CULedger, a consortium of USA-based credit unions, and Evernym, a blockchain development company, has launched MyCUID, a blockchain-powered digital identity system. This will protect the credit union members from identity theft and fraud.
An estimated 2 billion people in the world don’t have access to banking services, according to a World Bank report. As a result, communities have come up with various means to access banking services such as mobile payment systems. One such option is community-owned institutions that provide banking services, and these are commonly called credit unions. Credit unions are typically non-profit institutions, founded with money pooled in by the members, and members are also collective owners. In various countries of the world, they may be called in different names, and the spread of credit unions is also different across different geographies. However, it’s commonly recognized that they fulfill an important function, i.e. bringing banking services to people whom banks don’t reach. It’s also widely recognized that if credit unions could promote secured communication between members, and also between members and the credit unions, through effective means of identity verification, then they could expand their reach. Traditional process of the call center representative asking multiple questions to the member for identity verification is inefficient. Sending authorization code to member’s smartphone isn’t secured, because the code is stored in the smartphone, and a criminal can impersonate the member if he gets hold of the device. A technology solution is needed that will enable credit union members to own and control their identity information and seamlessly use it to authenticate themselves while transacting with the credit union.
Below is a summary of MyCUID solution:
- MyCUID is built on Evernym‘s Sovrin Identity Network. This is a permissioned blockchain, i.e. specific roles have authorization level according to the role, and it’s not open for anyone to join in. This is different from the public blockchains that power famous cryptocurrencies like Bitcoin. In Sovrin, there is no proof of work (POW) based consensus algorithm, and there is no mining. Consensus mechanism is similar to the enterprise blockchains, for e.g. R3 Corda. The consensus algorithm looks at the entire transaction, and divides nodes based on roles and specific access level. For e.g. a client creates a transaction, an ‘orderer’ provides specific order information, an ‘endorser’ validate whether the transaction meets validation criteria and endorses, while ‘peers’ maintain the ledger by committing transactions after endorsement.
- MyCUID uses a person-to-person distributed network.
- Using decentralized nature of blockchain, MyCUID ensures that the user has a digital identity which doesn’t depend on any central authority issuing it.
- The consensus algorithm ensures that the portable digital identity issued to the user is immutable and permanent.
- The system allows selective disclosure, i.e. the users can share appropriate extent of their identity data based on the context.
CULedger is an initiative to convert knowledge gained in research to actionable assets by executing focused projects, in the context of credit unions. This was formed jointly by Credit Union National Association (CUNA) of USA, Mountain West Credit Union Association, and Best Innovation Group, in 2016. The other partner in this ambitious project, i.e. Evernym, was founded in 2013, and they use distributed ledger technology (DLT) or blockchain, to enable organizations to create secure, permanent, and immutable digital identity for their stakeholders.
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