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Demur-rage currencies in Blockchain
  • Last Updated : 17 Feb, 2020

Currency is one such core concept in blockchain technology that can extended and re-understood. Currency which is usually referred as digital token it facilitates quantified transfer mechanism. This idea is known as Demurrage currency.

Demurrage means means “cost of carrying”- that is the cost to carry an asset. The Demurrage originated from freight and shipping industry which is used to indicate the extra cost or charge associated with detention in port of a vessel by the ship owner, as in loading or unloading in given time.

In the cryptocurrency sense, demurrage can lose the value over time i.e., deflationary. Thus, there should be some sort of action taking to realize value before it is lost i.e., spending. Therefore it encourages economic activity. Another important aspect of demurrage currencies is automatic redistribution of the currency across the network at certain time specified. In addition to the value loss, this periodic redistribution is another important factor.

Demurrage currency features could become dominant and standard currency tool. Freicoin and Healthcoin are two examples of demurrage currency.Here several health-realted services can be paid by using “Healthcoin”, for instance in United States many health related services or plans are usually paid in Healthcoin, where as Freicoin can be used basic needs like living expenditures. As the currency loses it value over the time the main goal is to spend it or to use it as soon as possible. Thus inducement to spend and redistribution are the main features of demurrage currency. This concept of demurrage currency is not only in the context of currency but it is also used for financial purpose, in economic activities and so on.

However the main goal of demurrage currency is to provide trust and motivate the people to spend the money before it looses its value.

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