C
Intermediate-Term Feature Descriptions

This appendix has in-depth descriptions of the innovative banknote features that could be implemented in a time frame of fewer than 7 years and that are discussed in Chapter 4 of this report. Each feature description includes subheadings dealing with various aspects of the feature:

  • Description—An explanation of the physical principle(s) on which the feature is based. Also, the feature application as visible, machine-readable, applicable to the visually impaired, forensic applicability, and so on, is described. Furthermore, the benefits and limitations of the feature are presented; graphics may be included to depict the feature and its operation.

  • Feature Motivation—A summary of the reasons why the feature is highly rated by the committee and reference to its uniqueness.

  • Materials and Manufacturing Technology Options—A summary of the materials and manufacturing process that could be used to produce the feature, as well as initial thoughts on how the feature could be integrated into a Federal Reserve note.

  • Simulation Strategies—A discussion of potential ways in which a counterfeiter could simulate or duplicate the feature and the expected degree of difficulty in attempting to do so.

  • Key Development Risks and Issues—A discussion of the durability challenges, feature aesthetics, anticipated social acceptability, and description of the key technical challenges that must be addressed during the first phase of the development process to demonstrate the feasibility of the feature idea,



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A Path to the Next Generation of U.S. Banknotes: Keeping Them Real C Intermediate-Term Feature Descriptions This appendix has in-depth descriptions of the innovative banknote features that could be implemented in a time frame of fewer than 7 years and that are discussed in Chapter 4 of this report. Each feature description includes subheadings dealing with various aspects of the feature: Description—An explanation of the physical principle(s) on which the feature is based. Also, the feature application as visible, machine-readable, applicable to the visually impaired, forensic applicability, and so on, is described. Furthermore, the benefits and limitations of the feature are presented; graphics may be included to depict the feature and its operation. Feature Motivation—A summary of the reasons why the feature is highly rated by the committee and reference to its uniqueness. Materials and Manufacturing Technology Options—A summary of the materials and manufacturing process that could be used to produce the feature, as well as initial thoughts on how the feature could be integrated into a Federal Reserve note. Simulation Strategies—A discussion of potential ways in which a counterfeiter could simulate or duplicate the feature and the expected degree of difficulty in attempting to do so. Key Development Risks and Issues—A discussion of the durability challenges, feature aesthetics, anticipated social acceptability, and description of the key technical challenges that must be addressed during the first phase of the development process to demonstrate the feasibility of the feature idea,

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A Path to the Next Generation of U.S. Banknotes: Keeping Them Real that is, to demonstrate feature capabilities and determine the usefulness of the feature in counterfeit deterrence. (The development phases are defined in Chapter 6.) Phase I Development Plan—A characterization of the current maturation level of the feature technology, key milestones to be achieved during the first development phase, and known current and planned related developments external to the Bureau of Engraving and Printing (BEP). Estimate of Production Cost—An initial assessment of additional BEP operational steps that would be required at the BEP to produce a banknote with the feature, incremental cost (higher, lower, the same) relative to the cost of the current security thread, and an indication of whether additional BEP capital equipment would be required for production. References and Further Reading—Selected references related to the feature and its associated components. Such references could include, for example, papers and conference proceedings for background on any work done relating to this feature. These lists are not exhaustive but are intended to provide a snapshot of current work related to the feature concept. The features described in this appendix are as follows: Color Image Saturation Fiber-Infused Substrate Fresnel Lens for Microprinting Self-Authentication Grazing-Incidence Optical Patterns High-Complexity Spatial Patterns Hybrid Diffractive Optically Variable Devices Metameric Ink Patterns Microperforated Substrate Nanocrystal Pigments Nanoprint Refractive Microoptic Arrays See-Through Registration Feature Subwavelength Optical Devices Tactile Variant Substrate Thermoresponsive Optically Variable Devices Window

