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Lamont Black, Associate Professor of Finance at DePaul University and cryptocurrency expert.
Lamont Black, Associate Professor of Finance at DePaul University and cryptocurrency expert.

Looking Down the Blockchain: Crypto and Traditional Currency

The world is still figuring out what blockchain and cryptocurrency are, and what societal applications the emerging technologies have.

If society at large is still trying to figure it out, so are credit union members. Dr. Lamont Black, an associate professor of finance at DePaul University, believes credit unions can live up to their mission of financial well-being for all by helping members through this process.

“Credit unions’ key value proposition regarding crypto is as a source of trust. There are people that want to engage with crypto, but it’s difficult, it’s scary. Many of them may look to you to say, ‘Hey, can you help me figure this out? Should this be part of my portfolio?’ ” says Black, who spoke Sept. 23 at the 2022 CUNA Operations & Member Experience Council and CUNA Technology Council Conference in Las Vegas, NV. “Help them learn and explore.”

While credit unions can immediately begin teaching members about cryptocurrency and how it fits into a wealth management strategy, education and investment aren’t the only applications.

“It’s not just a number that goes up and down on my phone and then I’m either happy or sad,” Black says. “That’s not crypto. It’s so much bigger than that.”

Cryptocurrency is just an application on a platform. The platform—and what Black considers the true technological advancement—is the blockchain. The decentralized ledger allows for shared recordkeeping that opens possibilities for many more applications.

“It creates a single source of truth,” Black says. “The world we’re trying to get away from is reconciliation. The blockchain flips that on its head and says, ‘instead of cleaning up after the fact, let’s agree on what’s going into the ledger.’ It’s a front-end coordination effort. Instead of having a single authority that tells you what’s true, we have a decentralized network agreeing on what’s true.”

Theoretically, a credit union member could hold physical assets like an auto loan on the blockchain as a non-fungible token (NFT), a digital record of asset ownership. That would allow for an agreed upon set of data, rather than requiring coordination between the buyer, seller, and funder’s information. If the vehicle is sold again, sales records would be accessible on the blockchain.

Other potential credit union blockchain applications could be offering membership as an NFT, using decentralized finance for secured loans, and finding space in the metaverse to hold member engagement activities.

Black also reimagines the digital wallet as a combination of the current digital wallet, which stores and enables crypto and NFTs transactions, and the virtual wallet, which stores and enables U.S. dollar transactions. Merging the two could lead to one digital wallet that holds dollars, central bank digital currency (CBDC), U.S. government-backed digital currency (USDC), bitcoin, ethereum, and NFTs.

That mixture is how Black envisions the future. Rather than crypto or traditional currency enveloping the other, he believes both will have a place in society.

“These two worlds are converging, not diverging. They’re going to continue to evolve and move toward each other,” he says. “The question is how quickly we evolve from here to the future. Start fostering a culture of innovation.

“You have to form a strategy, even if the strategy is ‘we don’t do that.’ You can’t just bury your head and hope it goes away. This is an emerging ecosystem,” he continues. “Start exploring. It doesn’t have to be all or nothing. It’s about how we take the existing and combine it with the new.”

Hear more from Black in the CUNA News Podcast episode titled “A Cryptocurrency Conversation.”

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