PALM DESERT, Calif.–When it comes to getting one’s arms around cryptocurrency, blockchain and related changes, it helps to follow a MAP, according to one person.
In remarks to the California and Nevada Credit Union Leagues’ REACH Conference here, Lamont Black, a professor at DePaul University in Chicago who is an expert on cryptocurrency and a frequent speaker to credit unions, said the best way to understand and respond to the rapidly evolving crypto/Blockchain landscape is to think of money, assets and platform, or MAP.
Black has become particularly well known for making much more understandable what many see as a complex subject.
“Fintech has changed. I want you to start thinking about crypto as fintech,” he said. “Crypto is the future of fintech. It’s fintech 2.0. Crypto can be used to provide financial services. This has the potential to transform the nature of what you do as a credit union. So, every credit union should be assessing the adoption of this. I’m not saying you should be doing this, but you should be assessing a strategy. Crypto has gotten crushed this year but it’s not dead. It will be back. Think about your credit union and how you want to position yourself. I want to encourage you to think about all these different directions you can go.”
M is for Money
“Money has taken many different forms in the past,” pointed out Black. “The U.S. dollar is ‘fiat’ currency, it’s not backed by anything physical. Now, it’s just managed money. Is that the only way to do money? I would argue no. Bitcoin, introduced in the fall of 2008, is a paradigm shift in the way we think about money. It is peer-to-peer digital cash. The problem with physical cash is it is physical. In a digital economy, it doesn’t work. PayPal, Zelle, they call themselves peer to peer, but crypto is much closer to that. This is money as data. It’s all zeroes and ones. You are now managing your members’ money on your ledger. What crypto does is transfer money and breaks down the silos. “
To that end, Black encouraged credit unions to think about the future of payments.
A is for Assets
“Crypto as an asset is where we are today,” Black said. “Many focus on crypto more as an asset than as a currency. It’s something to own as an investment for financial well-being. As money is digitizing, assets are also digitizing. Non-fungible tokens (NFTs) are a digital record of ownership. Start thinking about whether you do car titles or real estate titles as NFTs, as a way to record ownership on the blockchain.”
Black noted many members have already withdrawn or are withdrawing their funds from the credit union and depositing them into Coinbase as a technology investment.
“The question is, does your credit union want to discourage this or facilitate this?” he asked. “There is no right answer to this, as you do have reputational risk at stake, but you don’t want avoid this.”
P is for Platform
“Blockchain is the technology behind all of this. Whether crypto or NFT, you can own all that in a single digital wallet recorded on the blockchain,” he explained. “What is blockchain? It’s a system for shared record-keeping. Blockchain is distributed. What makes it different is it’s in distributed ledger. The benefit of that is we can all see it. It is a single source of truth that does not require reconciliation. There’s no more end of day reconciliation. Blockchain is a network consensus mechanism.
“Think about your members in this MAP,” Black encouraged.