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A Path to the Next Generation of U.S. Banknotes: Keeping Them Real COLOR IMAGE SATURATION Description By watermarking an image, its authenticity can be assessed. In most cases, watermarking is done in one or more of the various data channels of the image. The luminance, or brightness, channel of the image has been used, as well as the frequency space of the image. Since the eye is very sensitive to luminance variations, using the luminance channel results in any image degradation or manipulation being very obvious, and watermarks—even authentic ones—are often noticeable to a human observer. The frequency channel requires considerable processing if it is used, and it can also contain image-degrading artifacts. The technique on which this proposed currency feature—color image saturation— is based uses the saturation channel of color images to embed watermarking or other secure data. Color images are usually captured via red (R), green (G), and blue (B) data channels. Saturation is data derived from the RGB channels using various computational techniques already known in the imaging industry and does not require the development of any new technology. In watermarking via the saturation channel, no visible artifacts would generally be realized, and hence the image can be watermarked without impacting its quality in any noticeable way. The human visual system is much less sensitive to saturation channel variations (essentially color intensity) than to pure luminance variations as previously described. With the BEP capability to create, process, and print such a watermarked image, the counterfeiter would not know how the watermarking was done and, as a consequence, would be at a considerable disadvantage in attempting to create a passable note utilizing this feature. The paper cited in the “Further Reading” section below outlines the techniques used in performing this type of watermarking. One key benefit of this approach is that it should be very robust, and it is noteworthy that only an instrument can determine the authenticity of the image so marked, since unassisted visual inspection of the note would not be adequate to authenticate it. The complexity of the authentication hardware and software is not expected to be so costly or complex that it would incur prohibitive hardware or software implementation costs. Implementing a color-saturation feature requires that the image being used is in more than one color rather than being pure monochrome. Depending on the color model chosen for the image or on how the data are created and stored, there should be a hue, value, and chroma channel—for example, the chroma channel might be used for the watermarking. Hue, for example, is the color of the image, such as red, green, blue, cyan, magenta, and so on. Value is the brightness of the color and can be similar to luminance. The chroma channel is the intensity of the color, such as its “redness,” for example. The eye is about 10 times less sensitive to

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A Path to the Next Generation of U.S. Banknotes: Keeping Them Real chroma variations than to luminance variations. Color images in other encodings can be converted to have a saturation channel as required; it is just a matter of image preparation. The choice of whether the image is full color, pseudo-color, or just multicolor is optional and can be made at the time of note design. However, the image chosen would require selection based on its color characteristics and suitability for saturation channel watermarking use. Feature Motivation This feature would deter counterfeiting owing to the need to make an acceptable image with watermarking in the saturation channel. Also, it is expected that a watermarking scheme that would permit copying detection could be implemented. Thus, if a counterfeiter copied real currency and attempted to place the image on a counterfeit, the copied image would be detectable via the appropriate analysis mechanism. While this complete capability has yet to be verified, it would, if successful, be a very robust feature indeed. This feature is quite unique in that it uses the saturation channel of a color image to encode data; since this channel is not generally observable, a secure method of authenticating the note is provided. Furthermore, since the image is usually watermarked as a multibit-per-pixel image and then rendered as a binary image for printing via a halftoning or other binarization scheme, the would-be counterfeiter would not have access to the original image and would have great difficulty in determining from the binary image on the authentic currency the pixel values of the original image. It is expected that this feature would deter the opportunist and the petty criminal counterfeiter and that many professional criminal counterfeiters would be highly challenged in attempting to duplicate or simulate the feature. Furthermore, the would-be counterfeiter would have to reverse-engineer the authentication hardware and software. This multitiered robustness of challenging image modification and detection methodology replication would be highly frustrating and time-consuming. Perhaps one of the strongest values of this technique is for forensic detection. The value for other users would depend on whether the technology to detect and authenticate the watermark would be shared with commercial banks or retail outlets. Materials and Manufacturing Technology Options A color-saturation watermark feature would be printed on the note similar to the other Federal Reserve note (FRN) features. No special processes or ink would be required. The feature’s strength lies in the data encoded in the image. Since most notes do not have a full-color ink set such as cyan, magenta, yellow, and black, some effort would be necessary to develop a production process and an

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A Path to the Next Generation of U.S. Banknotes: Keeping Them Real image that employs the inks that the Bureau of Engraving and Printing uses or is planning to use. These requirements are not restrictions but do represent design and manufacturing choices to be made. Simulation Strategies Duplication of this feature would require the capability of at least a criminal of professional level. The opportunist or petty criminal would be easily prohibited from making this feature work by copying. Additionally, the data encoded in the saturation watermark would be unknown to the counterfeiter, since the data would be verified by a scanning and analysis mechanism only. The design of this mechanism would not generally give away the data that it processed in order to determine authenticity. A key characteristic of most images is that they exist in a continuous-tone or multibit-per-pixel data format. However, the printing process, such as intaglio, is a binary process in that there is either ink or no ink deposited on the substrate. There can be substantial proprietary technology in turning the continuous-tone image into the proper binary image that is capable of being rendered from a device such as an intaglio or offset printer. Again, the would-be counterfeiter would have no knowledge of the original image’s continuous-tone data and hence could not readily determine either the binarization process used by the BEP or the original image data. Without this information, the would-be counterfeiter would have no idea what the original data looked like and hence could not readily determine what an acceptable forgery would look like to an analysis instrument. This kind of feature would, therefore, provide the note with substantial security advantages that are not accessible by the criminal from the currency itself. A visually similar appearance would be no guarantee that a counterfeit note would pass an authenticity examination via the scanner and processor at the point of use. Key Development Risks and Issues Durability The durability of this feature should be high, since it is contained in a printed image and the image should be quite robust, as any printed feature would be. Therefore, durability is not an issue. Aesthetics The look and feel of the currency should not be negatively impacted by the use of this feature. The images would have to be in color or pseudo-color, and color is already present on U.S. FRNs.

