Quote from: John Tobey on August 10, 2011, 10:28:52 PM

..I kind of prefer a dynamic demurrage-like factor that just multiplies every coin's value by a number based on the linked commodity price/index. People are already used to seeing their account balance go up and down by small amounts ("interest" and "fees" or perhaps "taxes").

The problem with demurrage is apparent with the thief scenario. If a thief steals a bunch of the coin and sells it for a very low price, the demurrage would take the coin from everyone based on how much they are holding. This gives the thief and incentive to dump their coin as fast as possible to avoid the demurrage. It also gives others hoarding coins an incentive to sell out before the higher demurrage kicks in. You could suddenly have a spiraling inflationary problem as everyone tries to dump their coins before demurrage.

The opposite could happen if someone buys a bunch of coin at once and a reverse demurrage kicks in. People would then try to buy as much coin as possible to get the most reverse demurrage fees, thus driving a deflationary spiral.