Stephen DeMeulenaere

Alternative, Community, Complementary, Bitcoin, Cryptographic, Digital Currencies & Payment Systems specialist

Stephen DeMeulenaere - Alternative, Community, Complementary, Bitcoin, Cryptographic, Digital Currencies & Payment Systems specialist

Which Digital Currency do you choose? Theirs or Ours?

The End of Physical Currency: which Digitial Currency do you choose? Theirs or Ours?

The neat thing about blogging is that you can basically timestamp your prediction and come back to it in a year, two or even five and see how your prediction turned out.

This week we received two announcements, one from Europe and one from America that the physical currency spending limits for all citizens are being lowered to an amount so low that buying almost anything these days will be required by law to be reported to a separate department in the government.

For example, if you buy a used sailboat for $5,000, and transfer the money to the seller’s bank account, you (or your bank) will have to report that transaction to what basically amounts to the NSA of the IRS in order to confirm that the transaction is legitimate.

According to the Economic Collapse Blog:

  • In France, starting September 2015 cash transactions above Euro 1,000 are prohibited, and currency exchanges without requiring proof-of-identity are reduced from Euro 8,000 to Euro 1,000. Further, cash deposits or withdrawals from your bank account above Euro 10,000 will be reported to the French “Anti-Fraud and Anti-Money Laundering” Agency Tracfin.
  • French Finance Minister Michel Sapin brazenly stated  that it was necessary to “fight against the use of cash and anonymity in the French economy.
  • In Spain, cash transaction limits are already Euro 2,500, and in Italy, Euro 1,000.

In America, if you regularly deposit large amounts of cash, say for example you own a used-car dealership where many customers prefer to purchase a vehicle in cash, then you may need to fill out a “Suspicious Activity Report”. They say only suspicious transactions need be reported, but then they say “there are minimum quotas for suspicious activity reports that banks must meet.  If they do not submit enough suspicious activity reports, they can be fined (or worse). So why not stuff the quota with a few Mom & Pop small business transactions as well?”

Just this kind of scenario happened with one unlucky person in Iowa:

“A widow’s bank account was seized by the IRS and she now faces criminal charges for depositing her legal inheritance money in lumps instead of all together.

Janet Malone, 68, had $18,775 seized from her — money that was legally earned and was legally bestowed to her by her late husband, Ronald Malone. The problem, according to the government, was the fact that she deposited it in several lumps instead of all at once.

According to the Associated Press, Mrs. Malone deposited the cash in increments between $5,800 and $9,000. The widow’s private financial affairs evidently set off red flags under the watchful gaze of the federal government.”

So why would governments be increasingly limiting use of their own currency?

  1. Capital flight controls: they don’t want their currency “heading for the exists” or circulating faster than better currencies.
  2. Citizen espionage: All these government employees need reasons to keep their job, what better one than to spy not just on everyone as a whole like they have been, but on every single one of us.
  3. Traceable currency: Trying to control a currency through interest rates is so 1800s; they want to be able to do a little bit more. Monetary competition between countries is getting more fierce as they are dragged towards a US Dollar-led monetary collapse. They want to be able to take stern measures if needed, and a traceable currency is the only way to be able to do this.

In short, governments are taking us towards a single currency in which all citizens and transactions are identifiable and traceable.

And we can be sure they are working to implement their own Digital Currency. In fact, some people say they should, including “James Angel, a professor of economics at Georgetown University. He thinks the government should create what he calls “bitdollar,” a bitcoin-like digital currency that’s backed by the US dollar.”

“The world’s governments already are looking for ways to regulate bitcoin. And the Canadian government has explored its very own digital currency, MintChip, which is something akin to Angel’s proposal.”

There is even more interesting and pointed information in this Bitcoin Magazine article which confirms that governments are working towards implementing a fiat digital currency. Ecuador already has one, the Philippines are now considering it.

Our options are to continue using cash for as many kinds of transactions as we can, and to use peer-to-peer currencies like Bitcoin, Ripple, and others that are not easily traceable by government agents whose job it is to track every single one of us.