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A Path to the Next Generation of U.S. Banknotes: Keeping Them Real Social Acceptability There should be no issues regarding social acceptability, since the feature is just an image. However, it is conceivable that the scanning and processing of the note might cause some concern about maintaining the anonymity of currency. This feature would only facilitate the authentication of the note, however, and would not be used as a tracking feature. Key Technical Challenges The first key technical challenge would be to make sure that the embedding of the required data in the saturation channel did not noticeably deteriorate the image being watermarked. The second key challenge would be to make sure that the watermark data were detectably altered if the image was copied in an unauthorized fashion. In this way, any attempt to copy and reproduce the image would cause detectable errors that would flag the currency as counterfeit. Lastly, a scanning and processing mechanism would need to be designed that properly analyzed the note and did so at an acceptable speed coupled with tolerable cost and complexity. Phase I Development Plan Maturity of the Technology This technology is modestly mature. Any required scanners and data-processing schemes are already known and tested. The only remaining issue is how well the embedded data degrade upon copying so that forgeries are easily detectable. The state of this knowledge is unknown. Current and Planned Related Developments No related developments in the public domain are known to the committee except as described in the reference work cited in “Further Reading,” below. Key Milestones The key milestones required are as follows: Select an image or images suitable for use on currency. Watermark the images, scan them or copy them, and process the data.

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A Path to the Next Generation of U.S. Banknotes: Keeping Them Real Investigate how well the saturation watermark passes through the currency engraving and generation process. In approximately 1 year following the achievement of the above results, currency could be in production, depending on resources and priorities. Development Schedule The committee estimates that the development of Phase I of this feature could be completed well within 2 years. Estimate of Production Cost Compatibility with Current BEP Equipment and Processes The production cost should be very minimal owing to the fact that watermarking is only a printed feature. The cost impact of printing an image in more than one ink needs to be assessed, but this is likely already known. Incremental Production Cost The cost of this feature should be very minimal, since it is just another printed feature on the currency. For the required color image, color inks and a more complex printing process are involved, but the additional cost impact should be low to very low in the volumes of currency produced. Required Capital Equipment There is little in expected capital cost incurred with this feature. The need to process the watermark and scan the image would require some capital equipment, but it should be a relatively small amount. The software processing required should be capable of being developed on systems already in-house. Further Reading Huang, P.S., and C.-S. Chiang. 2005. Novel and robust saturation watermarking in wavelet domains for color images. Optical Engineering 44(11): 117002.

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A Path to the Next Generation of U.S. Banknotes: Keeping Them Real FIBER-INFUSED SUBSTRATE Description This proposed feature involves fiber-infused paper—that is, small-diameter optical fiber segments placed in the currency substrate. These fiber segments could be glass, acrylic, or other materials. Even metallic fibers could be placed in the substrate to radiate signals when illuminated by radio-frequency (RF) signals, for example. Optical-fiber segments, when illuminated by laser light or narrow-spectrum illumination, create a signature pattern that would be easily recognizable. This feature is envisioned as an upgrade to the current fiber content of the substrate of U.S. FRNs. To employ this feature, optical fibers, or more preferably fiber segments, are placed in the substrate. As the substrate is manufactured, these fiber segments are mixed in before the paper is dried. When the finished substrate is illuminated with light, especially laser light, the fibers light up as the incident light emanates from the ends of the fibers. The first deterrent example would be for a user to notice the speckles of light from the substrate when it is illuminated. The mere speckles of the substrate with its embedded fibers would be somewhat complex for counterfeiters to reproduce, since the counterfeiters would have to create their own substrate. This elevates the complexity of their counterfeiting task considerably. The limitation of this approach is that anything that causes the substrate to produce visible speckles might be misconstrued as authentic. One key element of this feature is that the substrate is no longer passive when illuminated by optical or other electromagnetic radiation. The way that the substrate responds can be highly controlled. Figure C-1 illustrates the fibers embedded in the substrate. The references in “Further Reading,” below, give additional illustration of the concept and use of this technique. FIGURE C-1 Fiber-infused substrate.

