I got a kickass idea maybe which will make it so anybody will be able to mint their own physical amount of crypto, and it will be redeemable back to crypto anywhere, both tasks even in his/her own house. In between, this cash can be verfied by anybody.

This idea has a giant, seemingly impossible hole in it, but if it can be figured out maybe this could work.

Ok the idea uses these things:
1. A decentralized network with a database, decentralized control of its own crypto accounts
2. Smartchips, as in a chip you can store a private key on that can't be read, but can sign, etc
3. A networked gizmo to interact with the smartchip

To make a piece of "cash", somebody does this:
1. Decides how much crypto the cash is to be worth
2. Generates a random key pair (having nothing to do with crypto addresses or anything)
3. Puts the private key on the smartchip
4. Makes a crypto transaction to an address owned by the decentralized network
5. The number denoting the amount of crypto that was given to the decentralized network address is stored in the database along with the public key.

The smartchip is now "worth" that amount of crypto because to redeem it, all one needs to do would be something like:
1. Tell the network an address to pay crypto to
2. The decentralized network gives the smartchip something to sign.
3. It uses the signature to lookup how much crypto to pay.
4. Maybe further confirms by encrypting random data with pubkey in database and see if smartchip can decrypt
5. Pays the crypto address in crypto, and deletes record of public key and amount

In the meantime, cash can be verified at any time much like the procedure for redeeming, but without the last step of actually paying crypto for it and deleting it.

There's probably holes all in this idea, but the big glaring one for me is how to give decentralized control of crypto addresses to a network, which is essentially a decentralized bank or wallet.

As soon as block rewards dry up beyond a certain threshold, a one way slippery slope is exposed for miners to go out of business on. Since transaction fees aren't mandatory, the network hashing share can effectively be purchased by miners subsidizing their own mining operations, by way of gaining the share of network hash rate given up by fee charging miner going out of business.

By waiving transaction fees, the fee waiving miners will less incent people to include transaction fees, because statistically, blocks with these transactions in them will eventually be found by the fee waiving miners, even if the miners who charge fees reject these transactions.

It is not necessary for the fee waiving miners to collude or to have a majority of hashing rate to start the process of driving out the fee charging miners. It will happen naturally at an ever growing rate in proportion inverse to how long people care to wait for a block to be found with their transaction in it that they didn't include a fee for. As the netwrok hash share of fee waiving miners grows, this wait time becomes shorter, more people will disinclude fees, and thus the eclipse of fee charging miners accelerates.

The hashing network will then probably be comprised by the likes of amazon, google, or other companies who can afford to mine for free. They mine for free as a way to purchase influence over the blockchain. By forming coalitions or cartels, they can project their policies onto the economy by "benevolently" executing arbitrary 51% attacks without negatively affecting the continued use of the currency.

This may be a dead horse, but maybe it shouldn't be. It's been discussed in the noob section, but once people get out of noob jail, they rarely go back.

This summarizes this article, which also includes some things i didn't summarize:
http://www.marketoracle.co.uk/Article39704.html

I posted versions of this in the Economy section, but got no traction at all. Maybe this should go in the Trading section, but I'm asking for technical implementation ideas here.

The terms "note" and "receipt" are used interchangeably here.

Inert, physical notes offer anonymity, higher adoption rate in the local physical world, instantly verified transactions, and reversibility of transactions.

The masses will have high demand for all these things in their money. These features are mandatory for true adoption, but do not exist in cryptocoins.

Notes can be issued on anything, any cryptocoin, any metal, any stores of grain, any commodity, at any time. They're just receipts. Transacting with these receipts offers all the said, mandatory benefits I just described.

However, the non-physical, cryptographic, public nature of cryptocoins make it so the said, mandatory benefits do not exist when transacting with the cryptocoin commodity itself.

Receipts for cryptocoin reserves must be and eventually will be used as actual money so we can enjoy the said, mandatory benefits. Otherwise cryptocoins will be nothing more than they are today, which isn't very useful.

Any entity that people trust not to evaporate with their commodity can successfully issue and redeem notes on anything at any time there is a demand, including right now.

