Blockchain and Bitcoin 101

In June, I bookmarked a visual guide posted by Reuters, "Blockchain explained: Do you understand the technology that underpins bitcoin?" This, along with Tony's informal lecture, of course, helped me get down to the basics of what a blockchain and bitcoin is, and how they're related to each other. Here's what I know:

A blockchain is a database that is shared across a network of computers. It is comprised of records of information, bundled together into "blocks," which are then linked together to form a "chain." When information (such as details of a monetary exchange between two people) is first submitted as a record, the computers in the network, called "nodes," check to confirm it is valid. The accepted record is added to a block, which is assigned a unique code called a hash; the block also contains the previous block's hash. The blocks are connected in a specific order based on their hash codes.
No one person or entity has control of a blockchain – it is decentralized and has no "master." It's open to everyone, and all users are anonymous. This creates a trust issue among users, so to resolve that, new computers looking to join a blockchain must pass a test called a "consensus model."
Blockchain is the technology used to record transactions involving bitcoin, a type of cryptocurrency (a digital medium of exchange), but that's not the only thing it can be used for. Other uses include simplifying the record-keeping of payments at financial institutions, checking the history of products whose trade records are kept on a blockchain, storing medical history information and property records, and creating rig-proof voting systems.

What Does It Mean for CUs?

Well, according to the list of possible blockchain uses in the Reuters guide, the technology could help credit unions streamline their payments transactions and save on related costs. That's a good thing! Plus, blockchain technology's decentralized format is right in line with the philosophy of credit unions. All of a blockchain's users are equal controllers of the system, and all credit union members are equal owners of their credit union. Leaders from CUNA and the Mountain West Credit Union Association caught onto this a couple years ago when they launched CULedger, a consortium of U.S. credit unions exploring potential use cases for distributed ledger technology. It recently rolled out MyCUID, a tool that will give CU members a lifetime, portable, digital identity (CULedger leaders noted they are not getting into the cryptocurrency space at all).

Instant Insights /

My Unlikely Blockchain Technology & Bitcoin Teacher

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