many long-term holders who are not easily swayed by price
fluctuations. The proven bitcoin ecosystem community is the best place for planting the seeds
of a genome-based, shared economy, ecosystem pursuing the utilization of genome data while
protecting each user’s genome identifiers.
Bitcoin holders will claim GNC, one GNC for every bitcoin they hold. The GNC ecosystem
will start with about 80% of GNC redeemed to bitcoin holders. This baseline value is what
differentiates the GNC ecosystem from an ICO token, making it more robust and promising.
ICO tokens often resort to an airdrop to grow the token ecosystem. However, distributing
tokens free of charge through an airdrop frequently ends up in price uncertainty and can fall
prey to token scammers. In the wake of an airdrop, the token ecosystem often finds itself in a
swirl of good news spun by those trying to push up the coin price and massive sell orders by
arbitragers dumping their airdropped coins.
We estimate that at least 5 million GNC will be unclaimed. That figure is based on published
reports that there are between 2 to 8 million lost bitcoin keys and on our estimation that
bitcoins held by hackers or unlawful holders, who are reluctant to leave a footprint, are likely
to be a multiple of the number of lost bitcoins. Reviving these unclaimed GNC and using them
to promote the public good of genome data is the basic framework of the GNC project. For
healthy growth of the coin ecosystem, certain amounts of unclaimed GNC will be excluded
permanently from the total coin supply. Immediately after the expiration of the claim period,
any unclaimed coins in the wallet of GenomeChain in excess of 3.3 million will be sent to an
irreversible address and burned. Three million coins in GenomeChain’s custody will be
distributed over a six-year period, in a planned manner, to minimize market disruption.
Company’s coin use will be limited to rewarding contributors to our social goals and will
minimize free riders and prevent speculative coin selling.
By taking a snapshot of bitcoin UTXO, the GNC project can bypass regulatory uncertainty
around ICOs and concentrate on creating a token ecosystem. It can start building an ecosystem
immediately following coin generation. Unlike an ICO token, it does not need to sell coins by
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touting the value of the token. Unclear regulations around ICOs are making large businesses
and institutional investors hesitant to participate in token ecosystems. The GNC project,
however, is free from regulatory controversy and exempt from market securities regulation
because it does not sell coins. As a result, the project can focus on achieving the long-term
goal of building upon the success of the GNC ecosystem to create a genome-based, shared
economy, ecosystem, instead of raising quick money through ICO.
Unlike other token ecosystems portraying a rosy picture of the future, the GNC project can
offer genome data-based colored coin services right away. GNC holders can order GeNome
Colored Coin(hereunder “colored coin”) containing their genome data by sending a certain
amount of GNC to service providers. Colored coin producers can deduct their service charge
from GNC that they have received. Users (initially bitcoin holders) will view such charges as
negligible as they have received GNC free of charge anyway. The minimum amount of GNC
required for colored coin production may change depending on market conditions. Encoding
can be done for 1GNC or 0.0001GNC. The minimum amount may indirectly affect the market
prices of colored coins. The existence of a useful function for all humanity is a key
differentiator between GNC and bitcoin, and it will serve as a price attractor.
Technological advances in disease prediction and prevention are slowing down due to lack
of genome datasets available. Colored coins will help raise people’s interest in the genome
and reduce sequencing costs, encouraging more people to use genome sequencing service
and thus accelerating the creation of a genome-based, shared economy, ecosystem.
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1. Blockchain’s limitations as to the truth of data
Bitcoin, the first blockchain network, is a distributed system of transaction records created,
and currently stored on, some 10,028 1 nodes around the world. Bitcoin verifies the
authenticity of transaction records without the need for third-party adjudication. When
bitcoin was first introduced, a small group of enthusiasts hailed it as a watershed event in the
history of civilization. Focusing on bitcoin’s authentication feature, to them, bitcoin was more
than a digital currency. As enthusiasts became familiar with bitcoin they started to pay
attention to a capability that became known as colored coins. Simply put, a colored coin is an
electronic form of a commemorative coin, stored on a blockchain. For example, with colored
coin, the amount of balance in one’s stock, bond or bank accounts can be attached to a certain
amount of bitcoin and transferred to someone else. Unlike bitcoin, that has no intrinsic value,
colored coin is a method for representing and tokenizing real-world assets. In addition to
proving ownership of real-world assets such as real estate deeds or car keys, colored coin can
also represent and verify college diplomas, transcripts or personal identification records. The
United Nations acknowledged that blockchain is the only viable method available for
authenticating personal identification papers presented by refugees.
Blockchain technology can enable global citizens with limited access to financial services to
participate in the global value chain as a producer or a consumer, which will double the size
of the global supply chain within a few years. Announcing the launch of TradeLens in August
of 2018, Maersk and IBM said that blockchain would transform a vital part of how global trade
is conducted. They also added that they were able to cut the transit time of a shipment by 40%
during their 12-month trial. IBM has been heavily investing in blockchain technology, believing
that blockchain will play an important role in digitizing global shipping, an industry that moves
four trillion dollars of goods every year.
1 https://bitnodes.earn.com/ December 9th 21:00
excludes all nodes prior to protocol version 70001 (i.e. >= /Satoshi:0.8.x/),
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Blockchain can propel innovation in the global supply chain particularly because it can
resolve the long-standing issue of trust in transactions. Various supply chain issues - data
visibility, process optimization, demand forecast, production and inventory management –
cannot be solved from a traditional technological perspective because they do not resolve the
need for a trusted party to mediate any exchange of valuable data. As Brigid McDermott, vice
president at IBM Blockchain Business Development said, trust is the missing piece in the
puzzle of digitizing the global supply chain and blockchain solves the trust issue, thus
completing the puzzle. Blockchain not only verifies place of origin, but can also control the
risks that may arise in the distribution process, such as last-minute order cancellation, by way
of transparency and mutual monitoring. Improving food safety is therefore a blockchain use
case that is garnering much attention.
Every year, about 400,000 people are dying from failure of the food supply chain2 and risks
posed by a handful of greedy food producers or distributors can spread quickly over the tightly
knit global supply chain. Since 2016, Walmart and IBM have been running a pilot to provide
better traceability to food distribution using blockchain. In announcing the result of the pilot,
they said they were able to trace distribution of mangoes in two to three seconds, not in seven
days as it currently takes. They also completed a pilot of migrating Walmart’s pork supply
chain to a blockchain platform. Starting in 2019, Walmart and Sam’s Club will be using IBM’s
blockchain platform to trace the distribution flow of green vegetables, like lettuce and spinach,
real-time from farms to supermarkets. Jack Ma, the co-founder of Alibaba of China, called for
tougher laws on counterfeits and said that fake food is a problem. Alibaba embarked on a pilot
of using blockchain technology to trace New Zealand beef all the way back to its country of
origin3. Provenance of the United Kingdom piloted blockchain technology to track tuna from
fishing sites in Indonesia to consumers in the United Kingdom. Sainsbury’s and Unilever are
carrying out a pilot project to reward farmers in Malawi, with financial incentives, who
produce and process tea in a fairer and more sustainable manner. The tea is shipped and sold
2 https://www.businessinsider.com/annual-food-poisoning-deaths-2015-12
3 https://which-50.com/alibabas-blockchain-food-tracking-program-launches-in-new-zealand/
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to consumers in a transparent manner using blockchain, allowing the growers to gain more
profits by commanding higher prices.
Blockchain, by definition, is a distributed network that does not give any nodes privilege to
control a central server. Based on this definition, some argue that technically speaking,
TradeLens and other blockchain platforms led by businesses are not blockchains because they
give privilege to certain nodes in the input stage. This form of implementation allows potential
abuse of such privileges and means corruption cannot be blocked. If false information is
encoded into the system in the first place, blockchain can be more dangerous than traditional
databases that allow easy error correction. Without the premise of advances in sensing
technology, blockchain cannot be relied on to ensure the truth of data by itself. Blockchain
guarantees immutability, but it is agnostic as to whether the data being recorded forever is
true or not. Blockchain protects all data, even false data, as soon as it has been recorded in
the system. This is an issue for all blockchain systems, regardless of being private or public.
