Demurrage (currency) - Wikipedia, the free encyclopedia

Word of the day: Demurrage (Currency). #cyborgcamp #bitcoin /cc @cyborgcampsea

of holding a unit of currency, similar to the effect of a negative interest rate on all currency in circulation. Both inflation and demurrage reduce the purchasing power of money held over time, but demurrage does so through fixed, regular fees while inflation does so through expansion of the money supply through the actions of a central monetary authority distributing the new issue of currency, through endogenous money creation (such as fractional reserve banking), and through charging of interest, which compared to demurrage fees is less certain in the magnitude of its effect, involves an uncertain time lag in the development of its effect, and is not necessarily uniform in its costs and benefits across the holders of the currency. The uncertainties in turn make the determination of net present value of an investment in the currency more uncertain, and thus rational acti...

Full article: http://en.wikipedia.org/wiki/Demurrage_(currency)