[natdempk]

Value could be pegged to the dollar by having a set number of premined coins with 0 available for mining with these coins given out for dollars. The creators could then hold onto all of the dollars they receive for the coins, as a way for people to cash out at some point in the future to ensure its value. Maybe a design that would allow only the creators to mine new coins, but everyone in the network to verify them could work. I do not know if such a thing currently exists.

It would be better than Paypal in that after initial issue to users it would be somewhat decentralized. The downside is that you have a central agency basically maintaining the value of the coin, so that if they run away with part of the monetary backing, the whole thing probably goes bust.