Blockchain is most vulnerable in the areas where it intersects with the real-world, creating
the ‘first-mile issue’. In smart contracts, this vulnerability is referred to as the “oracle issue”.
How can real-world data be verified as correct before it is uploaded to a blockchain? As far as
organisms are concerned, there is a solution. Genome information can make blockchain
records capable of verifying both the authenticity and the truth of data. Genetic testing is the
best way to discern whether a tuna is real tuna or a calf is of a special variety. Genetic
information makes it possible to trust the agricultural or fisheries product while not
necessarily trusting the farmer or the fisherman. Selected genetic information that
distinguishes types of agricultural or fisheries products are encoded along with the producer’s
information into a token on the blockchain network. These tokens can be sold to consumers
in advance. A token gives high protection against potential risks as each token represents a
specific product from a specific producer. As the market price of token matches the risks that
may occur during production and distribution, producers can get financing. Consumers can
avoid the risk of fake food. Distributors and financial investors can get returns on their
investments in a transparent manner.
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2. GeNome Colored Coin
Colored coins are created by encoding metadata in bitcoin transactions. Value of real-world
assets such as stocks, land deeds, or real estate can be attached to a certain amount of bitcoin,
and the immutability of bitcoin’s blockchain ensures trust. NASDAQ previously looked into
developing a system using colored coins as tokens to represent stocks. More recently, bitcoin
cash advocates have attempted to expand the function of colored coin to establish a token
generating platform similar to Ethereum.
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The United Nations launched the ID2020 initiative to provide universally accepted identities
by 2020 for the 1.1billion global citizens who have no officially recognized identification.
ID2020 leverages blockchain technology, attaching biometric data such as iris or genome data
to a blockchain to record unique identification with immutability while preventing any attempt
to present false identification. This identification can be read anywhere in the world by an app
and allows objective verification of a refugee’s birth, nationality, and criminal record. This
reduces the risk, and leads to less wasted effort, in providing refugees with job opportunities,
education, and welfare. Supported by Microsoft and Accenture, who volunteered their
services, the system is expected to resolve controversies over states’ accepting refugees.
If an ordinary citizen, who does not have access to professional sources of intelligence or
investigative capabilities, acquires a tool to verify a person’s identity, trust-based transactions
utilizing identity data will exponentially increase. For example, many individuals across the
globe can make small investments in a medical student in Africa, on the premise of the
student’s potential income in the future. Financing foreign students, which was not possible
due to lack of verification of the student’s identity, becomes possible. ID verification also paves
the way for the growth of global supply chain finance. A small company without collateral can
participate in the global supply chain as a manufacturer or a consumer with backing from
financial institutions, which are currently only available to large companies.
Ultimately, encoding genetic data into a blockchain coin gives us global identification. For
the moment, 100 SNP (single nucleotide polymorphism) related to physical characteristics are
selected to be colored into the genome coin. A combination of just one hundred traits still
ensures a high degree of the unique identification of one in 5 billion, even after excluding
medically sensitive hereditary data and using only generic traits owned by 80% of the
population. Barring medically sensitive data in the selection of genes enhances the protection
of personal data and reduces data volume to encode in the blockchain as the input values
become standardized. In the same way that we do not know who owns bitcoin in UTXO,
colored coin’s metadata can remain on a transparent blockchain, and even if unencrypted,
ownership of the colored coin is not identifiable only with the data stored on the chain. A
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smartphone app can be used to display a colored coin in a human-readable format using
natural language, or even through the use of a generated, human-like image.
Combining a user’s 100 genome data visualizes their traits and gives users the pleasure of
discovering something new about themselves and expressing their genetic code in an avatar
for gaming or social networks. The genetic avatar leads to a better understanding of the
essential characteristics of family members and loved one, driving recommendations and
adoption of colored coin making.
In a survey that asked individual genome testers what motivated them to participate4, 78.4%
mentioned “detection of inherent risk of disease.” However, 81.2% of the 305 respondents
also answered “curiosity about my genes.” While experts and personnel in the genome
industry associate genome with illness, for consumers, the genome is also about
entertainment. Personal genome research is an effective means to satisfy the need to discover
oneself and can bring joy from learning about the characteristics of people close to oneself
and how that affects your relationships with them. A service utilizing genome data in this
way helps to increase the general public’s awareness of genome and enhances the capability
of dealing with more sensitive data like medical information.
4 https://www.genomeweb.com/genetic-research/health-not-primary-motivation-dtc-genetic-tests-open-
genetic-data-sharing#.XBCNvGgzaUk
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2.1 Selection of genome SNP set and their number
The set of SNPs encoded in the colored bitcoin should be
observable characteristics of an individual which are not medically
sensitive, i.e., hair color, hair fiber shape, skin hair, eye color, skin
color, ability to break down alcohol, height, weight, or breast size.
2.2 Number of SNPs and distinctiveness
The population frequency for a specific combination of one
hundred traits, present in 80% of the whole population, is one five
billionth. In mathematical terms, on average, one in five billion
people own that exact combination. This rate of occurrence cannot rule out the possibility
that the same combination of the traits does exist, but can obtain distinctiveness by adding
limited contextual information people can employ in real life. Limited contextual information
allows re-evaluation of distinctiveness with a conditional probability, reducing the chance of
an identification error to probabilistically insignificant levels. In practical terms, contextual
information such as age or nationality creates a subset of the global population, within which
one in five billionths chance of a genuine duplicate is infinitesimally small. Identifying
individuals using genome data in this manner is convenient and statistically reliable.
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2.3 Gene coloring
Hundred genotypes (the SNP pair) combined with two hash values take up 328 bytes of data.
Using a standard code structure to record the genotype, instead of full-text descriptions, can
reduce the amount of data that needs to be embedded in each colored coin. The amount of
base coin may vary according to the market environment, but the combination of genotype is
encoded into the transaction data of the base coin using a fixed standard code. A genome-
wide hash value is also inserted, as a link to the complete genome of an individual which is
stored separately. Decryption of the whole genome data, therefore, requires both the hash
values and the secret key of the colored coin. This ensures private data protection and allows
data sovereignty of the full genome data.
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2.4 Colored coin’s client app and full-node server
Bitcoin trading smartphone
apps or Simplified Payment
Vehicles (SPV) alone cannot read
colored coins because they do
not have access to all the blocks
that are required to verify the
block that includes the colored
transaction. Users must use a
smartphone app designed explicitly for colored coins, which relays between the user’s
smartphone and a full-node server. The client app sends a hash of the private key to the full-
node server, and the server checks the blockchain history to find the colored metadata
transaction. This information is returned to the client app, which subsequently uses the
metadata to visualize the genotype and create an avatar based on the genes. A significant
amount of research shows that a genome avatar expresses an individual’s unique features
quite closely and it is possible for a third party to compare a person in real life to the avatar
picture.
Users can then dress or dole up their genetic
immutable with accessory items. When presenting the
avatar as a verifiable ID to a third party, specific texts
plus trait values are also displayed; the name of genes
and the frequency of phenotypes are shown in
numbers.
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2.5 Limited issue of celebrity’s genome tokens
Another useful application of coin coloring occurs
when you encode multiple tokens with identical
metadata. Issuing a limited number of tokens in this
manner, containing a famous star’s genome
information, would allow its use in marketing activities
while preventing any potential controversies over
copyright as such tokens cannot be created without active consent from the star and/or their
management agency. Fans may want to own a token containing the genome of their favorite
celebrities or athletes. They can then personalize the avatar, even though the token is loaded
with the same base information. As celebrity genotype colored coins are issued in limited
numbers, scarcity makes them collectible, pushing up the value. The price of their token
becomes an indicator of the popularity of the star. Competition among fan clubs may drive
the star’s token prices up.
