Several banking organizations have piloted projects to develop the use of DLT, but Esser said CULedger is probably the most advanced in terms of its development.

CULedger differs from blockchain although the two are often used interchangeably when referring to distributed ledger technology. Blockchain, which organizes data into blocks that are chained together, is one type of a distributed ledger that increasingly became associated with a permission-less, open system involving cryptocurrencies such as bitcoin.

However, not all distributed ledger systems need to have the same mechanisms. There are different functions in the distributed ledger, such as data storage, validation and distribution. Not all blockchains need to be currency-based either. "CULedger is not into cryptocurrency. We are not getting into that space at all," Esser asserted.

Distributed ledgers use independent computers or nodes to record, share and coordinate transactions in their corresponding ledgers, instead of using a centralized system as in a conventional ledger.

CULedger evolved from its "research to action" roots into a new CUSO, which launched last summer. "We became an official company and we're right now in the process of our private equity funding. We're seeking $10 million in the first round to get us through the first part of our roadmap," Esser said. She added CULedger is more than halfway to its goal, and expects the initial round to close by November, if not sooner. Esser noted it has 25 investors and that list is growing. Its leaders hope to get around 40 investors by the conclusion of the first round.

In February, CULedger announced it teamed up with DLT specialist Evernym on a digital identity system called MyCUID. The tool uses a person-to-person network of distributed, private agents working in parallel with the distributed ledger to give credit union members a lifetime, portable digital identity.

By developing a global self-sovereign digital identity through MyCUID, CULedger believes it can further enhance the trust credit unions have with their members, reduce risks associated with cybersecurity and fraud, improve the member experience and cut costs.

CULedger created a working proof of concept to demonstrate the use of a digital identity in a call center environment, recognizing that call center fraud is on the rise and is only going to get worse. "[The call center] is a channel of vulnerability for credit unions, and it worked perfectly and seamlessly on eight different nodes," Esser said.

CULedger plans to start selling the MyCUID product in 2019. "Right now, we have defined our minimal viable product," Esser said, which is using DLT to create a self-sovereign identity product fully under members' control.

A self-sovereign identity allows members to store their specific identity information on their own devices and deliver it competently to those who need to authenticate it without depending on a central-identity data storage area. By enabling selective disclosure, identity owners also control the amount of data shared in a context. Esser communicated the user owns and controls their identity forever, completely reversing what is happening today.

Esser noted the process improves the privacy element of personally identifiable information since the notion of "zero-knowledge proof" exists with MyCUID. A zero-knowledge proof, or zero-knowledge protocol scheme, allows one party to verify another party, without sending any personal information. In the case of MyCUID, the source of that information – credit unions – would validate members by becoming the trusted source of that data.

Currently, CULedger plans to conduct pilots for MyCUID with credit unions and consumers over the next 60 to 120 days. "We have a number of credit unions that have stepped forward expressing interest in wanting to be part of this pilot initiative," Esser explained.

CULedger expects MyCUID to benefit credit unions all over the world by identifying members as they try to interact with their financial institution, but it also envisions the role of MyCUID in a much broader sense than just solving an operational issue. "It is a philosophical issue. There are more than two billion consumers around the world who do not have any type of financial interaction because they don't even have an identity," Esser explained. For those who are underbanked, it is all about financial inclusion as well.

Esser credited John Ainsworth, who joined CULedger in December 2017 as president/CEO, for driving the use of MyCUID in a much broader capacity. Ainsworth, who came to CULedger from MasterCard, said at the time, "It's well documented that we can anticipate more change in the next 10 years than over the last 50 years. Staying relevant in the age of digital disruption is a current and present challenge for the credit union industry."

Regarding MyCUID, Ainsworth has voiced, "We created MyCUID as a global digital identifier that permits our members to securely interact with their credit union. By giving individuals control over their personal identifiable information, MyCUID will create a truly secure and privacy-preserving flow of information to promote balance, fairness, diversity and competition in the digital economy."

In addition to providing digital identities, MyCUID will become the foundation for future development as CULedger identifies other applications and solutions that can run on DLT. "Everything will require some level of authentication," Esser noted.

For a long time, members have trusted credit unions to provide financial services and of course safeguard their information, Esser held. "MyCUID is going to take that trust to a whole new level."

Esser added, "I'm just so excited about this opportunity for credit unions because this will become revolutionary for us. The self-sovereign identity, this is where the world is going. It definitely will take some time to get there, but it is so exciting for credit unions to be on the forefront of this new technology and be examples for the world in this area."

Several other recent announcements centered around CULedger:

• Esser, formerly the vice president of alliance development for CUNA Strategic Services, joined the CULedger management team in April, along with Rick Cranston, a lead contributor and driver for credit union DLT, who will serve as COO.
• In May, CULedger announced it will use Hedera's hashgraph platform – a blockchain alternative that reportedly attains elevated scalability without foregoing security – to help reduce the cost and complexity of making cross-border payments. CULedger already used the private ledger version of hashgraph, offered by Swirlds, for general purpose, permissioned use.
• In May, the World Council of Credit Unions' board of directors unanimously approved CULedger for WOCCU membership. "We are pleased to welcome CULedger to our membership base, encourage their active participation to expand services provided to members and strengthen the global credit union movement," WOCCU President/CEO Brian Branch said in a statement.