Let's say we had a bitcoin wallet with exactly 1.0 BTC in it. We wanted to use this 'reserve' to issue your own physical, paper currency.
This could come in the form of a bond or security. The necessary thing is that it must be tradable, counterfeit proof, and hold value.
If we printed a circulation of this paper currency, perhaps we could call it a note redeemable for bitcoin within the wallet at a fixed exchange rate.
1 Physical Note = 0.0001 BTC
It would seem that a signature from the private key of the reserve wallet would be required to produce a QR code which can be printed on the physical note. Each note must be signed cryptographically.
When the note is presented to the authority, it is redeemed from the bitcoin wallet to the customer?
How could such a system work?
