Fiat money backed by Bitcoin

Or fiat money hacked by Bitcoin.

 You know what - every person already puts too much of his trust into pieces of paper.

Imagine - many people even ready to put on card their 30 to 60 days of their hard working labor in poor counties. Before you get paid here, most of us rely just on a chance of being or not being scammed by employer.

Also even when you're doing some purchases from $1,000 to $5,000 you are trusting a paper again. Because you are not machine to be even 50% sure whether it is real papers.

People love their fiat money. They are loving to say "I believe only in money which I can touch"

Credit cards aren't accepted yet in 90% of places like landlord, private services, purchasing from hands, and many other cases, because CC epayments itself is a new technology

Why fiat money even can exist?! How does it happen to still exist in 2014!!! In the world of Toyota's, credit cards and the portable mobility?!

Remember - fiat money is 300-400 years old technology! Why I am calling it technology? Because fiat also falls under specifics of technological features. Feature #1 of fiat is watermarks, different security hard to fake mostly designed for human eye recognition (now thru special devices like infrared - which in 90% cash cases even NOT USED which means almost the same like accepting Bitcoin with 0 network confirmations)

Even with all these security flaws in paper money - people still use it, an that is shouldn't be missed when developing new technology.

My vision is clear on this subject - there's nothing wrong with creating Bitcoin reserved central bank. In this case each Bitcoin note will be very protected like the dollar and other currency bills. With only difference that you will see a special id number by which you can exchange this not for real digital Bitcoins.

Such central bank should have camera's inside the private building which documents the process of making such money.

This idea perhaps isn't new of course: in history there was many attempts from making money from Gold. But such attempts failed for the reason of massive acceptance of IOUs dictated by banks.

Plus if you're losing physical gold - you've lost not only the money, but precious metal itself which could be otherwise used for other purposes.

But again - not using gold is more political reason.

Why am I advocating this idea of fiat money backed by Bitcoin? While I understand that the real value is in its electronic usage, there is also very important role of synchronizing fiat money with Bitcoins too: it's because this will give to people better understanding of value and reliability proof of p2p cryptocurrency. 

You may ask: what is the difference between the FED and Bitcoin Central Bank?

It's easy:

1) Money printed with Bitcoin Central Bank isn't just uncontrolled printed money - it is a transparent non-profit organization which should be able to provide the proof that double printing doesn't occur. Each banknote will have a serial number which will give right to owner for releasing funds to the Owner Bitcoin Wallet, after certified banknote destruction.

2) Each banknote can be checked online for identification of its authenticity (through open key to wallet where funds shouldn't be spent)

3) Organization which prints money shouldn't know the private keys for wallets.

4) Banknote users also don't know the private key, but under the secret area in each banknote there is a hidden code which lets to redeem that banknote by its destruction in special certified centers available in every city. The hidden code aren't disclosed to anybody even central bank doesn't knows it.

Technologically there's no obstacles for this idea to work.

There's only one thing where bank could get corrupt - in stealing user's secret codes written inside currency.

And if such thing somehow happens - screw such bank, because the whole idea is based on bringing Bitcoin to mainstream.

I'm really curious yet - is there any technology in the world which can produce cheap chips (like inside of modernisated plastic cards), where you can write secret code, but secret code could be readed by special ATM only - which could destroy the card after redeeming it?

Ive opened the reddit topic about this question

http://www.reddit.com/r/Bitcoin/comments/27x0n6/need_advice_from_crypto_expert_is_there/

Also there it's fun to imagine what value we would give for physical Bitcoins.

Current price of Bitcoins is $620 so today it would be:

- 0.1 btc - $62

- 0.05 btc - $31

- 0.01 btc - $6.2

- 0.005 btc - $3.1

- 0.001 btc - $0.62

- 0.0005 btc - $0.31

- 0.0001 btc - $0.06

- 0.00005 btc - $0.03

- 0.00001 btc - $0.006

Such bills as 0.00001 may sound rediculus at the $620 per btc, but once 1 btc becomes over $1000 - it becomes easier to use such units as 0.00001 - because now with $1000 per btc 0.00001 is equal to $0.01 (1 cent versus 0.62 cents with $620 per BTC)

What's wrong with Bitcoin central bank as long as you can check the validity of each cash.

I just can imagine Bitcoin paper bills issued by every government of the world, and controlled by the government with all that policy against counterfeiting and now with additional validity check - in order for your paper cash to be valid - it should be unspent. Also as a citizen you will have the ability to spend it by going to bank (bank should destroy it by law after spending it - spending means sending it on a Bitcoin wallet electronically)

Remember, one day cash was backed by gold. Now why we don't back it with Bitcoin? There always will be in the next 2 decades such an old fashioned people who still prefers cash. Why we don't protect those people by creating a central bank. I think the article author is talking exactly about that, and you Bitcoin community is just showing how much you're obsessed by the whole idea of non-cash transfer, without giving a clue that some people hate non-cash transfers because of its complexity for their age.