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Can CUs Afford to Wait and See on Blockchain?
Tuesday, April 5, 2016 6:30 AM

By W.B. King

According to an article in CU Journal, if credit unions continue to take a wait-and-see approach on blockchain technology, they will miss out on the opportunity to help shape not only how it will be used, but how it will be regulated.

The first step is developing an understanding of what blockchain is and what it's not. In an effort to better understand blockchain and its relation to cryptocurrencies and the financial industry, Best Innovation Group recently released a podcast called "Mission Impossible: Explain Blockchain." One key takeaway: blockchain should not be defined by bitcoin.

"Most laypeople still equate Blockchain with Bitcoin and with that comes an image of currency speculation, shady transactions, the Mt. Gox meltdown, etc.," said managing principal at 154 Advisors, Glen Sarvady, who served as guest panelist on the podcast. "Bitcoin is merely an example of an application of Blockchain. It was an interesting proof of concept, but most of the investment attention is focused on broader applications."

Best Innovation Group CEO John Best stated that Bitcoin has value, but said to date there is an inherent trust issue with Bitcoin that has stymied the perception of Blockchain. It is important, he said, to differentiate Bitcoin and Blockchain in this ecosystem.

Blockchain or "distributed ledger" is often linked to cryptocurrencies such as Bitcoin. And while there are more than 20 cryptocurrencies worldwide, Bitcoin, released in 2009, was the first decentralized ledger currency.

"The concept of the distributed ledger is planting strong roots in a variety of areas from government applications to financial services and beyond," said Paul Mica principal for The DMA Group. "With the cover off of the technology, blockchain discussions turn to development, implementation and regulation," said Mica. "Now is the time for credit unions to engage and stay ahead of the curve."

Read more about Blockchain.