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A Path to the Next Generation of U.S. Banknotes: Keeping Them Real A more robust feature would be to authenticate a note by a scan or digital photograph of the substrate and compare it with the known speckle pattern from a registered original or from data encoded on the note—this kind of longer-term feature is discussed in Appendix D. Feature Motivation The fiber-infused substrate feature has a good rating in the committee’s analysis owing to the difficulty of implementing the cause of the feature—that is, the fibers in the substrate—and the utility of visual inspection. Furthermore, this feature would not be reproducible using electronic printing and scanning techniques and hence would frustrate a large number of would-be counterfeiters. The feature idea is also compelling owing to its requiring both the design and manufacture of the currency substrate. A counterfeiter would be challenged not only to provide a good paper substitute for authentic currency but also to build the special fibers into the substrate. This process is most likely well beyond the capabilities of all but the most dedicated and resourced operations. This feature is quite unique, although similar techniques were used for missile verification in the Strategic Arms Limitation Treaty—SALT 1—of 1993 when fiber-embedded placards that could not be duplicated were placed on missiles. Furthermore, the costs associated with this technique would be quite low, since the cost of the materials is low, and it is their being embedded randomly that gives the technique value. Materials and Manufacturing Technology Options The manufacturing requirements for this feature would involve paper manufacturing and integrating the fiber fragments into the paper or other substrate material. Since the BEP’s paper supplier produces the authentic substrate, it would be tasked with implementing this feature. It is not expected that this would be a difficult operation, although some tooling and process changes would no doubt be required. Once the substrate had been produced, further note production would proceed as usual. Simulation Strategies Simulation of this feature by would-be counterfeiters would not be easy. Furthermore, only the professional criminal or state-sponsored counterfeiter might be able to do a decent job of embedding fibers in the substrate and doing it well enough to make the operation a profitable one. Since the BEP could also control

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A Path to the Next Generation of U.S. Banknotes: Keeping Them Real the fiber materials in the substrate, the counterfeiter would be faced with the difficult task of creating the fibers as well as making the substrate, eliminating the vast majority of criminals from attempting to do this. Key Development Risks and Issues Durability The durability of this feature is unknown, but it would be dependent on the lengths of fiber embedded in the currency. If the currency was folded, the fibers could break if they were too long. Thus, the fibers would have to be short. No degradation of the fibers themselves is expected, and the only deterioration would be from breakage of the fibers if they were too long. Aesthetics There should be no aesthetic issues with the fiber-infused substrate feature. Unless illuminated, the note would look and feel identical to one without the feature. Even when illuminated, the feature should not detract from the note’s appearance. Furthermore, the speckles that would be generated by illumination would be a comforting feature to the receiver of the note. Thus, the feature is aesthetically neutral and conforms to the look and feel of current notes, as far as is known. Social Acceptability There should be no issues of social acceptability surrounding this feature. Key Technical Challenges The key technical challenge would be the incorporation of the fiber-infusing process into the substrate production process. A key technical challenge of this feature would be the development and use of instrumentation for the analysis of the fibers. Such instrumentation could range from the simple, such as a solid-state laser diode in a penlight configuration, to the more complex, such as a small scanner that reads the currency and produces a result that could be read by a user or that gives a “go” or “no-go” signal. Such an instrument should be simple, reliable, and cost-effective, which may require a development effort, depending on what requirements are placed on the instrument itself.

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A Path to the Next Generation of U.S. Banknotes: Keeping Them Real Phase I Development Plan Maturity of the Technology The maturity level of this technology is relatively low for currency-related efforts. The science behind its use and verification is known and highly reliable, but this technique has not been implemented in high-volume, low-cost applications such as that envisioned here. Current and Planned Related Developments There are currently no known programs that use this feature. The papers cited below in “Further Reading” describing its use are the only ones known to relate to this effort. There may be related proprietary efforts in companies, but this is not known at present. A key issue regarding this feature is one of feature-assessment methods such as instrumentation. There may be levels of authentication methods that are desired and that are improved over time. With the increasing miniaturization of instrumentation and sensors via technologies such as microelectromechanical systems (MEMS), the state of the art is advancing rapidly and should only enhance the usability and value of this feature. Key Milestones The expected key milestones for Phase I would be as follows: Place fiber fragments in paper substrates to determine the applicability of the technique and any operational or manufacturing difficulties that might arise. Assess authentication techniques for a phased development of passive and active instrumentation methods over time. Development Schedule It is expected that achieving Phase I development would take between 2 and 3 years. Estimate of Production Cost Compatibility with Current BEP Equipment and Processes Other than obtaining the substrate from the supplier, the currency-manufacturing operation should remain unchanged. The conventional intaglio printing currently used would not be impacted.

