WASHINGTON—CUNA and the Mountain West CU Association offered a first overview of their blockchain project, CU Ledger Open Source, during a webinar for affiliated CUs from across the country.
The project is exploring the potential use cases for blockchain technology within the CU system.
CUNA and the MWCUA are seeking to enlist participants while developing a prototype platform before launching, explained CUNA Chief Operating Officer/Chief of Staff Rich Meade during the webinar that according to CUNA attracted 350 participants and likely hundreds more listeners. Meade said the idea is to create interoperability among credit unions regardless of their core systems, third-party products or platforms for quick adoption to the blockchain.
“We want as many credit unions to participate in this proof of concept as possible,” Meade said. “The more participants we have, the more nodes we have, the better we will be able to validate the data and the more reliable that platform will be.”
CU Ledger Open Source project organizers are asking for financial contributions from credit unions that want to get involved in the project: $1,000 for credit unions with assets of under $500 million; $5,000 for credit unions with assets of $500 million to $1 billion; and $10,000 for credit unions with assets of more than $1 billion, CUNA said.
“CUNA President/CEO Jim Nussle has challenged the credit union system to be disrupters and not be disrupted,” Meade told the participants. “This is the perfect opportunity for credit unions to come together and form our own network and be the disrupters. This technology, in my opinion, is coming. That’s all the more reason for us as credit unions to build our own platform, then have someone dictate the terms to us.”
Participants will serve as a node on a permissioned shared ledger network. The proof of concept will not be integrated with any core system or other sensitive data, said John Best, president/CEO of Best Innovation Group, who is assisting with the project implementation. “It will not be connected to anything at the credit union,” Best said during the webinar. “We will be using false data. Credit unions can wall it off in the cloud if they wish.”
At its most basic level, blockchain technology is a private transaction database. However, in contrast to a traditional database, information on a blockchain can be accessed by participants without the permission of a central administrator. Rather, the blockchain is managed as a network of computers, much like the Internet, with each connected participant’s computer defined as a “node.” Each node has a record of the entire blockchain, ensuring the integrity of transactions. Because each node has a record of every transaction, the blockchain is also called a shared ledger, CUNA explained
Credit unions could potentially use a permissioned shared ledger not for moving money but for moving data such as “smart” contracts, assets, settlement documents, and identification information that can be tracked and verified in minutes rather than hours and days, CUNA said.