This process can be taken to the next level by mixing the data from different colored coins.
Fans can add another star's colored coin to that of their favorite star’s to create a new
combination of phenotypes. They can also imitate reproduction to create a child avatar by
combining the genetic information of the celebrity with their own. The avatar application
determines the trait utilizing random values.
2.6 Genome coloring; Unique identification of agricultural and fisheries products
As a financial platform, built on the premise of absolute trust in agricultural and fisheries
products, colored coins open the door to multiple opportunities for small producers. Those
with available labor and land, who could not previously participate in the global supply chain,
can now receive financial backing directly from the middle classes of developed countries,
producing good agricultural and fisheries products and meeting society's need for safe food.
Colored coins are created with selected genetic information that distinguishes types of tuna,
wine or cow. At production, a genetic test is conducted and the results are encoded, along
with the producer’s information, into a colored coin on the blockchain network. Tree
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structures make it possible to generate different tokens for different parts of beef or pork by
attaching information in tiers. For example, a colored coin for the pork knuckle of a specific
pig can be generated by adding a serial number to the specific pig’s data. In this way, one pig
produces a cluster of multiple colored coins that represent its different parts. These tokens
can be sold in advance to distributors or end consumers, who can, in turn, sell the colored
coins to others. When updates on the distribution process are loaded onto the blockchain and
attached to the hash of a token, the token price fluctuates reflecting the view of the market
of the new value of the product. This trading process is the equivalent of trading futures of
digital securities but for agricultural products. This trading in parallel, even before processing
and distribution, to agricultural production evolves colored coins into an agricultural financial
platform.
As colored coins are inter-operative with
other blockchains, through middleware, they
can be distributed on other blockchain supply
chain platforms that are being built to protect
food safety. Genome colored coin will be
launched alongside blockchain supply chains,
led by global giants such as Walmart and IBM,
reinforcing truth of data.
2.7 Encoding genome-wide hash value and family finding service
It is not practical to encode your entire genome onto a blockchain, but a hash key of your
whole genome is encoded in the colored coin that represents you. When this hash value and
a paired private key from your GNC are presented together, an individual’s complete genome
data, stored in the GENOMECHAIN database, becomes accessible, and its decryption becomes
possible.
The GENOMECHAIN genome database is a foundation for various services, among which
finding your biological family has garnered the most public interest. Genetic information is
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highly beneficial to finding family members. Adopted children often fail to find their biological
parents when relying on advertisements limited to a region. While searching the name used
before the adoption and other characteristics in the genome databases, they may find close
biological family members. It is also possible to find a connection from kin’s uploaded data,
even without information of parents or direct family members. This makes it possible to offer
services to find birth family relatives for adopted children, for the elderly suffering from
dementia or even to bring fallen soldiers back to the war bereaved.
The genome database can paint a family tree linking
close relatives, and facilitates complete genome-based
genealogy books, mainly targeting Asian markets.
Ethnically diverse countries like the United States of
America have seen fast growth of ancestry services that
show where one’s ancestors come from. One can draw
and then hash a family tree or ancestry distribution into
new colored coin.
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3. Coin generation
Regulatory uncertainty around ICO (Initial Coin Offering) persists. Particularly, the regulatory
bodies in the US have maintained a tough stance toward ICOs. The U.S. Securities Exchange
Commission (SEC) that regulates the securities markets holds a firm position that most current
ICOs are in violation of the U.S. Federal Securities Act. The SEC clearly noted that the act of
selling tokens without any functionality, before creating an ecosystem, is in clear violation of
the U.S. Securities Act. Several companies who performed an ICO have already been ordered
to return the raised funds and were levied fines. Against this backdrop, post-ICO companies
are defending themselves with the argument that the tokens they issued are utility tokens,
not marketable securities. However, in determining the nature of the token, the U.S. courts
place greater weight on the nature of the relationship between the investors and the issuer,
and less on functionality. Recently, there was a court ruling that if return on investment was
the greatest motivation for token investors and if the investors were aware that managerial
efforts of the issuer or a third-party have crucial impact on the market price of the token, such
token constitutes a marketable security. The court also stated in the ruling that the name,
property or technical features of the token do not affect the judgment as to whether the token
is a marketable security or not.
Ironically, bitcoin has overcome prolonged regulatory controversy and impediments
including trading bans. The chairman of the SEC stated that bitcoin is a true cryptocurrency
and does not constitute a marketable security. The U.S. Commodity Futures Trading
Commission (CFTC) defined bitcoin as a commodity and placed bitcoin under its supervision,
not the SEC. The CFTC went on to permit brokered trading of bitcoin futures and options.
Selling tokens classified as securities to the public without prior approval from the relevant
regulatory body violates the U.S. Securities Act; the seller may face prosecution by a U.S. law
enforcement body if any of the investors is an American citizen. The global nature of
blockchain-based token makes it impossible to keep track of the nationality of every single
investor to exclude American citizens. Therefore, having a legal entity offshore or carrying out
an ICO in an ICO-allowing country does not necessarily mean the “no American citizen” rule
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is satisfied. Furthermore, it is not realistic to exclude American users altogether when the goal
of ICO is to build an ecosystem around genome information.
If the goal of ICO is ecosystem creation, not quick money, the issuer can opt for a path that
does not pose regulatory uncertainty. Generating coins by taking a snapshot of bitcoin’s UTXO
can help the issuer to overcome the initial challenges it may face in building an ecosystem. If
GNC is distributed to bitcoin holders in the ratio of one to one free of charge, it is a conditional
airdrop. Since bitcoin holders paid for their bitcoins, this conditional airdrop will show a
different price curve than a generic airdrop where coins are distributed to the public free of
charge. This was already evidenced in the hard forks of bitcoin cash and bitcoin gold where
market prices formed immediately after the hard fork.
Behavioral economists often use games to gain insight into the human mind. The ultimatum
game shows how credibility and context influence the behavioral patterns of humans. The
basic game involves two individuals who do not know each other. One individual is given ten
dollars and one chance to split it with the other player. They can offer to share any amount of
the ten dollars, but if their offer is refused both players get nothing. While game theory
predicts that the lowest possible offer will be made (last game; therefore maximize returns)
empirical evidence shows that, under these circumstances, the average offer is four to five
dollars. These findings lead researchers to tweak the rules of the game and investigate further.
What happens if both players are given a chance to be the person that decides the split, for
example, by providing that privilege to the person who guesses closest to the number of bricks
it took to make the Great Wall of China? In this case, the proposer becomes less generous in
their offer; they’ve won the right to more of the ten dollars. In another variant both parties
are told that the proposing person has that role because of some preferable attribute, they’re
older, or better educated, this lends them legitimacy. In both of these variants the proposer
offers the lowest possible split, and invariably, this split is accepted. Contextual information
may change their perceptions of fair distribution. Whether such contextual information is
rational does not weigh much.
22
Users will be able to trade their GNC for bitcoin. You need to own bitcoin to receive GNC in
our airdrop. This infers a baseline value to GNC, with bitcoin acting as the underlying value
which drives the derivative value of each GNC. This baseline value is supported by the
contextual expertise of existing bitcoin owners, in the same way as the preferable attributes
add value to the negotiating value of the proposer in the ultimatum game.
Lost coins and illegally acquired bitcoins will be excluded from GNC distribution by changing
the address system so that claims made past the designated period will not be redeemed. This
will result in a big variance between the total number of bitcoin supply and the total number
of GNC supply but will increase transparency and legality of the coin ecosystem as a whole.
