Thank you for answers. It seems the lack of study still
Creating a counterfeit of most any paper item is trivial unless expensive anti-counterfeit measures are taken. Here's an example of the challenge to making paper hard to replicate:
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http://rt.com/usa/100-dollar-bills-misprinted-496This is such a challenge that even community/local currency issuers such as Brixton Pound have gone to using electronic (mobile/SMS) ledgers:
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http://www.youtube.com/watch?v=qa9Bqrs9yAQEven tactics like putting a hologram sticker to protect the private key (as is employed with the Casascius physical coin has) been discovered to be vulnerable:
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http://codinginmysleep.com/casascius-physical-bitcoins-cracked-at-defconThe problem comes with intending the item (paper, coin, whatever) to circulate.
What does work well are single-use vouchers. When buying a MoneyPak at a convenience store, that piece of paper that is issued contains a code that can be redeemed online. This same approach where a one-time code is issued is how ticket-in/ticket-out (TITO) equipment at casinos work. Other e-gift cards and other vouchers/coupons work with the same concept. The code is revealed to the customer but the intention is that the code will be redeemed instead of the paper with the code being transferred to someone else as an exchange of value.
The single-use e-code/voucher approach used by MoneyPak/UKash/CashU/etc. all are regulated financial products (as there is an issuer of the code) and issuing a private currency would bring the regulators:
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http://www.the-star.co.ke/news/article-128667/cbk-investigates-bangla-pesaSo even if one wanted to go that route, there are hurdles beyond the technological.