Nothing at any time, including right now, keeps anybody from doing this with any commodity, including cryptocoins: "You can give me that thing and I'll write you a receipt for it, and we can swap back anytime you want".

It's really as simple as that for the receipts to be used as money. This is going to happen, guaranteed. The more popular, the sooner.

The receipt issuer has to come up with a way to successfully identify counterfeits and to combat other fraud vectors.

A decentralized, p2p network of banking software and/or receipt issuing ATMs should be implemented to accomplish this in such a way to minimize note issuing by private, fractional reserve banks.

Any ideas and discussion are most welcome!!

If crypto-money reaches critical mass in popularity and starts really threatening the power elite, then it will be used as reserves to issue redeemable notes and accounting entries on by the current banksters. We will then use these notes and accounting entries as money.

The banking institution used to do this with gold, now they use monetized government debt as reserves. Since monetized government debt is such a criminally stupid specie, and banks are ready poised to issue notes and accounting entries on anything (they already have a convenient branch location near you!), then they will do it. They will even get the government to legislate that nobody counterfeits their physical notes and coins.

This might be an acceptable compromise for some people. Crypto specie is totally superior to monetized government debt specie. It is arguably superior to even precious metal in this day and age.

These banks will still be private corporations though. Maybe governments will grow a pair and take the money power away from these private banks during this transition, but that is a totally wishful fantasy.

The community could possibly hurry up and create some kind of decentralized p2p banking mechanism to do this for us, like a network of kiosks or atms or software clients run on your own computer. That would totally kick ass.

Because there is a hard cap on the quantity of bitcoins, it is a mathematical fact that one day, there won't be anymore bitcoins. Either that or the currency will fail first.

Statistically, the btc supply, like radioactive material, has a halflife. Over a certain period of time, half of them will disappear.

This will happen over and over again until the btc economy is dehydrated beyond any use or they are all gone.

The length of the halflife is determined by the statistical rate on average that people collectively lose coins.

This loss is due to forgetting brain wallets, paper wallets going through the washing machine, paying nonexistent addresses by mistake, loss of private keys through human or computer malfunction, dying without revealing private keys, destroying coins purposefully for reasons of spite or insanity, and probably other ways that unfortunate people will haplessly invent.

Ceaselessly increasing the subdivision of the coins just to avoid this total disappearance is farcical.

I don't know what that halflife is, but it is a finite amount of time. I'm just saying.

I'm editing this entire Original Post to explain better, sorry for that:

ABOUT ANONYMITY:
Ok as far as the blockchain perusal goes you have something like these guys did:
http://anonymity-in-bitcoin.blogspot.com/2011/07/bitcoin-is-not-anonymous.html
http://www.quantabytes.com/?utm_source=anonymity_blog&utm_medium=blog&utm_campaign=quantabytes
They're surely not the only ones doing it. There are teams of monkeys in govt and organized crime and lone wolfs doing it right now probably. Many existing background checking companies may add this kind of thing to their background check services.

As far as govt data mining/spying goes (just one of many examples):
http://www.youtube.com/watch?v=TuET0kpHoyM
The communications (since it is everything) talked about here will obviously have cryptocoin addresses in it readily associated with email addresses, ip addresses, etc. This site bitcointalk or any like it like blogs and such where people include donation addresses in their sigs is at risk of being subpoenaed and forced to divulge account info, thus linking crypto addresses to people. Criminal botnets and hackers can gain and probably already are gaining these correlations without a subpoena obviously, and probably can do so without even being noticed, either on webservers and databases or simply on single users computers. The loss of anonymity is a one way street forever. The blockchain is permanent and public.

You put the blockchain analysis together with the data mining, and the anonymity of the cryptocoin users of the world in general pretty much disappears as time goes on, undeniably.

However all that being said, some researchers at Johns Hopkins invented Zerocoin which is a way to anonymize cryptocoin transactions beyond the public key hash addresses, but it requires integration into bitcoin code, which may or may not happen. If not, surely another cryptocoin will use it.
http://spar.isi.jhu.edu/~mgreen/ZerocoinOakland.pdf
https://www.google.com/search?q=zerocoin

ABOUT ADOPTION FOR USE AS A MEDIUM OF EXCHANGE:
The fluctuating fiat price currently hinders adoption because it's hard for people to affix prices for their goods or services. We can't really do much about that.