After the billing period ends, the total circulation of GNC is inevitably less than that of bitcoin,
therefore we generate 6 million GNC in advance. Burning ten years’ worth of bitcoin ledger
from January 3, 2019 will give clarity to the total number of GNC in circulation and enable the
GNC ecosystem to have a fresh start in asimple and transparent manner. GNC is therefore
differentiated from bitcoin, as the high percentage of coins acquired through unlawful or
dubious channels are unlikely to participate. Conversely, restrictions on GNC claims will help
to reduce uncertainty around bitcoin ownership because it clarifies which addresses among
the large bitcoin holders are still valid and fair.
Rewarding the contributors of the ecosystem with GNC the issuer holds will help accumulate
indirect capital and increase the value of the entire ecosystem. The issuer has abundant
resources to invest in the public good portion of the ecosystem. In a hard fork, the issuer of
the new coin expects a natural emergence of a new coin ecosystem separate from the old one,
driven by technological advantages of the new system. But shortage of resources makes it
hard for the issuer to invest in improving the public service of the new ecosystem. Bitcoin cash
and bitcoin gold had first mover advantages; they were the first bitcoin hard forks and gained
much traction among investors. They were traded for bitcoin almost immediately after the
hard fork, pretty much as soon as an exchange rate was formed. Their starting price was not
zero. As they established a market price, mining power followed. The next 40 hard forks that
followed bitcoin cash and bitcoin gold failed to create a stir. Without an initial price, there was
23
no driving force to create an ecosystem. No price meant no miners, and the lack of miners
rendered their blockchains unsustainable. Without proof of the robustness of a blockchain,
investors left or did not come in the first place. This vicious cycle became their natural state
and could not be broken without an external shock to the system.
Distributing coins or tokens that carry a certain value in a structured manner will add vigor
to the ecosystem. Rewarding behaviors benefitting the entire ecosystem will induce desired
behaviors, which will in turn raise the value of the entire ecosystem. However, promoting
behaviors beneficial to all participants is challenging because of the hazards of selfish thinking
as shown in game theory’s prisoner’s dilemma. Individual participants tend to wait for others
to do things benefitting the entire ecosystem rather than doing them by themselves as this
would subject them to an unfair burden of cost. In this context, the faith that there is someone
out there who is willing to incur cost to enhance the ecosystem will bring greater profits to all
participants as is the case of GNC. Such faith will encourage participants to take risks, investing
more of their time and cost for the ecosystem. More participants mean a bigger pie and a
bigger slice for every participant. This will create a virtuous cycle or self-reinforcing prophecy.
When the participants witness the self-reinforcing prophecy in motion, the ecosystem will
overcome the initial-stage challenges and start to grow.
There is a discrepancy between what is preached by blockchain advocates and what is
achievable by blockchain. A single ecosystem alone cannot create a shared economy, as
portrayed by each ICO white paper that maps out our near future. From a technological
perspective, the world did not have to wait for 20 years to see the wide penetration of social
networks after the advent of the Internet. But, social networks became widespread only after
the mass adoption of smartphones. Certainly, not all the blockchain ecosystems, as depicted
by many ICO whitepapers, are phony, but it will take many years for them to become a reality.
It takes time for an ecosystem to grow enough to change our way of living. But impatient
investors who bet on the blueprint portrayed by the white papers and suffered losses are
blaming the delayed creation of ecosystems for their loss. Some early investors are asserting
that ICOs are a big scam designed to raise easy money that need not be accounted for.
24
GNC does not follow the typical ICO path. It does not raise funds by selling massive amounts
of coins up front. Instead, it creates an ecosystem around a well-established coin because the
goal of token sale is to build an ecosystem, not to raise funds. Using blockchain to enable
consumers to perceive the value of genome information will lay the groundwork for vitalizing
the blockchain ecosystem and the genome-based shared economy. A virtuous cycle can be
initiated to induce contributions to the genome-based ecosystem and increase the benefits
to all participants by leveraging the generic human trait of responding to incentives.
3.1 Taking a snapshot of bitcoin UTXO
As of January 3, 2019 at 0:00 UTC, the snapshot of bitcoin UTXO will be taken. Addresses
that contain bitcoins at that point in time can claim redemption of the number of GNC
matching the number of bitcoins it holds. This process is called “snapshot” instead of a hard
fork because public mining does not start immediately after the ledger is copied. It is more
accurately described as a phased or tranche based fork that is carried out step by step, in this
case, over a year.
January 3, 2019 marks the 10th year anniversary of the launch of the bitcoin system. This
will be a monumental day celebrating the robustness of the bitcoin system that has been
proven by its long survival in a hostile environment. However, no official ceremony is planned
to celebrate the anniversary as no entity is expected to spend its own money on marketing
activities that will benefit the entire bitcoin system. Copying the bitcoin ledger by GNC can fill
the void and serve as a memorable event for bitcoin’s 10th anniversary.
The approach of GNC by taking a snapshot of bitcoin UTXO instead of an ICO will cause a stir.
The controversy around GNC befits bitcoin’s 10th anniversary as it will raise a philosophical
question as to the essence of the innovation bitcoin has brought. Copying the bitcoin ledger
and using it as the seedbed for a genome-based shared community is backed by the argument
of bitcoin champions, that the growth of bitcoin has clearly demonstrated the core principles
of the coin ecosystem. This argument is aligned with the idea of bitcoin as a “currency”.
25
Mainstream bitcoin critics assert that innovation comes from blockchain, not bitcoin and the
survival and growth of the bitcoin is just accidental. To their eyes, bitcoin is a mere happening
that will end sooner or later. While taking interest in blockchain as a technological innovation,
they do not attach value to the past decades’ participant experience and group learning
elements of the bitcoin ecosystem. As a result, they have never tried to create a coin
ecosystem, leveraging the bitcoin community.
3.2 Raising a claim for GNC
After the bitcoin snapshot is taken, bitcoin holders can download the wallet app from the
GNC blockchain explorer and raise a claim for GNC. When their private key is typed in, the
wallet app will automatically trigger a transaction and create UTXO. This enables bitcoin
holders to obtain the same amount of GNC. Bitcoin holders will be entitled to claim GNC from
April 1, 2019 to December 31, 2020. Any GNC unclaimed by bitcoin holders during the claim
period cannot be retrieved after December 31, 2020 with a bitcoin holder’s private key alone
because GNC will be managed with the new private-public key pair system.
3.3 Lost coins
Lost bitcoins have piled up for the past 10 years. Lost coins occur because the holders have
forgotten owning the coins or have lost their private keys. According to several projections
(which are widely divergent), around 2 to 8 million bitcoins will never see the light of the world.
High concentration of coins by mega holders is another thorny issue for bitcoin. Addresses
containing over 1,000 bitcoins account for half of total bitcoins in circulation. Mega holders
are problematic because they undermine predictability. They may be long-term investors, but
they may be responsible for lost coins. Because of the lost coins, the market has no clarity as
to how many bitcoins are up for trading. This is paradoxical when bitcoin is supposed to be
more predictable than fiat currencies such as the US dollar or the Korean won as bitcoin has
a fixed mining cap and block time.
Burning bitcoin's past ledger drives a fundamental difference between GNC generation and
an ordinary hard fork. This allows elimination of lost coins and unlawfully acquired coins –
26
hackers’ wallets - from total GNC supply and greater predictability than bitcoin. Furthermore,
GNC can bring transparency to the bitcoin ecosystem as bitcoin holders’ GNC claim patterns
can give insights into the nature of big holder addresses.
3.4 Coin burning
Unclaimed GNC are expected to be over 10 million BTC since owners who illegally acquire
bitcoin and lost coins whose ownership cannot be specified will claim GNC. The total amount
of GNC is confirmed after burning 10 years worth of bitcoin ledger.
3.5 Use of GenomeChain-held coins
GenomeChain will divide 3 million GNC out of 6 million GNC it holds into six lots in the unit
of 0.5 million GNC and distribute one lot of GNC every year for six consecutive years. Coin
distribution will take place evenly throughout the year based on predetermined schedules.
