Private institutions can be set up to issue bitcoin based paper money. The paper is printed by the same companies that print government tender, making it prohibitively expensive to forge believable copies of these notes in the long run. Security features on the notes can include a barcode that can be scanned/entered to confirm that the note has not yet been redeemed for the underlying bitcoins at the backing institution.
I like the idea.
The barcode security-feature you talk about could actually be the address owning the amount of bitcoin this note is being backed up with.
That way, users can always verify the backing is actually present (to avoid possiblity of fractional reserve banking).
Good idea?