I’ll be checking back on this article to see how things have progressed, but in the meantime, get educated about Digital Currencies, get your own wallet, and convert some of that increasingly worthless paper for some of our money.

Digital Currency Council Professional Certification

Stephen DeMeulenaere, DCC Certified ProfessionalI’ve been wanting to write another blog post, and it’s high on my list of things to do. But I thought it was really important to take a moment and get my Digital Currency Professional Certification with the Digital Currency Council based in New York.

There are a lot of charlatans & scammers out there that are preying upon people’s ignorance of how these systems work, so it’s really important to have a certification examination that helps to separate those who know, from those who don’t.

The test was a difficult 100 question test that covers even minute details about Bitcoin that only an expert-level person would know, and certainly could not just google info about during the test. Congratulations to the Digital Currency Council for making this possible.

Will Digital Currency Efforts Reach ‘The Last Mile’ in 2015?

Aside from its ups and downs: up in investment, down in price, few would disagree the Digital Currency field had a momentous 2014. Investment poured into dozens of new companies in North America and Europe, and the crash of Mt. Gox and sale of Silk Road bitcoins barely had an effect on the market.

There was also a lot of talk about the need for these Digital Currency companies to go “The Last Mile” and bring their services to the developing world, where mobile phones dispersion far outnumbers bank accounts, and the cost of sending money overseas takes many billions of dollars out of the hands of poor, hard-working migrants, and handicapping local development. We heard very often about how this company or that company is aiming to break into the remittance market in Asia, banking the unbanked in Africa, drop Bitcoins onto an island in Latin America, etc. etc.

Well, I’m standing here somewhere along this Last Mile in Southeast Asia, Bali, Indonesia to be exact, and I can tell you that despite all of the efforts (see below) we, the tight-knit team of Bitcoin/Ripple/Stellar/NXT and other digital currency supporters and promoters have been making across the country, we haven’t yet seen anyone from North America or Europe step up and join hands with us to go the Last Mile to get digital currencies into the hands of ten of millions of Indonesians, let alone Thais, Cambodians, Vietnamese, Burmese, Bangladeshis, etc. etc.

The intention is there, it’s just that nothing concrete has been contributed. I’ve been contacted several times this year by representatives from several different organizations asking me for advice, feedback, picking my brains for useful tidbits from my 17 years of residing in Asia. Not only from small companies producing ATMs or POS Devices, through major coin developers, and right on up to the Bill & Melinda Gates Foundation.

The Bitcoin Indonesia exchange the leading company in the country has been seeking financing the past two years. (If you’re interested, contact me, I’m trying to help them to find financing!) Nobody has contacted them, and it’s not like we can just hop on a plane and fly over to New York or San Francisco or London or Amsterdam, with cap in hand, not on our own meager Rupiah currency which is getting gang-raped by currency speculators as I write this, or over the sky-high visa walls that are keeping Fortress America safe by not letting anyone in that doesn’t have a Christian or European-sounding name.

We have done a lot in Indonesia in 2014 to attract attention and hopefully attract funding. We hope that in 2015, more than one of you reading this will take notice and come and visit us over here, and joining us in reaching the Last Mile.

Short List of Accomplishments in 2014

Accomplishments in the Works for 2015:

  • Attending Inside Bitcoins Singapore, Inside Bitcoins Hong Kong and Bitcoin 2015.
  • Coin Academy Training workshop in Singapore. 

So now you can see there is a lot happening over here, all the more reason to plan your next holiday in Bali, Indonesia! Comment below to contact me directly.

Why @Permacredits does not fit the Philosphy of Permaculture, but @Freicoin does

In line with my effort to remind people new to the cryptocurrency movement, that there was a movement for decentralized currencies before Bitcoin, I just wanted to be sure everyone knew that the currency for the Permaculture Movement, Mutual Credit, has been used in the Permaculture movement for decades before Permacredits, the new cryptocurrency which claims to be the currency of Permaculture, arrived on the scene.