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A Path to the Next Generation of U.S. Banknotes: Keeping Them Real of the feature could potentially degrade or distort the look of the portrait; thus, it perhaps would be prudent to place this feature to the right of the portrait. Social Acceptability There are no obvious hazards or public concerns created by introducing this feature. Although a simple bar-code design is suggested, this design would be very rudimentary (only a few strips) and therefore could not contain the amount of information that a normal bar code could. Thus, there would not be any loss of privacy. There are no environmental hazards. The inclusion of a feature that the visually impaired and blind population could use to denominate and authenticate FRNs would be of great social benefit. Key Technical Challenges The technical challenges for the tactile variant feature involve establishing the process by which the substrate becomes rough and understanding the manner in which the ink will respond to a substrate with varying levels of roughness. Adding roughened areas to FRNs needs to be done in a such a way that whole sheets of bills can still be printed. The use of a bar-code-like design has its benefits, as one could apply roughened strips straight across the entire sheet. This could be the simplest format, thereby using a roughening machine directly on the roll of paper as it exits the papermaking machine—that is, before it is cut into sheets. Using roughened shapes that repeat themselves along an imaginary vertical line is another approach to implementing this feature. High-pressure printing on a substrate with varying roughness will probably not cause any adverse effects to the precision and clarity of the note. Experiments will be needed to confirm this. Phase I Development Plan Maturity of the Technology Experiments for durability and ink clarity need to be designed and performed, a design for this feature needs to be carefully chosen, and a machine to create the unique rough areas on the FRN needs to be created or modified from an existing one. Current and Planned Related Developments There are no known development programs related to this feature, but the feature is quite simple, and it is expected that relatively little investment would be needed to implement it.

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A Path to the Next Generation of U.S. Banknotes: Keeping Them Real Key Milestones The milestones for the Phase I development of this feature are the following: Conduct a laboratory demonstration of a substrate-roughening method that can produce roughened areas of different shapes. Develop test features incorporating tactile variance. Carry out experiments to estimate the durability of a roughened substrate. Conduct initial experiments to determine how intaglio images would be affected by a substrate with different degrees of roughness. Development Schedule and Cost Estimate It is expected that the Phase I, and indeed perhaps the total development, of this feature could be completed within 2 to 3 years. Estimate of Production Cost Compatibility with Current BEP Equipment and Processes The roughening machine to create this feature would be used by and located at the supplier of the substrate. Thus, the effect on BEP operations would be minimal. Incremental Production Cost The cost for the roughening machine should be very modest, and it is expected there would be a low incremental cost. Required Capital Equipment The technology to create a roughening machine already exists. In fact, these machines themselves already exist. They would, however, need to be modified so that they are capable of creating the unique feature shapes on the FRN. Further Reading No additional reading is suggested.