Continuous and gradual distribution of coins will help minimize an excessive burden being
placed on the GNC ecosystem. GenomeChain will distribute 2 million GNC out of 6 million GNC
to early GenomeChain investors. Of the remaining 1million GNC, 0.5 million GNC out of the
remaining 1 million GNC will be distributed among platform architecture designers,
developers, advisors and GenomeChain executives and employees who contributed in
building the GenomeChain ecosystem. To eliminate the possibility of a secret block trade
27
involving token scammers, withdrawal of these genome coins will be frozen through smart
contracts, or time lock, for about a year until mining is open to the public. 0.5 million GNC are
airdropped at coin exchanges to help vitalize secondary markets.
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4. GNC Blockchain
In the GNC ecosystem, blockchain is employed for processing and approving coin
transactions and creating and storing colored coins. The GNC Blockchain is relatively free from
database efficiency and decentralization issues commonly experienced by other blockchains
that are focused on data storage and sharing and on smart contract platforms. This new
genome blockchain will be established independently and will be interoperable with the
blockchain of genome-based shared market platform.
GNC will minimize changes to the bitcoin program. The bitcoin protocol is the essence of
minimalism and its robustness has been proven through its survival in an adverse environment
for 10 years. Seeking full node attainment as a critical goal at the expense of database
scalability, bitcoin has achieved a level of distribution that has no single point of failure. Bitcoin
also boasts high predictability in both coin supply and block time. The fact that bitcoin is still
up and running reveals what it takes for a coin ecosystem to be viable.
GNC adopts bitcoin’s proof of work as its consensus algorithm. A key to bitcoin design is
making mining cost almost equal to the bitcoin price. This design makes it impossible for any
participant to build a scheme to gain special profits, which leads to fairness and downward
price rigidity (the price does not fall below a certain price range for a certain period of time
after it has skyrocketed or plummeted).
Criticism of bitcoin mining requiring high power consumption is largely misguided. Bitcoin
price hikes will increase power consumption, but bitcoin mining also benefits the electric
power industry by acting as a variable sink for off-peak electricity manufacture. Power
generation requires massive machinery and equipment, adding rigidity to production
management. Production schedules are developed based on peak demand. During off-peak
hours, electric companies are in a dilemma between discarding electricity generated, causing
waste or suspending operations, causing low utilization. This dilemma can be solved with
bitcoin mining. Electric companies can use off-peak electricity to mine bitcoins themselves or
sell it to bitcoin miners, both of which will bring more profits. They can work with coin miners
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to address, in part, the efficiency caused by their inability to adjust electricity prices to meet
demand fluctuations.
Some critics voice concerns that collaboration between electric companies and coin miners
may create power supply shortages for the average consumer. These concerns may not be
grounded given the global nature of competition among miners. Given the fact that peak
hours and peak seasons spread well across the globe, most of mining power is highly likely to
come from off-peak regions. Nevertheless, some mechanisms are required to get around price
rigidity. When signing a contract with coin miners, electric power companies can include a
provision prohibiting peak hour mining. It would be much simpler if power companies select
to become miners themselves. All they have to do is mine during off-peak hours and sell the
mined coins during peak hours or peak seasons. This will cause downward price pressure,
prompting uncompetitive miners to leave the market, which will result in less competition for
electricity.
This principle of competition can apply to any electric power company regardless of energy
source, be it renewable energy sources such as hydraulic and geothermal or more
conventional sources such as coal or nuclear power. Having a higher percentage of fixed costs
vs. variable costs, coal-powered plants as well as nuclear power plants can benefit from
collaboration with coin miners. However, cooperation with coin miners is dominantly pursued
by the operators of hydraulic and geothermal power plants. Small and medium-sized cities in
Canada and the northeastern region of the US, home to many hydraulic power plants, are
actively seeking partnerships with coin mining companies to revitalize their local economies,
overcoming the industrial hollow-out.
Proof of work facilitates the projection of the correlation between GNC price and mining
hash power. Because rising GNC price will attract more mining power, managerial efforts to
raise the value of the ecosystem can make the system more robust. The argument that it is
not easy to control the mining power needed to fight against a hostile force is valid only when
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coin prices rise too high. Otherwise, amassing mining power at low prices to protect the
system is a perfectly viable strategy.
Immediately after the nodes of new coins are opened to the public, the system can be
exposed to malicious attacks – even though such act does not bring any particular benefits to
the attacker it may be undertaken as an intellectual challenge or for publicity. However, the
issue of malicious attacks can be addressed through phased-in public access.
No single blockchain project was impeccable when first introduced. All the projects
underwent a governance crisis regarding program improvements. Multiple issues can surface
in early days of operation. Program changes may be required for various reasons including
technical glitches. This justifies centralized leadership in the initial stage of operations, at least.
For example, bitcoin had only a small number of miners in the early days and program changes
initiated by Satoshi Nakamoto met with little resistance.
The GNC project will have an incubating period with monopolistic management system,
which can hardly be called a blockchain in a particularly strict sense. Mining will proceed with
blockchain architecture in operation even during this period. As the program becomes stable,
the blockchain will be operated as a closed, permissioned blockchain among companies that
share the vision of a genome-based shared economy. Participants will be able to get up to
speed with the GNC Blockchain during this period. They will increase hash rates through
consensus and prepare for the public opening. When sufficient hash power is secured, the
system can be protected from any malicious attacks that may occur after its public opening.
High mining costs will deter malicious attackers who will give up on any haphazard attack
attempts when they expect the high hash rate from a friendly solidarity group to last for a
certain period of time after mining is open to the public.
4.1 Private blockchain - incubating
Technically speaking, the GNC Blockchain is not pure blockchain. GENOMECHAIN will
operate several full nodes to store ledgers on the blockchain and approve transactions. The
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hash rate and level of complexity is low. The complexity of mining will be controlled so that
confirmation will occur every 10 minutes allowing us to maintain the same cadence and block
time as the bitcoin blockchain. This is aimed at enabling the public and the market to
understand GNC based on bitcoins from which they are derived. This period will see no mining
attacks by outsiders as node access is limited to qualified applications. Hacking will be blocked
by firewall and encryption. The ledger will be copied periodically to capture the transactions
occurring in this period and will be stored separately. This will allow ledger recovery or
program improvements even after the occurrence of hacking and prevent a panic-caused
chain reaction leading to system collapse.
GenomeChain will deploy an app that will allow bitcoin holders to claim GNC. During this
claim period, GNC holders can trade their coins in the same way as bitcoins using the wallet
app distributed by GENOMECHAIN. Bitcoin holders can claim GNC until December 31, 2020.
They can transfer GNC to other GNC wallet holders or trade them for dollars or
cryptocurrencies like bitcoins through exchanges or over the counter transactions. You can
read more about GNC transactions or blockchain at the GenomeChain website
www.genomechain.co.kr.
4.2 Delegated mining
Once the claim period ends, GENOMECHAIN will finalize total GNC supply. Then, the colored
coin blockchain will go into full operation. Companies wanting to participate in the GNC
ecosystem will be selected and 10 global mining companies will share full nodes and engage
in mining in a closed setting. Mining share will be determined through consensus and hash
power will be adjusted continuously in preparation for public opening. During this period, 12.5
GNC will be mined every 10 minutes, the same rate of mining for bitcoins. The cost of mining
will be much lower than the price of the coin with the differential passed to partner companies
for offering hash power.
The GNC Blockhain will have immutability and visibility even during this delegated mining
period. Fatal errors, however, can be addressed through consensus among participants, which
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is an advantage of delegated mining. Governance will be in place, but it will be hard for a single
entity to tamper with data unilaterally. As colored coins are issued with service offerings the
program will stabilize.
4.3 Public opening
When the program is proven to be stable, the GNC Blockchain will be open to the public and
any miners can participate in mining. The acceptance of colored coins, proof of program
stability and clear market value of the coins will attract more miners. Thanks to the delegated
mining period, the system remains ready to stave off potential 51% attacks that may occur
post-public opening.