There is one big difference between Mutual Credit and Permacredits, which makes the former a match with the philosophy of Permaculture, and the latter, Permacredits not. Here are the reasons why:

- Permacredits are assets. It is incorrect to call them credits. These assets must first be purchased with scarce US Dollars, which were themselves issued as debt. The philosophy of Permaculture is about reciprocation, not about imbalance or debt.  The Transaction Stack (Blockchain) of a Mutual Credit system is always balanced at zero, there is always enough credit available as is needed.

- Like many other cryptographic currencies modelled on Bitcoin, Permacredits are scarce commodities that can circulate as a currency. They are a store of value that can function as a medium of exchange. Permaculture is about entropy in nature, and a store of value is not in line with it. Mutual Credit systems allow each member an interest-free credit line, as long as they are willing to accept the currency when asked, and reciprocate it in turn. They do not need to be purchased first. The philosophy of Permaculture is about abundance, not about scarcity.

- The method of applying of negative interest, called ‘demurrage’ mimics the natural entropy that occurs in nature, so that stores of value cannot be used to misrepresent and misallocate natural resources, while also incentivizing circulation over hoarding. Mutual Credit systems separate the functions of money as a medium of exchange, and put it above money as a store of value. Their value is in circulation, not in hoarding.

The only cryptographic currency that abides by the natural law of entropy in the design of money is Freicoin, which applies the principle of demurrage, which separates the functions of money between a medium of exchange, and a store of value. Permacredits, if they were to be in line with the philosphy of Permaculture, would be based on Freicoin. Therefore Freicoin is currently the only true Permaculture cryptocurrency. Demurrage is an essential feature to ensure the entropy of the supply of money is in line with natural processes.

I’m writing this not to be critical of Permacredits per se, but to dispel the notion that Bitcoin is a ‘one solution fits all’ model. Bitcoin is not an ecological monetary system. The Bitcoin Blockchain, although revolutionary from a digital payments perspective, is not revolutionary from a monetary perspective.

Bitcoin Myth #2: Bitcoin is the first movement for decentralized currencies

I often hear people speak of 2009, the year Bitcoin was born, as being the year that the movement began.

Since I’ve personally been very active in the movement since 1991, and have good friends & colleagues who have been very active in the movement since the 1970s, I thought I’d bring the folks who came to know of the decentralized currency movement though Bitcoin, up to speed about what we’ve been doing the past 40 years.

Well, actually that would take a long time, so I hope you’ll start looking up Community Currencies, Complementary Currencies, Local Currencies and Mutual Credit for a start.

Firstly, EF Schumacher and his friend Ralph Borsodi are two thinkers who helped revive the idea of a government-free money. Borsodi’s Constant, launched as an inflation-free currency in 1974, kept the ball rolling which had been rolling for decades previous, until the Local Exchange Trading System was designed by Michael Linton and others and released to the public.

The movement for non-government currencies has always been decentralized, just not to the extent that was technically capable from 2009. But, the idea that it was possible has been talked about for decades previous.

What’s important to know is that there was a movement before Bitcoin, and if you did not know that already, then welcome!


Bitcoin Myth #1 – There was no Open Public Ledger (Blockchain) before Bitcoin

I hear and read this quite often, that Bitcoin’s Blockchain is the first example of an open public ledger. An open public ledger is a list of all transactions that have taken place in an economic network being made fully available to all members of that system.

It’s not true. Both Local Exchange Trading Systems and Time Banks have had open public ledgers in their systems going back over 35 years. In fact, it’s a central tenet of Mutual Credit Systems that the system’s ledger must be open.

Myth busted.

2 Paths to Mass Adoption: Tipping & Training – @ChangeTip & @CoinAcademy

In behind all the technical discussions, philosophical debates, political lobbying, there’s the popular topic of mass adoption, how to make it easy for anyone who knows how to basically use a mobile phone or computer to secure their device, and acquire, spend and receive Bitcoin.