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A Path to the Next Generation of U.S. Banknotes: Keeping Them Real THERMORESPONSIVE OPTICALLY VARIABLE DEVICES Description A thermoresponsive optically variable device (TOVD) provides an appearance that changes reversibly with temperature—for example, blue when cool and red when hot—over a temperature range near room temperature. Heating this type of responsive device (or cooling it, depending on its temperature) by touching it with a finger, for example, changes its appearance. In certain embodiments, such as those that involve liquid crystals, the colors can also change with viewing angle, and the properties of the reflected or transmitted light can depend on polarization. Such devices would be difficult or impossible to reproduce with conventional scanner or printer technologies. They provide additional functionality—that is, responsiveness—and are challenging to simulate or duplicate, compared with conventional OVI features or DOVDs. As such, they provide enhanced security benefits. Their highly visible, reversible, and optically variable appearance and the polarized nature of the reflected or transmitted light provide a level of banknote feature functionality that is valuable for the general public. One type of TOVD can be formed with thermotropic chiral liquid-crystal (LC) materials. The nematic phase of a chiral LC is known as the cholesteric phase, and is observed in LCs with chiral nature or in achiral LCs that have chiral additives. This phase consists of a helical arrangement of LC molecules, with a well-defined pitch. Circularly polarized light that strikes a layer of cholesteric LC is reflected when its wavelength is comparable to the distance associated with a full turn of the helix (that is, the pitch of the cholesteric phase). This effect causes the LC to appear brightly colored. The color depends on the viewing angle owing to the geometry of the Bragg effects that generate the reflected light. The reflected light also can be circularly polarized, providing additional benefits for security. The color varies with temperature owing to the temperature dependence of the helical pitch of LC molecules in the cholesteric phase. The chemical structure of the LC molecules determines the pitch and its dependence on temperature. Figure C-13 illustrates the thermal effects in a typical system. A TOVD currency feature could consist of a uniform patch of this type of material, a printed image formed on top of such a patch, or an image formed directly with the thermoresponsive material. Separate fabrication of the feature followed by integration with the paper represents a path to insertion into currency. TOVDs based on liquid crystals are used in thermometers, mood rings, car paints, and battery testers. They are also being explored for use in low-cost systems, such as “re-printable” paper. These devices can be used in security applications, but the committee is unaware of any widespread use for such purposes. The main challenges for currency applications are durability and cost.

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A Path to the Next Generation of U.S. Banknotes: Keeping Them Real FIGURE C-13 Images showing the thermal response of a cholesteric liquid crystal. At room temperature, the device is black (upper left in the left frame). Heating by a hand causes changes in the observed color (right frame). SOURCE: Adapted from the University of Wisconsin-Madison IPSE Liquid Crystal Activity Guide <http://mrsec.wisc.edu/Edetc/supplies/ActivityGuides/LC_Activity_Guide_Expo.pdf>, Materials Research Science and Engineering Center on Nanostructured Interfaces, University of Wisconsin-Madison. Another route to TOVDs uses thermoresponsive inks known as leucodyes. Although these materials are much better explored for security applications than are liquid-crystal-based devices, they have the disadvantage that they do not provide unique viewing-angle and polarization-dependent properties. They are, however, more fully developed for low-cost implementations and are used widely in packaging applications. Durability represents the main challenge for currency applications. Feature Motivation The committee considered the concept of a TOVD feature to be valuable owing to its easily identifiable, unique, and highly visible responsive functionality, suitable for use by the general public even with little education provided on the nature of the feature. It is also usable by high-speed machine readers. A TOVD feature would provide, however, limited forensic functionality. As described above, heating or cooling a TOVD feature by touching it with a finger, for example, changes its appearance. Such a characteristic would be difficult to reproduce with conventional scanner or printer technologies. Implementations with cholesteric liquid crystals offer the widest diversity of visual indicators, including viewing-angle-dependent appearance and polarization-selective operation. Leucodyes, however, are more fully developed for low-cost applications. In both cases, robustness for currency applications must be demonstrated.

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A Path to the Next Generation of U.S. Banknotes: Keeping Them Real Materials and Manufacturing Technology Options A TOVD requires a thermoresponsive material (for example, thermotropic chiral LCs or leucodyes), a suitable substrate, and a top layer to seal the system. The manufacturing processes for cholesteric and leucodye devices are well established. Specially designed materials, especially in the case of the LCs, could provide unique colors and temperature responses. Such a device could be formed into an element, such as a security strip, and then integrated with the paper prior to printing. The ability of such a structure to withstand the direct pressure of the intaglio process is unknown. It might be possible, however, to adjust the position to avoid direct contact during printing or to integrate the TOVD after printing. The designs would need to take into account a wide range of operating temperatures—for use, for example, in regions from Alaska to Arizona. However, the functioning of the devices—that is, their responsiveness—only requires changes in temperature due to contact with a finger or other device. As a result, the ambient temperature does not limit the device’s operation except in the special case that the temperature of the note is the same as body temperature, as in the case of inspection of the feature with a finger. To expand the complexity of the functioning of a TOVD and to address the variable ambient temperatures, it would be possible to construct a feature that consisted of a composite array of different features, each of which responds in different temperature ranges. Simulation Strategies For liquid-crystal-based devices, simulation might be possible at a crude level, by cutting and pasting off-the-shelf devices obtained from battery testers, decorative items, thermometers, clothing, and so on. TOVD features that involve printed patterns, or their integration with other printed images, would make this sort of simulation strategy difficult. Also, the colors and temperature responses of TOVDs used in currency could be custom-designed to differ in identifiable ways from commercially available devices. Nevertheless, it is reasonable to expect that crude simulations could be generated by petty criminals and that acceptable simulations could be produced by professional criminals. Duplication of TOVDs, while more difficult than simulation, is within the range of capabilities of a state-sponsored organization. Devices based on leucodyes might be easier to simulate, owing to the wider availability of the inks as well as the feasibility of directly printing patterns of leucodyes without concern for careful control of thickness or molecular alignment, which are necessary in the case of liquid crystals. A path to simulation of a liquid-crystal device could use, in fact, combinations of leucodyes and conventional pigments to simulate the color changes. The viewing angle and polarization-dependent behavior would, however, be difficult to capture using this approach.

