Generic and Universal Local Cryptocurrency: LCoin

Abstract

Blockchains are finding evermore applications. One underused application of blockchains is local currencies. Local currencies are currencies that circulate in a restricted area in purpose of growing the local economy by forcing local spending. We introduce the concept of geographical demurrage: money loses of its value the farther away it is spent. We construct four generic local cryptocurrencies: a simple one mimicking local paper money; a second that restricts spending to the dedicated geographical area; a third that utilizes geographical demurrage for maintaining the system, and a fourth that lifts the geographical restrictions and maintains geographical demurrage, thus creating a universal local cryptocurrency: a currency that loses value correspondingly to the distance between its point of reception and point of spending. So without the need to restrict spending to a given geographical zone, the currency will always encourage local spending, no matter where it is spent; yielding a universal local cryptocurrency we name LCoin.