Ideally demurrage currency is stable in the sense that prices do not gradually rise so demurrage is the only thing causing money to lose value (the value loss is entirely by nominal loss rather then inflation loss), as most economies typically have inflation of 2-5% this is no worse for the merchant then the current monetary paradigm.  Second their would still be bank deposits that pay interest of a few percent which manifests as subtracting from demurrage, so a short term deposit might be net 3% demurrage and a savings account just 2% and most people will naturally use these accounts when they want to save.  Third most businesses have a high turn over of their cash so transaction fees have a much larger impact on them then dose demurrage, our implementation will pay miners from demurrage thus keeping transaction fees to a minimum.  Third demurrage lowers interest rates meaning loans can be very near zero (in practice their would be a risk premium which is legitimate), and merchants can thus finance their business by a low interest loan and will naturally need to acquire FRC to repay it with.  The merchant also dose not suffer from increased cost of overhead burden, if things like salary and rent are payed for in denominated in deflating currency then all these costs are constantly growing.  Lastly the potential customer no longer has a death-grip on the coins, in fact they want to spend them so the merchant isn't forced to constantly undercut and race-ahead of the current deflation by offering an even lower price such that the customer is finally induced to buy (their are BTC merchants adopting that strategy right now), when merchants do this they are forced to hold coins themselves waiting on deflation so they can sell them for enough to cover their costs.  This slows down commerce and drives yet more deflation as coins are removed from circulation and velocity drops.



Yes the current protocol is for a stable 100 million coin base, but we reach it quickly in just 3 years because we have no need to stretch it out for eternity as BTC dose and we really want to know what happens when a coin base stops growing, it's literally never been done before.  Now we have some some theories on what will happen if demand continues to grow after that point, one possibility is that velocity of money goes up to accommodate the higher level of goods being exchanged, but it might also happen that we see deflation emerging, though we expect it would never be as high a deflation rate as seen in BTC.  Possible solutions range from simply forking to create more coins, or my personal preference creating a futures-market like mechanism inside the protocol that manages money supply in a distributed fashion, much like how difficulty is controlled now.  As users buy futures with present coins they indicate the predicted future value of coins and volume is increased or decreased in a compensatory manor.