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A Path to the Next Generation of U.S. Banknotes: Keeping Them Real Key Development Risks and Issues Durability The durability of TOVDs is sufficient for use in a range of existing applications, as noted above, but their durability, at the level required for currency, is unproven. The degradation modes would be a function mainly of the device packaging, particularly in the case of the liquid-crystal systems, since the materials themselves are known to be very stable—liquid-crystal display applications provide an example. The leucodyes can be degraded by prolonged exposure to ultraviolet light. Suitable packages (for example, ultraviolet-absorbing encapsulation layers) would need to be developed to avoid these sorts of limitations. Aesthetics A responsive feature, such as a TOVD, could, if properly incorporated, enhance the aesthetics and appeal of U.S. currency. Social Acceptability There are no known environmental hazards or public concerns with respect to TOVDs. Key Technical Challenges A key challenge would be the development of low-cost, high-volume manufacturing approaches for TOVD production. The extremely high levels of reliability and durability demanded by currency applications—including in this instance the range of ambient temperatures in which a thermal device would have to operate effectively—represent the main difficulty. Tests must be performed to assess the durability of existing devices for use in currency. The outcome of such tests can provide guidance on the development of suitable packaging systems. Methods to reduce the cost of the liquid-crystal-based devices, in particular, appear necessary. Phase I Development Plan Maturity of the Technology The existing TOVD devices in the applications noted above suggest that the technology is mature for applications similar to but with less stringent operational demands than those in currency. These devices have not been demonstrated to

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A Path to the Next Generation of U.S. Banknotes: Keeping Them Real achieve the necessary durability and reliability for currency applications, to the committee’s knowledge. Current and Planned Related Developments There are many development efforts in liquid crystals generally, and in cholesteric liquid crystals in particular, to support existing product applications and to develop new systems, such as bistable reflective displays and “re-printable” paper, that use these materials. Additional efforts are required, however, to address the technical needs of the currency application, and in particular the cost. Key Milestones The key milestones to the development of a TOVD feature are the following: Conduct initial durability tests of several different TOVD features. Develop a reasonable approach to achieving cost-effective integration of TOVD features in the currency substrate. Development Schedule The committee estimates the time for completion of Phase I of development for a TOVD feature to be within 2 to 3 years. Successful systems-level tests would require, primarily, adequate packaging of the feature and cost-effective manufacturing approaches. The key assumption is that durability of a TOVD can be achieved by suitable packaging and integration approaches. Estimate of Production Cost Compatibility with Current BEP Equipment and Processes The cost of a liquid-crystal-based TOVD is expected to be relatively high compared with that of other nonresponsive complex features such as diffractive optical devices. Integration of a liquid-crystal TOVD would occur through a strip bonded to or woven into the paper. TOVDs that use microencapsulated leucodyes might be printed directly. The layout of the printed parts of the currency might need to be designed to avoid high-pressure contact with the TOVD associated with the printing. Alternatively, development efforts could be directed to yield TOVDs that are compatible with these pressures.

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A Path to the Next Generation of U.S. Banknotes: Keeping Them Real Incremental Production Cost The cost of a liquid-crystal TOVD would likely be in the medium to high range. Other approaches, such as those based on leucodyes, would be lower in cost. Required Capital Equipment Capital equipment used for existing TOVDs could be implemented directly, or in some variants, for currency applications. Liquid-crystal TOVDs would most easily be integrated through a security strip or on a plastic substrate that is integrated with the paper note, similar to a diffractive optical device. Leucodyes could be printed directly, although studies would be needed to determine whether existing BEP printers could be used for this purpose. Further Reading For more information on color-changing inks, see <http://www.screenweb.com/inks/cont/brighten981119.html>. Accessed February 2007. Bahadur, B. 1998. Liquid Crystal Applications and Uses, Vols. 1-3. Singapore: World Scientific. Broan, L., and C.L. Saluja. 1978. The use of cholesteric liquid crystals for surface temperature visualization of film cooling processes. Journal of Physics E: Scientific Instrumentation 11: 1068-1072. Ireland, P.T., and T.V. Jones. 2000. Liquid crystal measurements of heat transfer and surface shear stress. Measurement Science and Technology 11: 969-986. Parker, R. 1988. Flexible Resistive Heat Battery Tester and Holder. U.S. Patent 4726661.

