Why You’re Chained To The Bitcoin

September 10, 2015 at 9:43 am Leave a comment

It’s not the headline  news   but the news  the will  have the most  lasting impact on your credit union’s  operations that is most important to keep an eye on.

So one thing you should know  this morning is that   Visa, Nasdaq, Citi Ventures, Capital One, Fiserv and French telco Orange are among a group of investors to pony up $30 million to invest in Chain,  one of several technology startups scrambling to adapt bitcoin-like technology to a host of financial transactions ranging from stock purchases to account transfers. This technology will transform the way all banking is done.  The only question is when this transition will take place.

In its most general terms-with apologies to computer wonks out there–the bitcoin allows computer users to send a    “currency” between computer users without the need for an intermediary like a credit union.  I simply electronically send my bitcoin to another bitcoin user.

This is in  itself is no big deal.  The magic comes from the fact that every one of those transactions is recorded in a chain that acts as a public ledger of the transactions.  As explained in this LA Times article each  one of these transactions creates “an electronic spreadsheet”  chain of transactions that, at least theoretically,  can’t be edited.

The bitcoin has raised the ire of regulators because the system is ideal for facilitating anonymous transactions.  A criminal who receives payment in bitcoin can rest assured that he has been paid without anyone knowing who he is. But there is nothing that says these  transactions have to be secretive.  The potential savings and applications  that can come from a continually updated electronic ledger that can’t be tampered with  has the biggest names in finance salivating  particularly when it comes to  high volume financial marketplaces.

For Instance Chain’s  website  explains how its technology can be used by brokers to sell securities directly to buyers without the use of a third-party clearinghouse.  It doesn’t take too much imagination to envision a day in which the same technology is used to facilitate instantaneous clearances with a greatly reduced risk of fraud.   Virtual currency or not,  chain technology is here to stay.

This is  the latest example of how  banking and technology are merging faster than could have been anticipated even five years ago.  The financial institution of tomorrow won’t just use technology it will be a technology company.  Your members who have grownup expecting new IPhones every year will expect nothing less of you.  Here is a link to the story.

http://www.finextra.com/news/fullstory.aspx?newsitemid=27823

Entry filed under: General. Tags: , .

Are Merchant Cyber Security Claims Unfair And Deceptive? 6 Things to Ponder on a Friday Morning

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

Trackback this post  |  Subscribe to the comments via RSS Feed


Authored By:

Henry Meier, Esq., General Counsel, New York Credit Union Association.

The views Henry expresses are Henry’s alone and do not necessarily reflect the views of the Association.

Enter your email address to subscribe to this blog and receive notifications of new posts by email.

Join 436 other followers

Archives