I had to come up with this because Skynet from the Terminator television series is said to begin it's attack today 

Seriously, optimization of massively parallel computation as in the bitcoin network could speed up artificial intelligence development.

What do you say?

I have a new, unused mobile phone. I'm willing to sell it for some BTC. If you or your friend have a relative in Havana and want to send him/her the phone as a present, just let me know.

Please PM if you're insterested.

If the serial number on the paper is a public key then any client can verify that real bitcoins back up the paper. The key would have to own exactly the stated amount on the paper.

Any holder of paper can go back to the issuing institution and "transfer" the value to a new piece of paper with a new key on it. The holder can verify that the transaction went through on the real bitcoin side. This action would render any "duplicate" pieces of paper useless because if they now check their keys there is no value behind them. It would take a real juggling act for the issuing institution to keep any fraud from showing.

It wouldn't take too many people regularly checking their paper bitcoin to ensure the issuing institution is backing the paper with 100% real bitcoin.

Is there really an invisible ink that lasts forever (or for years at least) and absolutely cannot be revealed by any method that doesn't render it permanently visible? If so, I suppose that works. The issuer wouldn't even need to retain his own ability to access deposits, if he was willing to let some bitcoins be potentially lost forever. If not, then the idea doesn't work, no matter how cool it would be.

I'm wary of any attempt to make notes self-redeeming, because it is basically DRM---you are giving out the keys to the vault in an obscured form, so that people can only use them in the way you would like. We all know how well this has worked for software and movies.

I'm smart enough to know I'm not the smartest man on the planet---and whatever scheme I come up with for hiding private keys, one of those smarter men will find a way to reveal them without voiding the note. If he's smart enough to keep his mouth shut, he could do this for years before anyone even notices there's a problem. It would be negligent of me as a guardian of deposits to leave them vulnerable like that.

And even the private key could be micro-etched onto a thin piece of metal imbedded into the plastic, so that the holder of the plastic token could tear it apart to get at the private key.

What we need is a strong leader to make the courier network run on time.

when you say reliability, are you talking about timeliness specifically?  If so, perhaps the runner can designate a delivery schedule (available weekends, tuesdays after 8pm) kinda thing so everybody knows what sort of time-frame all the links in the chain are running on.  If the package needs to be delivered to the next runner or the destination before this runner can deliver it based on their schedule, they're opted out of the "delivery available" message all together. 

Likewise, if they agree to run a package and are late circumstantially, a negative mark should be considered.  If a theft occurs by a runner, the account will essentially self-destruct, and their deposit (if applicable) should be either given to seller, buyer, or donated to a fund to be voted on by the two.   At this point, criminal proceedings may occur.

Yeah, but how would you do that with robots?

I somehow don't expect that a bitcoin-backed paper currency (even if 100% backed) will ever succeed.

However, I'll give it a go.  Let's start with one-time paper currency.  i.e. it is issued by some "bank" and, at it's first use, the paper is destroyed and the value it represents is received by the seller of goods.

First, we'll need some widespread smart-phone software which can recognise those two-dimensional barcodes (what are they called - QR codes, right?).  Next we'll need some double-layered paper, with the top layer being transparent.  Now, you send some bitcoins to a bitcoin address.  The private key, as a QR code, is printed on the lower layer of paper.  The address, also a QR code  (but a special one), is printed on the upper layer, directly on top of the lower QR code, but here's the cute bit: you're actually seeing a mix of both QR codes together.  So what you need, is that both QR codes, seen together, represent the public bitcoin address, but you can't tell which part of the pattern belongs to the which QR code.  You scan this with your smartphone, your smartphone checks out the bitcoin block explorer and verifies the value at that address.  You accept the paper as payment, tear off the top layer, scan in the private key and immediately transfer the bitcoins to your address.

Of course, as long as people are willing to trust that the issuing bank has either deleted all the private keys in these paper notes, or will not sneakily transfer the bitcoins out, then there's no actual need to tear off the top layer, and so, the note can be re-used.

Any good?

As for expiration dates, you people are far more accepting of the idea than I would have guessed. Of course they'd have to be both prominently written and easy to predict---perhaps notes could be released in batches that expire at the end of a calendar year, with "VOID AFTER DECEMBER 2013" written in large print on the reverse. The revenue from unredeemed notes would easily make up the printing costs--if we assume each note costs 0.1 BTC to print, a single unredeemed 50 BTC note would cover the cost of 500 notes printed. Given the amount of cash destroyed in every year, not to mention the number of people who can't manage to mail in a $100 rebate form, issuing cash could be very profitable indeed.

The fractional reserve idea, the central-issuer idea, isn't that what people interested in BTC are trying to move away from?

As I see people here vouching for anarchy and believing on behaviors that are no longer.

He's not talking about conversion from AS to Metric, but about the division of an inch into hundredths.  At least that is what I thought that he was talking about.