When I started writing my blog again, I focused on volatility as one of the main obstacles to mass adoption. Now I’d like to flip the coin over for a moment and look at the two main paths to Mass Adoption: Tipping and Training.

I hapchangetippened to have a chance to ask my question directly to the CEO of ChangeTip, Nick Sullivan, just last week (November 27, 2014) at a pre-Thanksgiving lunch at Hubud, the co-working center in Ubud, Bali, Indonesia, before Pantera Capital announced in their December Newsletter that they had led 3.5 million USD in funding for ChangeTip.

As I happened to be sitting next to him, I ask Nick which he thought was more important for mass adoption: apps that made it easier for people to use Bitcoin, or suitable forms of education that helped people feel comfortable using Bitcoin?

He replied thoughtfully that it was a mix of both, that good apps encourage people to learn, and good learning programs encourage people to use good apps. People will have to learn more by using apps so in effect both are needed.

As co-founder of Coin Academy, one of the main Mass Adoption-focused Bitcoin and Digital Currency education platforms, this raised my hopes that we would also be in someone’s thoughts about how to best educate the masses to start using Bitcoin, and make great use of ChangeTip!

Creating a Cryptocurrency is Not Enough, it Must have a Reason to Exist

These days anyone can create their own cryptocurrency. You can do it the hard way and build it from scratch yourself, or you can do it the easy way and have someone take an existing currency design and put your name on it. There are several different providers you can choose from.

But then what? Do you just give it away, spread it around like Facebook Likes, hoping that it will catch on and people will start exchanging it? Why would they? What’s the incentive?

Bitcoin has an incentive for almost everything, except for hosting a node, something which is really important to the network and circulating bitcoin. But when it comes down to it, there isn’t much reason to circulate bitcoin, at least compared to the perceived benefits of holding onto it.

Most other digital currencies are finding the same problem. Once a group of like-minded tech savvy people have a wallet with some coins in it, they don’t have any reason to circulate it with others. It gets boring to have to load the app and update the blockchain just to have it sit there.

As a designer of previous-generation complementary currencies, I spent around 75% of my time researching and designing the use-cases for the currency, and the remaining 25% on designing notes, setting up exchange platforms, liasing with local officials and educating the users. If it was clear what the use-case scenarios would be, this would save me a lot of that 75% of time spent figuring out how it would circulate.

There are three basic things you need when designing a currency system: a wedge, a sink and a pump.

A wedge is the main reason the system is being implemented. What problem are you trying to solve with this currency? How will it make life not just a little better, but a LOT better for people? A wedge could also be a key partner in the system, a strong backer. A wedge could also be a key beneficiary of the currency system, perhaps a community project of some kind.

A sink is a place, a user in the system who will always receive the currency. The local grocery store, movie theater, family restaurant, etc.

A pump is how the currency gets injected into the economy. How do people get it? What is their reason for wanting to receive it, and what is their reason for wanting to circulate it?

Sinks need to know that there are places they can spend their currency as well, so this is the next step in the cycle. Can they push the currency up the supply chain? Can they buy vegetables with it? If the sink gets clogged, the system will be in trouble.

Pumps need to know that people want the currency and will circulate it, not just hold onto it until the system stalls. They need to know that their participation will help the goal of the Wedge to succeed, from which they will also receive a benefit.

So it’s not just a matter of splurging a currency onto a group of people, but to imbue this currency with a reason to exist and hopefully flourish.

Update from 21 December 2014

It looks like Charlie Lee, the creator of Litecoin, is getting schooled about this. As creator of a practically-stalled cryptocurrency that was once “the silver to Bitcoin’s gold”, he seems to be falling into the same trap that many other dying or dead coins have fallen into: the absence of a functioning network economy.

Possibly the first Stable Pegged Cryptocurrency – NuBits

Link to article below:

Link to White Paper

On September 23, Peershares launched NuBits, a digital currency developer Jordan Lee claims will remove the volatility associated with cryptocurrency prices. NuBits hopes to accomplish price stability by separating the coin’s currency and voting mechanisms, which will allow developers to tie the currency’s value to the value of United States Dollars at a 1:1 ratio.

