2012 December 23 Sunday
North Korea Counterfeiting 100 Dollar Bills: How To Stop?
David Wolman, a Wired editor who has written a book on counterfeiting, says the US could put economic pressure on North Korea by stopping the use of the $100 bill. I occasionally find the $100 bill useful. e.g. what happens if a power outage makes credit cards and ATM cards useless? Cash still works. So I'm opposed to this idea.
An alternative proposal: Make counterfeits easier to detect by putting a really large number on every $100 bill and make it so the number can only be verified as legitimate by a US Treasury computer server. Then banks and merchants could scan and automatically detect bad notes.
The idea here is the number of good numbers would be a very very small fraction of all the numbers in the legal range. Could a note have its numbers printed on it small enough for this to work? Maybe put them all on it 2 or 3 times to deal with smudges?
By Randall Parker at 2012 December 23 06:49 PM
The number of large numbers is large. If all of the 55 trillion in Z1 where in hundreds that is only 550 billion numbers with only 15 digits you would have a slightly better then 1:2000 chance of picking one at random. Every extra digit reduces the chances by an order of magnitude. As long as the candidate algorithm isn't cracked it should be secure and that can be solved by using quantum randomness since a modern TB hard drive could store all the numbers even for this situation.
If you were going to do something like this you'd have to combine it with something that can't be duplicated, such as tying the number to a hash generated from some irreproducible characteristic of the bill itself. Maybe some encoding of the colors and positions of the thread fragments in the paper?
Here's another variant on the idea: Don't use an algorithm to pick which numbers to make be legal numbers. Choose them randomly and store each one.
Also, use base 36 by using the full alphanumeric character set. One could even go further and use other characters.
I think the US government should step up to a bill that is far harder to duplicate at the same time it adds the digits. One could even tie the serial number to some graphic pattern that varies according to the value of the serial number.
Hmmm, downside: the US government could retroactively invalidate bills known to be in the possession of "criminals" or "tax cheats" or even "class enemies".
Even if the $100 bill is replaced by $20, the North Koreans will once again find a way of manufacturing counterfeit money.
In fact, probably criminals prefer using smaller denominations like $20 instead of $100 dollar bills.
But the best solution will be electronic cash in the future.
So what stops the NoKos from just cloning one of the new, valid $100 bills? I suppose the government could detect that fairly quickly and invalidate the bills with that number...
Anyway, it wouldn't surprise me if the government were happy to see the $100 slowly fall out of use. Making everything electronic would make it a whole lot easier to implement a nationwide sales tax or VAT.
Yes, money becomes more easily traceable and controllable in this scheme. But there's always gold.
A scanner in a store would allow the store to detect instantly that 3 $100 bills are using the same id and therefore at least 2 (and likely all) are counterfeit. Imagine big drug buys done with $100 bills where they all have the same serial number. The drug sellers will check and refuse to accept the cash. Ditto whoever the North Korean government buys stuff from using $100 bills. These bills have much less utility to the North Korean government if they have to be used one at a time.
How long until the DB of good numbers is hacked and a torrent/pastbin/wikileaks of them shows up?
A scanner in a store would allow the store to detect instantly that 3 $100 bills are using the same id and therefore at least 2 (and likely all) are counterfeit.
Unless they were all in the same store, how?
The bill needs to contain all the particular information needed to verify the authenticity of the bill. IIRC, one way that missiles were verified under arms-control treaties was by painting them with a lacquer containing something like mica flakes; the resulting pattern was unique and not reproducible, so could not be forged. The patterns of colored threads in a US bill is likely just as impossible to reproduce. If it could be imaged and converted to a hash which is cryptographically signed and printed on the bill, the authenticity could be confirmed using a stand-alone scanner so long as the hash is not cracked.
The government might also find a way to sell fake banknote numbers to Pyongyang.
Hmmmm... Cruise missiles?
A more prosaic approach: since the ink for the bills comes from a specialized Swedish firm, it would be easy to block shipments of ink to North Korea.