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A Path to the Next Generation of U.S. Banknotes: Keeping Them Real WINDOW Description The principle of the window feature is the inclusion of a denomination-specific window, possibly integrated into the substrate of U.S. banknotes. The window could be shaped differently on different notes, or different notes could simply have windows of different sizes—in particular it is suggested that the lower-denomination notes have larger windows, thereby deterring their use for counterfeiting larger-denomination notes that would have smaller windows. Alternatively, higher-denomination notes could have no window. Feature Motivation The motivation for the window feature is its effectiveness in deterring the use of lower-denomination notes as sources of currency substrate for the counterfeiting of larger-denomination notes by the inclusion of a denomination-specific window or hole in the note. This feature is intended for unassisted use by the general public—that is, a large-denomination note would have a window, or the wrong window, if it was a counterfeit manufactured by the “washing” of a lower-denomination note. In particular, therefore, the feature is proposed as a specific deterrent for the opportunist and petty criminal classes of counterfeiter. Also, the committee believes that the careful design of the window could add to this feature’s value as a denominating aid for the blind. The major risk with this feature is that robust embedding of a plastic window into the paper substrate might be difficult. This feature is expected to be cost-effective once the manufacturing challenge is solved, since the cost of the mass-produced plastic windows is expected to be less than that of the security thread. While clear plastic windows are in use in banknotes with plastic substrates—such as those in Australia and Mexico—the committee is not aware of integrated plastic windows in paper notes. Materials and Manufacturing Technology Options Substrate-integration technology similar to that needed to implement windows is also needed for the Fresnel lens, hybrid diffractive optically variable device, microoptic array, and subwavelength optical element features discussed earlier in this appendix. In order to produce this feature so that it is challenging to the counterfeiter, the window would have to be integrated into the substrate. This would require a change in the substrate manufacturing process, perhaps as a variation of the process used to integrate the current security strip.

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A Path to the Next Generation of U.S. Banknotes: Keeping Them Real Simulation Strategies The windows could be simulated and duplicated by professional criminal and state-sponsored counterfeiters in counterfeiter-produced substrates. However, simulation by a petty or opportunist counterfeiter would be challenging, as it would require the holes in the lower-denomination notes to be “filled in” in order to allow for the use of those notes by bleaching for instance, as a substrate for higher-denomination notes. Key Development Risks and Issues Durability The positioning, size, and shape of the window would have to be investigated to minimize durability issues. The committee believes that given the remarkable strength of U.S. currency paper, the durability of the feature and the note has a high probability of being satisfactory. Aesthetics The feature will change the aesthetics of the U.S. FRN, but properly designed, the window should not affect the overall look and feel of the notes. Social Acceptability There should be no social acceptability issues involved with the implementation of the window feature. Key Technical Challenges The key challenge is the development of the window design and production process that are respectively durable and inexpensive. Phase I Development Plan Maturity of the Technology The window feature is a low-technology feature that could be implemented in the short term once the durability and production cost issues were resolved. Current and Planned Related Developments The committee is unaware of any research specifically targeting this type of feature. The committee knows of no plastic films that have yet been integrated into

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A Path to the Next Generation of U.S. Banknotes: Keeping Them Real a paper substrate, although there does not appear any compelling reason to think that this cannot be done. Key Milestones The key milestones for the Phase I development of this feature are the following: Demonstrate that a plastic window can be effectively integrated into the substrate. Resolve durability issues. Development Schedule The committee believes that this feature could be fully developed within 2 years. Estimate of Production Costs Compatibility with Current BEP Equipment and Processes The window feature might require an additional processing step in the production at the BEP, depending on whether the holes are produced prior to printing (by the substrate manufacturer) or after printing (at the BEP). Incremental Production Cost The committee believes that this feature would not add significantly to the cost of FRN production. Required Capital Equipment The need for extra equipment at the BEP would depend on whether the holes were produced prior to printing (by the substrate manufacturer) or after printing (at the BEP). Further Reading No additional reading is suggested.