A block is only created every 10 minutes with btc. Other cryptocoins may be different. Not only that, it is recommended to wait at least several blocks after your transaction to be sure it is safe. This is too long for people to wait when they buy stuff in the physical world.

To transact in the physical world everybody needs various gizmos and android apps, and merchants and storefronts need their own internet connected appliances and gizmos to transact with, etc. This is hindering adoption.

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The solution to both these problems is inert, physical tokens that people and businesses can exchange immediately, in person, exactly like cash. To avoid a central token issuing authority which will gain the ability to become a fractional reserve lender (FRB) of these tokens, an implementation of a p2p cryptocoin token exchanging network should be invented.

When i first learned about FRB, i hated it. I thought it was a total scam. I still do pretty much. It definitely is a scam when the reserves are a ridiculous joke like "monetized government debt" instead of an actual, fungible, valuable, uninflatible, physical thing like precious metals (or cryptocoins on a bombproof blockchain). Even with real reserves, I kind of still do think it's a scam, but really only if the FR lenders make too many notes (tokens), go broke of their reserves, and then get bailed out by devaluing all the tokens. Also what is bad is if instead of devaluing the tokens, they simply go belly up and people get shafted holding all these useless pieces of paper. There isn't much to prevent this, so i'm not a big fan of it anyway. Therefore i think a decentralized p2p thing to issue and redeem the tokens one to one, no FRB, should be created give us our inert cash.

I will say though that issuing tokens on cryptocoin reserves will keep a bank way more honest than issuing tokens on precious metal reserves (unless they don't care about going broke and creating an angry mob), because demand for the cryptocoin specie will be constant and way, way higher. They have an actual important use, as opposed to gold. Anytime somebody wants to buy something on the internet, they will want real cryptocoins, not tokens, so if they have tokens and want to buy something online, they will demand cryptocoin specie from the bank. That being said, if we can come up with a way that a decentralized p2p network does this, why have private banks do it?

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So anyway to get back to the implementation of a p2p cryptocoin token exchanging network, which will facilitate anonymity and adoption in the real, physical, local merchant world:

Somebody did this thing, which is a bitcoin ATM for fiat:
https://bitcoinatm.com/
http://motherboard.vice.com/blog/the-worlds-first-bitcoin-atm-to-dispense-cyprus-bills

This obviously exchanges btc for fiat money, but could just as easily spit out cryptocoin-only tokens of some sort. It could also be connected to a free software, decentralized p2p network of token issuing/redeeming machines.

Maybe the tokens could be physically minted zerocoins somehow. Or maybe they can be pieces of plastic with a totally random privkey (having nothing to do with any btc keys) on a smartchip like an openpgp card or the like. The pubkey will be stored by the network. When somebody redeems the token at the atm, the machine can use the pubkey in the network to verify the token is real. The masses can validate the tokens in much the same way. Or maybe they should be totally inert, really hard to counterfeit pieces of paper, so much so that the machine will always be able to tell the difference when they are redeemed. How do these machines validate fiat paper when inserted?

If the ATM spits out tokens with real btc privkeys on them, that can undermine anonymity (like a too-small coin laundry would), and also you have to trust the ATM not to know it and spend it out from under you, and anybody you spend it with has to have that same trust. But that way you can open it up in an irreversible way and find the privkey and redeem it to yourself, and take the whole redeeming operation out of the ATM function, which would be simpler. If somebody can figure out a way to get a privkey on a physical thing and guarantee with no trust that not a soul in the world can possibly ever know it without irreversibly and obviously opening the token, not even the ATM software, that would be huge. Maybe zerocoin can do this? I'm not familiar enough yet to know.

The main problem is that tokens probably need to be easy to validate and hard to counterfeit since people and merchants aren't going to always want to whip out their token smartchip anti-counterfeiting tool in a dark alley when they're transacting their dimebags. It might should at least have some kind of hard to replicate features or something. Not sure what. Holograms?

Counterfeiting the tokens is most assuredly not the only fraud vector that would threaten this system.

Please give us all some ideas anybody!