There is no doubt that humanity could use universal ledgers like the blockchain, to manage more efficiently its agreements and transactions. But just as bitcoin is misconceived as a currency that is extractive to both humans and natural commons, so there are serious issues with how the blockchain is currently conceived. This very clearly explained, yet still complex essay, is a very good explanation of what a better underlying structure could be, and how a currency for the commons could be based on mutual credit, not creation by ‘fiat’.

The proposals described in this essay are coming closer to reality, now that Arthur Brock and associates at, are advancing in the construction of a alternative Holochain.


  • What is a Cryptocurrency?
  • Alternate Approach: Parallel Chains with Intrinsic Data Integrity
  • Currency Design Principle: Mutual Credit
  • A Minimum Viable Cryptocurrency
  • More Scalable Security: Notaries + DHT
  • Conclusions


We identify and clarify the core elements of and describe a new approach to designing such currencies distinct from blockchains – an approach rooted in biomimicry. We explore efficiencies for decentralized data and decision-making and distinguish consensus of distributed process, rather than data in ledgers, at the core. We then illustrate an implementation of a cryptocurrency using these principles and a use case which brings a centuries old practice into the digital era. We address the central vulnerability to this model working at scale, showing how the solution can be built with existing technologies. Finally, we also confront social challenges involved in governance of crypto-systems.


By leveraging Intrinsic Data Integrity to run numerous parallel tamper-proof chains you can enable nodes to do various P2P transactions which don’t actually require group consensus. It is not only possible, but far more scalable to build cryptocurrencies without a global ledger consensus approach or cryptographic tokens. This paper has provided a framework to build a tokenless cryptocurrency, and showed how mutual credit is an appropriate currency issuance method for operating such a cryptocurrency on completely peered chains. Basic PKI with a DHT addresses the obvious vulnerabilities.

First published as an article here. Also, after the original publication they have built the technology.

Read the full article here.

If you would like to comment on this draft, feel free to do so on the google doc version.

Photo by Ars Electronica

2 Comments Essay of the Day: Mutual Credit Cryptocurrencies – Beyond Blockchain Bottlenecks

  1. Avatarpaulfree14

    Hi Michael,
    I’m really appreciate your work and input, so I hope you don’t take me wrong when using strong words on something I see so many ppl repeating from which I believe even they believe it’s harmfull for our culture.

    You’re as many commited to commons and free culture (free as in freedom). But as you are also one of many reapeating the support of cooperations which can be seen as a danger for free society.

    Google did much, but has left since a while the path of being a tech company. They are nothing but extracting value from the public. Taking their date without contributing their knowledge back to the public, using marketing to shape public opinion…they have a strong influence, stronger then I wished anyone would have.
    And just yesterday they had a german wide campaing for merkel speaking in an interview.
    …what ever there is much to tell how shit they are, and most of us even know about….but just continue to refuse to shift their very own behaviours. And all in all mostly just for one reason.
    conservatism. We tend to use the known even if we know it’s violent against oneself.

    Let’s get into the unknown. Let’s act as much as we advocate (everyone after thei capacity and needs)

    Ok now here the very strong words:


    And pls remind yourself that you have also a strong influnce. Use it to advocate the usage of free (free as in freedom) software.

    I won’t comment anything within a google document.
    And I even wish anyone refusing to use google.

  2. AvatarJon S

    Im a proponent of the blockchain and mutual credit systems. I have noticed, however that many who do as well are also anti-capitalist and also use Marxist/Communist terms. I see no reason why mutual credit systems and capitalism must be mutually exclusive. In fact, i believe mutual credit systems can mitigate and possibly eliminate all the supppsed ‘flaws’ of capitalism.

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