Once the system is open to the public, GNC will work just like bitcoin with no single entity
having control over the system and the blockchain will be immutable. A crisis in the program
can inevitably escalate into a governance crisis because consensus can hardly be reached on
program or system change. A governance crisis will lead to the separation of ecosystems
through a hard fork. As the largest GNC holder GENOMECHAIN may be able to exert leadership
in a limited manner, but the greater the credence GENOMECHAIN attaches to the principle of
transparent and predictable distribution of the issuer’s coins, the weaker its leadership will
become. Absence of centralized leadership and the existence of decentralized governance is
the strength of blockchain. The GNC Blockchain will not be controlled by any one party, be
that a regulatory body, or a hacker.
After public opening, once stable operation is achieved, GENOMECHAIN may consider
donating some of its coins to establish a GNC Foundation for psychological leadership of our
coin ecosystem.
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5. Developments in genome industry
Precision medicine is an approach to patient care that
allows doctors to select treatments based on genetic
information and the resulting physical differences of
each patient. Conventional medicine administers, more
or less, standardized treatments to all patients with
same diseases, which can work well for some patients, but can cause adverse reactions for
others. Precision medicine treats patients based on their unique genome information and
potential correlation between their genetic predisposition and their diseases. Precision
medicine has been adopted in some healthcare areas with particularly pronounced advances
34
in oncology. Precision medicine is also instrumental in disease prevention. It helps to analyze
individuals’ genetic information to understand the chance of developing certain diseases and
to provide them with personalized lifestyle or exercise recommendations, heralding the age
of personalized healthcare service.
Genome-utilizing sectors, including precision medicine, require secure access to accurate,
truthful genome information from individuals. Developing drugs and treatment for diseases
caused by exogenous pathogens is relatively easy because patients will mostly get well once
the particular pathogen is removed out of their body. However, treating diseases involving
gene or hormone disorders is more complicated because they involve complex in-body
mechanisms and thus a single drug or therapy may not be sufficient to eliminate the
symptoms. These types of diseases can be best treated with customized treatment regimen,
developed through interdisciplinary approach, requiring collaboration among health care
providers, pharmaceutical companies, genetic sequencing companies and big data-based app
developers.
The Human Genome Project, the first genome-sequencing project, was completed thirteen
years after its start in 2003 with a total investment of 3.8 billion dollars. During the past fifteen
years, since the end of the project, genome technology has advanced exponentially, resulting
in dramatic declines in the cost and lead-time of genome sequencing. This has led to rapid
commercialization of genome sequencing technology. Since the advent of Next Generation
Sequencing (NGS) in 2017, the speed of technological innovation has accelerated even further,
substantially lowering sequencing cost and creating a full-blown market for genome
sequencing. The NGS market is growing by 20% every year and is expected to reach 13 billion
US dollars by 2020.
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-– Declining sequencing costs
Genome is one of the fastest growing areas in big data. The cost of genetic sequencing has
come down to as low as 1,000 dollars. With decreased cost and lead-time, orders for genome
sequencing are on the rise. As of February 2018, 12 million individuals have used a genome
sequencing service.
- Growth of DTC genetic sequencing market -
Precision medicine is growing by 12.6% every year and is estimated to post 89 billion US
dollars by 2022. Advanced countries including the US, the UK, Japan and China are leading the
market. The UK became the first country to adopt policies on precision medicine in 2012 when
David Cameron, the then British prime minister, announced “100,000 Genome Project.”5 The
project aimed at securing whole-genome sequencing data of 100,000 British people – a
combination of healthy people, cancer patients and rare disease patients – under the
leadership of the National Health Service. The United States’ precision medicine initiative is
5 http://www.medigatenews.com/news/393453848
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designed to create a large-scale, cohort database of 1 million volunteers with a budget of 215
million dollars6. The cohort database will include data on genome, clinical examinations, living
conditions, lifestyle habits and field of profession, which will be used to develop a knowledge
database named the “Precision Medicine Dictionary” on diseases, causes of diseases,
treatments, and new drug development. Japan established the “Individual-based Medical
Information System” project as the product of the Agency for Medical Research and
Development (AMED) 7 . This was carried out to materialize genome-based medicine for
disease treatment with an investment of 83 million dollars (9.3 billion yen). In July the same
year, Japan ran a project of treating pediatric patients suffering from diseases with unknown
causes with genetic sequencing information. They also laid the foundation for providing
medical information to individuals to increase healthcare efficiency and to encourage them to
take actions necessary to stay healthy. In March of 2016, China announced future investment
totaling 9.5 billion dollars for the next 15 years or 634 million dollars per year, to implement
the “Precision Medicine 5-Year Development Plan”. As part of the plan, hundreds of projects
kicked off to collect genome data and clinical data. Korea also embarked on the
“Intergovernmental Genome Sequencing Project’ with a budget of 515 million dollars (578.8
billion won) for the eight years following 2014. This project aims to secure world-class genome
research resources and information and develop customized prevention, diagnosis, and
therapeutic technologies in order to facilitate customized medicine.
5.1 Changes in the regulatory environment
Falling costs have extended the scope of genome sequencing to lifestyle improvement and
disease prevention. A lack of scientifically proven genome information is limiting use cases to
low-risk areas and stifling the emergence of new genome-based services. Attention paid to
new services launched quickly dissipates because of a correspondingly poor consumer
experience. On the positive side, governments are moving to ease regulation amid
heightening pressure from optimists who believe in advances in genome technologies and
their expected benefits.
6 http://www.medigatenews.com/news/2580060783
7 http://www.ibric.org/myboard/read.php?id=2698&Board=report
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Direct to Customer (DTC) refers to genome tests being requested directly by consumers, a
growing market as the US moves toward deregulation. DTC tests have been heavily regulated
in many countries to prevent DTC services not backed by scientific methods. In the US without
explicit regulation on DTC tests, “23andme” launched DTC testing services, and was subject to
supervision by the FDA. In 2017, however, they obtained FDA approval for their DTC tests for
ten diseases including Parkinson’s disease and Alzheimer’s disease. In March of 2018, they
secured FDA approval on DTC tests for the BRCA 1/2 gene, the first cancer screening DTC test
approved in the US. With this approval, FDA made cancer screening tests available for
consumers in four years after they issued a ban on the sale of gene test kits at the end of 2013.
The US genome sequencing market is massive in size, accounting for about 50% of the global
market. With 23andme, Navigenics, Pathway Genomics and Knome taking the lead, the
market is gradually expanding. DTC test market grew by 25.1% every year from 70 million
dollars 2015 and is expected to grow to 340 million dollars by 2022. This remarkable growth
was driven by the FDA approval of DTC tests in the US. After approving the extended scope of
DTC test applications in last April, the FDA announced pre-certification (pre-cert) schemes for
Genetic Health Risk (GHR) tests in November. More recently in March 2018, the FDA approved
DTC tests for BRCA genes for certain mutations.
Some service providers suggested the adoption of the “hybrid DTC model” to boost DTC tests.
Under the hybrid model individuals can have DTC tests freely, but need to engage healthcare
providers for interpretation and additional tests. The hybrid DTC model attempts to find a
middle ground between two conflicting views as to who need to have control over genetic
information. Some view genome information as part of medical information and argue that
experts, not the genetic data owners, must have control. Others believe genome information
is part of sensitive information and thus needs to be controlled by the data owners. The hybrid
DTC model moves some control away from the data owners to medical experts, who will
supervise the access to and analysis of genetic information. This hybrid model is designed to
accelerate deregulation on DTC tests.
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5.2 Genome sequencing cost
Only a small percentage of people around the world possess their own genome information.
Although technological advances have brought sequencing costs down to about 1,000 dollars,
consumers believe genome sequencing price is still too high for the value they get. In a survey8
conducted by a sequencing service company in February this year, only 2% of the respondents
said that they had their genes sequenced. For the question asking the major reason for not
getting a genome sequencing service, “high prices” was ranked number one, cited by 29%.
