By Ray Birch
WASHINGTON—CUNA is optimistic that by the end of the year, or possibly sooner, it may have test sites for its blockchain initiative ready to roll out to credit unions.
CUNA Chief Policy Officer Bill Hampel told CUToday.info that its CULedger project, which recently delivered a successful proof-of-concept, has now reached the point of “refining the proof of concept and assembling a business model to make CULedger available to credit unions and system-related organizations if they want to invest in it to take it the next stage of development.”
Hampel said that to date the project has been funded by credit unions interested in the concept donating money to the effort.
“That money was all contributed to research projects, and did not represent any purchase to own anything,” Hampel explained. “Now the next stage is to form that business model…that interested credit unions and system-related organizations can buy into. So, we’re looking for investors.”
Hampel said there are a number of credit unions expressing interest—70 jumped in at the initial concept stage and more than 200 others are currently expressing interest.
Hampel acknowledged that blockchain efforts are not always the easiest to understand or explain, but that more people, including a significant number of credit unions, have begun to understand how the blockchain works and how credit unions can leverage the platform.
“Maybe the best way to describe CULedger is to say it is analogous to the Apple App Store,” he explained. “What CULedger will do is generate, maintain and support a platform that is based on something close to a blockchain—a distributed ledger on which credit unions and system-related organizations will be able to run their own applications for whatever purpose they decide.”
Hampel said CULedger would collect fees from third parties and others that want to use a credit union based blockchain to develop and sell applications and utilities to CUs based on blockchain distributed ledger technology.
Hampel noted that a critical aspect of any distributed ledger platform is whether or not it is open to anyone or is permission based.
“Permission-based means only vetted players can play, and ours is permission-based, so it’s only going to be for credit unions and system-related organizations to serve as nodes on our distributed ledger,” he said.
Not A Product
Hampel emphasized again that CULedger is not a product offering, but a platform to run applications.
Examples of applications that may run using CULedger, said Hampel, are call center authentication and online and mobile banking enhancements.
“Also analogous to the Apple App Store, when the App Store got started it had a couple of its own applications to demo it to get it started,” said Hampel. “We are developing one app which is a mechanism credit union call centers can use to authenticate their members so they don’t have to play 20 questions when a member calls in, and therefore jump right into providing service. Another app we are considering is one for loan participations. A credit union could set up an app to place on CULedger and make it available so buyers and sellers of credit union loans can find each other and use it as a clearing house.”
Hampel added that blockchain certainly could be used to support payment applications. However, it is not suited for high-volume, low-dollar transactions.
CUNA is looking at “weeks, not months” to have a business plan to roll out to credit unions to offer them a chance to invest in CULedger.
“Then, we are shooting for end of the year, and possibly sooner, to have functioning test sites running in terms of not only the nodes on the blockchain but also the first applications of it,” Hampel said.
As CULedger rolls out, Hampel acknowledged that educating credit unions on the blockchain is an important step. He said that CUNA has been providing a basic introduction to blockchain at its meetings, in its publications and at other various points in the rollout of CULedger. Hampel believes credit union leaders better understand blockchain today, due in part to the growing amount of good, understandable information on the Internet.
“At first much of what you read on the Internet was not much more than gobbledygook, and hard to really understand,” said Hampel. “The repository of information on blockchain has greatly improved.”
Hampel added that someone does not have to be a blockchain expert to use the platform.
“It’s like sausage,” he said. “You don’t need to know how sausage is made to enjoy sausage itself. You don’t need to know how blockchain works to benefit from the applications that run on it.”