Lee believes NuBits will appeal to potential cryptocurrency users because it will allow them to know the dollar-value of their coins without having to perform mathematical calculations.

NuBits Project Launches

Jordan Lee says that while Bitcoin and Peercoin are important inventions, they possess inherent flaws that render then unsustainable. He says their major flaw is that they simultaneously serve as both currency and shares. The NuBits whitepaper explains why this is a problem.

Currencies must have a stable value to be effective, while Peercoin and Bitcoin have exhibited exceptional volatility. Many argue volatility will end with the high liquidity that will accompany widespread adoption. While volatility will decrease with greater adoption, it is unlikely volatility will ever be less than occurs with large cap stocks such as Google or Microsoft. This is still an unacceptable level of volatility for a currency.

However, Lee says that even if volatility could be eliminated, that would hamper a coin’s ability to function as a “share.”

 Let us suppose I am wrong and that volatility will be eliminated in these networks. In that case they would serve well as currencies but poorly as shares, because they would not appreciate, nor give dividends. This would likely cause a selloff of these “shares”, thereby introducing volatility once again.

NuBits purports to avoid this problem by separating the NuBits network’s currency and voting facets into two separate entities. NuBits serve as the network currency, and NuShares facilitate the voting mechanism, and most importantly the introduction of new currency units.

NuBits as Currency

Perhaps the most frustrating part of engaging in cryptocurrency transactions is having to figure out the fiat-value of the coins involved. If someone wants to buy a $15 movie, he has to divide that by the current bitcoin price to figure out how much he owes. While not incredibly difficult, this can dissuade new people from entering the market.

NuBits hopes to avoid this friction by tying the price of NuBits to USD at a 1:1 ratio. According to the NuBits System, a $15 movie will always cost 15 NuBits, no matter how much the demand for NuBits ebbs and flows. By making it easier to figure out how much the dollar-value of an item is, people less-inclined to adopt cryptocurrency may be more easily persuaded to test it out.

When demand increases, shareholders will vote to create new coins to maintain the 1:1 ratio. When demand decreases, shareholders can vote to allow coinholders to accrue interest on their investment if they agree to “park” their coins for a set period. When demand is low, speculators may see incentive to acquire and then park their coins as a high-risk, high-reward investment should demand rise again.

At present, users can purchase NuBits on Bter.


NuBits will enter circulation through the voting mechanism. Unlike most cryptocurrency voting systems, NuShares operates independently of the NuBits currency (though they can share a wallet).

Instead, NuShares are intended to be a source of network equity for developers, entrepreneurs, and speculators. NuShareholders can receive network revenues in the form of Peercoin dividends paid out by a custodian. NuShareholders can cast votes for actions that positively affect the Nu network. These actions help adjust the supply and demand for NuBits so that they will always remain at a long-term $1.00 US value.

The actions to vote on are Custodian votes, Park Rate votes, and Motion votes. NuShareholders will be able to vote on these three different network actions when a block is minted. By setting their vote in the client it will be recorded into the blockchain each time they mint a block. The purposes of these three categories of votes are to select custodians to maintain the network, choose interest rates for parking, and make decisions on the development of the network.

One interesting facet of NuShares is that it allows NuShareholders to choose who will receive newly-minted coins. People can submit proposals for why they should receive the coins, and NuShareholders can choose which they deem the most worthy cause. Perhaps a developer would like funding to build a project for the NuBits protocol, or a charity wants to raise funds for a cause. They can submit their proposal, and the NuShares community can debate and decide who to distribute the coins to.


NuBits is a unique idea, and it will be interesting to see how Jordan Lee and the NuBits team will work out the inevitable kinks that will arise. If NuBits are truly able to eliminate price volatility through their NuShares voting system, a somewhat uncomfortable question will arise. Is the altcoin community ready for a stable currency?