When these 29% respondents were asked to suggest appropriate price points for genome
sequencing, 33% said “less than 100 dollars” and another 33% said “less than 250 dollars”.
These findings reveal that sequencing price reductions driven by technological advances are
still not enough to overcome consumers’ psychological price barriers.
5.3 Concerns over data security
According to previous studies, many individuals expressed their intention to share their
genetic information for the development of medical technologies and improvements in
human health. For example, in a survey 9conducted by PatientsLikeMe’s, an online research
platform, on social media users in the US, 92% said that they were willing to share their
medical data with research organizations for disease studies and 85% said that they were
willing to share their medical data with pharmaceutical companies for the launch of safe
products. But, they said that they would share medical data only when it is guaranteed that
data shall be kept confidential and their consent shall be obtained prior to use of data. But,
the genetic data owners have no means to check if their genetic data have been used without
their prior consent and they have no choice but to trust what they are told. Possibility, even if
it is a remote possibility, of their data being used without their prior consent can cause
concerns, which will be an impediment in the growth in genetic data sharing.
8 Marshall, Deborah A., et al. “What Are People Willing to Pay for Whole-Genome Sequencing Information
and Who Decides What They Receive?” Genetics in Medicine, vol. 18, no. 12, Feb. 2016, pp. 1295-1302.,
doi:10.1038/gim.2016.61.
9 https://news.patientslikeme.com/press-release/patientslikeme-survey-shows-vast-majority-people-health-
conditions-are-willing-share-t
39
Lack of transparency in the post-sequencing process leaves no choice for the genetic data
owners but to trust involved companies. In this environment, individuals may be reluctant to
share their medical and genome information even for a higher cause. Hence, a transparent
ecosystem is needed to give peace of mind. An ideal ecosystem is one that allows data
contributors to choose which organizations they will share their data with.
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6. Using genetic data to promote social goals and a shared economy platform
Genome colored coins center around personal identification and entertainment. The coins
capture selective genetic information that helps identify an individual by appearance,
excluding any sensitive disease-related information. Sensitive genetic information will be
encrypted and stored on the server. Encrypted information, even if hacked, will be useless in
identifying an individual. Sensitive genetic information, if decrypted, can be used for research
purposes with prior consent from the data owner. The individuals themselves cannot release
their genome information as control is shared with the platform. This feature conforms to
current regulation; that require genetic data owners to seek consent from medical experts
when accessing their own sensitive medical information, while giving the data owners
decision rights regarding their genetic information. Shared control has other added benefits:
It prevents any leakage or abuse of sensitive information through general user error and it
helps prevent hacking because information cannot be accessed with the owner’s private key
alone.
GNC will serve as a catalyst for the genetic data ecosystem. High expectations exist for the
potential of genome information in tackling diseases and raising quality of life. Despite these
high expectations, genetic data collection occurs slowly due to price and regulatory hurdles.
From an economic standpoint, the genome data market has a high dose of positive
externalities. Individuals getting their genome sequenced will see immediate benefits as their
genome data will be used to offer them personalized healthcare services, including lifestyle
recommendations, through precision medicine. Giving consent to pool genetic information
will help broaden humans’ knowledge horizon on genome, disease and life patterns. This
knowledge will boost the development of medicine and related industries and bring down
sequencing costs. But no matter how high the unit utility (benefit) to unit cost ratio becomes,
the current genome sequencing market cannot reach equilibrium. All the benefits of
sequencing do not attribute to the individual consumers picking up the bill, instead they
benefit society as a whole. This natural state of leakage will lead consumers as a group to
cease genome sequencing at a point where their utility equals their cost. In this case, the
market is not in equilibrium from the perspective of the whole society because production
41
and consumption reach equilibrium at a point where total costs are lower than total utilities
based on both public and private benefits. If it were a different market, not the genome
information market, government would step in and stimulate demand with subsidies in a
measure to address the market failure and to achieve market equilibrium. But the government
in the genome information market is more tilted toward its role as a supervisor than as a
promoter.
The market could reach equilibrium if
genetic data owners are incentivized to share
their information. This concept underlies the
“sell your DNA” market approach. If economic
incentives are not enough to motivate owners,
then the call to action where users share in
service of humanity and financial gain as
provided by GNC may act as the catalyst
needed for private subsidy of the public good from shared genome data. Rewarding data
contributors with cash incentives and rewarding them with GNC may seem like similar
strategies but they are very different and can make a huge difference in outcome. Compared
to cash, GNC have high price volatility in their initial stage. This very feature makes GNC a
better form of incentive for data sharers. Recipients of GNC can relieve themselves from guilty
conscience that they sold their genetic information for cash.
6.1 Data sovereignty and free sequencing
If regulation is a physical barrier, affordability and data
security concerns are psychological barriers. Data
sovereignty refers to the concept that data owners should
be given ownership of their data and control over them.
Individuals pay when they get their genome sequenced and
they pay additional charges for services that use their
genome information. Companies that hold data sell that
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data and make profits. This asymmetric situation can be improved if a direct transaction can
take place between data owners and potential data buyers. With blockchain, data owners can
have control over their genome data. They can decide which subset of genome information
they will sell to which companies and to which projects at what prices. In addition, they can
track how their genome data are being used after the sale. In the GNC ecosystem, users can
receive GNC by engaging in certain activities and use the coins to purchase services offered
on the platform. As genome sequencing can be paid for with GNC, GENOMECHAIN expects to
collect genetic data of over 200,000 individuals by 2020. At the current rate of cost reduction,
by 2025 sequencing can be offered at an infinitesimal cost just enough to cover administrative
costs incurred.
Normally, the credibility of a research rises with increases in the number of samples
included in target and control groups. It may not be the case for genetic data collection. Select
and focus is a better strategy at least in the initial stage, focusing on depth rather than breadth
in terms of disease coverage. Collection efforts need
to be focused on patients with rare diseases,
diabetes or cancers like breast cancer, colorectal
cancer, and prostate cancer. Previous studies
indicate that precise results can be obtained on
samples of about 40,000 patients per disease.
Furthermore, genome data of patients with specific
diseases can boost new drug development effort. Given the high value of disease-specific
genome data, patients with target diseases need to be incentivized to share their genome
data. The GNC project is designed to provide the needed incentives, through an ecosystem,
to patients with hard to cure diseases. Therefore, it is urgent to build the genome-based
ecosystem.
6.2 Data security
The diagram below is MGBlockchain’s service architecture excluding blockchain. Individuals
access the server and upload their genome data on the cloud platform. Based on their genome
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data, apps will send the users personalized recommendations on categorized products or
services. But, this architecture does not include a mechanism to address users’ concerns over
data security. Because dealing with genome data, extremely sensitive personal information,
naturally entails concerns over data breach, data misuse and abuse, hacking and overall poor
data management. The architecture also lacks transparency in data transactions and the
reward system. These deficiencies can make people reluctant to use the services.
To overcome these limitations MGBlockchain
will create a blockchain, which will ensure secure
data storage, transparent relationships between
the users and partner companies, and data
sovereignty. MGB has security solutions used to
securely process private information.
MGBlockchain complies with international
security standards, ISO 27001, 27017, 27018, and CSA STAR. With blockchain, data can be
stored more securely against the risks of hacking or data breach. Furthermore, MGBlockchain
will carry out security verification with application developers and data buyers. This
verification is aimed at preventing post-purchase data use outside the purview of original
purposes and registration of problematic applications. Registration will be limited to
applications committed to proper use of genome data within the purview of the user’s
permission. Violating applications shall be expelled from the ecosystem.
Running on the blockchain platform, the ecosystem will allow users to track where and how
their genome data are used. The requirement of obtaining user consent before any data use
will block data use or sale without the user’s knowledge. Users can determine the level of
granularity for their data provision and refuse to sell to uncongenial buyers. They can also
donate their data to new drug development projects of their interest.
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6.3 Information expansion and service offering
The genome-based shared economy platform not only enables individuals to understand
their genetic features, health status and risks of diseases, but also offers a variety of app-based
services, ranging from information on various diseases, to personalized healthcare
recommendations and even to entertainment services. Under the theme of “from cradle to
grave”, the platform aims to help individuals improve their health throughout their lives across
different life stages: rare disease tests and missing child tracking service for ages 0-9: genetic
aptitude tests, personalized diet and skincare, and aerobic capacity tests for ages 10-29;
partner matching service, early menopause tests, and Alzheimer’s diagnosis for ages 30-49;
and major cancer screening for ages 50+.
6.3.1 Proactive management of potential diseases
Rapidly growing DTC tests have wide use cases among which disease management is
attracting the greatest attention. Disease-specific genome sequencing companies provide
information on potential risks of diseases including cancer, obesity, Alzheimer’s and heart
attack. Disease-specific genetic sequencing is highly accurate in diagnosing certain diseases
like cystic fibrosis and Huntington’s disease. Even for more elusive disorders such as renal
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diseases, asthma and obesity not directly linked to genetics, genome sequencing can still add
value by offering estimated risks in the form of probabilities.
Some voice concern that genome sequencing can spread fatalism. But genome information
does not determine the fate of an individual. To the contrary, it instills a mindset that the
course of one’s fate can be altered through healthier lifestyles and preventive care.
Alzheimer’s occurs by a combination of 70% of genetic factors and 30% of non-genetic factors.
The “APOE” gene shows the highest correlation with the onset of Alzheimer’s, but not all
APOE carrying individuals develop Alzheimer’s, largely because of non-genetic factors. This
indicates that controlling non-hereditary factors could reduce the risks of Alzheimer’s or delay
its onset. Genome-based personalized healthcare recommendations can engage APOE
carrying individuals to undertake more specific activities that are effective preventative
actions. Drinking moderate amounts of coffee instead of alcohol, getting regular cognitive
tests and dental care, and socializing with close friends and families can all help lower risk for
APOE carriers. Low-risk individuals not carrying APOE can adopt more general activities like
regular workout, moderate wine drinking, and omega-3 intake, and efforts to improve
cognitive ability.
6.3.2 Personalized diet
Nutrigenomics highlights the importance of genome-based diet on the ground that gene
mutations of individuals can affect metabolism and actions of nutrients in the body. For
example, Korean women have lower concentrations of Vitamin D in the blood than women
from other countries even if they are exposed to the same amount of sunlight. VDR genes
responsible for in-body vitamin D synthesis make that difference. Korean women are,
therefore, better off taking Vitamin D rich food. In another example, deficiency of methyl-
related nutrients increases in-body homocysteine concentrations and can raise the risks of
cancer, dementia and cardiovascular diseases. Other studies revealed the efficacy of turmeric
and green tea in improving genome methylation, histone deformity, and micro RNA, affecting
the actions of enzymes and protein and subsequently gene expression.
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Food will be at the center of personalized service in the future. The nutrigenomics market
will grow at an annual rate of 16.8% to reach 17 billion dollars by 2023. The world will see an
explosive growth of ecosystems that offer personalized dietary management services based
on the combination of genetics and lifestyle data.
6.3.3 Personalized exercise planning
Previous studies show that genetics determines
whether an individual is either a morning person or
an evening person. Advances in genome sequencing
combined with big data and Artificial Intelligence
capabilities will boost personalized lifestyle planning
service. Physical exercise is an important element of
lifestyle habits and its impact on health is as direct as
diet. In fact, many patients have successfully
recovered from disease through regular exercise coupled with therapeutic diet.
Humans’ skeletal muscles can be classified into two types of muscle fibers: fast-twitch fibers
(type II) required for longer duration activities; slow-twitch fibers (type I) for activities with
quick bursts of power and speed. The “ACTN3” gene determines the ratio of fast-twitch and
slow-twitch fibers. Depending on the ratio, individuals can be fast-twitch dominant, slow-
twitch dominant or middle-type. Different workout programs are recommended to different
types. Weight training programs focused on increasing both weight and reps are better for the
fast-twitch dominant type. Programs with more reps with less strength are better for the slow-
switch dominant type. Even with the same amount of activities, workout results may vary
person to person because of individuals’ ability to reduce blood sugar and cholesterol levels
and to gain muscles. Many researchers are looking to find genetic markers that can explain
the difference in such ability.
When the app containing genome information is connected to wearable devices, it can
generate the analysis results of the wearer’s daily activities such as actual amount of daily
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exercise vs. planned, issues with lifestyle habits and stress level. Using these results, trainers
can provide the users with ways to increase the amount of health-boosting activities at a
minimum cost and effort with a visualized wellness plan. The users will learn how small
choices in everyday life such as walking to work instead of driving or using the stairs, when
practiced for a long time, can help improve their health and be encouraged to implement the
plan. Setting concrete goals and getting feedback on implementation will reinforce positive
behaviors.
6.3.4 Genome-based social network
Patients tend to use social networks to share information on their diseases. Social media can
serve as a channel to acquire medical information on new drug development or efficacy of
new drugs and to seek advice on lifestyle habits. All of these will combine to give a peace of
mind to the patients. As can be inferred from the survey results mentioned earlier that more
than 80% of the respondents expressed willingness to share their medical data, people have
a good will to help out others of similar hardships. People with genes vulnerable to a certain
disease will likely reach out to other people with similar conditions: those who have recovered
from the disease; those who are currently fighting the disease; and those who have the gene,
but have yet to develop the disease.
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Going one step further, if people with certain genes can be connected through a platform,
the concept of social networks can shift again. The Internet enabled social networks
transcending time and space. Genome information can add an element of “biological
solidarity” to the time-and space-transcending social network. People with mutant BRCA1 and
BRCA2 genes highly linked to breast cancer are likely to develop a strong bonding among them.
With deregulation, the genome-based platform will increasingly take the form of a social
media platform like Facebook.
6.4 Growth of the ecosystem
As the GNC ecosystem with a clear reward mechanism attracts more participants,
sequencing companies, pharmaceutical companies, app developers and health care providers
can secure vast amounts of data and select their markets on the GNC platform. In addition,
they are additional factors that lure players into the GNC ecosystem.
Firstly, the ecosystem ensures transparent transactions. As transparency and certainty in
transactions are secured in the GNC ecosystem even without a trusted third party, app
developers can accurately track the record of app downloads. Currently, at pharmaceutical
companies researchers do most documentation manually on genome data collection related
to data compliance, price negotiation and contracting. This makes genetic data collection
time-consuming and costly. Smart contracts solve this issue through the coin ecosystem.
Secondly, personalized information facilitates market segmentation. Breaking up markets
into smaller segments and developing customized services for each segment will create new
demand. Insurers can develop personalized insurance products. Diet or fitness partners can
classify their members into small groups of individuals sharing similar genetic traits and offer
tailored optimal workout and dietary programs for each group.
Thirdly, data can be standardized. Unstandardized data requires additional cost. Genetic
sequencing data need to be standardized before the establishment of an ecosystem. When
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the genome-based ecosystem grows, the ecosystem’s data standardization approach can
become the industry standard.
A series of steps comprising the process from
GNC to the genome-based shared economy will
take place in a virtuous cycle with each step
reinforcing the next. Users will acquire coins
through various channels and use the coins to pay
for genetic sequencing service. More users
purchasing sequencing service means more
genome data and expanded genome knowledge
base, which will be leveraged to offer personalized services. Personalized services will attract
more participants into the ecosystem. Enjoying greater profits, partner companies will invest
more in knowledge and innovation. The growth of the ecosystem will bring more benefits to
participants. As a result, the ecosystem will flourish.