How does the authentication in the new UK £1 coin work?
security.stackexchange.com
security.stackexchange.com
They also mention that iSIS is made of three security types: "overt, covert and forensic".
So I don't think it's the case that luminosity is the core of the security, that is just the overt layer.
The keywords they keep using are "integrated", "embedded" and they state that the coin is "full-plate" and that they can produce blanks (for full-plating) that have iSIS protection.
They also mention (in the bottom video on this page: http://www.royalmint.com/business/circulating-coin/isis ) that unlike electro-magnetic signatures that have variability and also can vary over time (with coin wear), the iSIS has a binary yes/no response: authentic or counterfeit. It's a signature detection technique and the signature is not related to the size/weight of the coin.
Is it possible to make the interior of the coin in such a way that a radio signal bounced off of it would produce a received signal of a certain signature?
Some of the speculation has focused on patents recognised as being held by the Royal Mint that dealt with luminosity in the plate layer. I think this is just one of the security measures, but isn't actually the iSIS method.
So I think, as you suggest, they must (also) be using an anti-counterfeiting method that's more sophisticated than a plain additive. At least an additive that wouldn't return the same signature after it has been reprocessed by counterfeiters.
If the verification is done with a part of the electromagnetic spectrum that somewhat penetrates the coin, then you'll need a very thick, "obvious fake" layer. I am not a physicist so this is just vague speculation.
I find it hard to believe that anyone with the inclination to break the law in such a big way, and the resources to do it, would chose pound coins as the thing to counterfeit. I could be completely wrong..?
Edit: Of course I presume I must be wrong by the fact that this coin is being introduced, I guess my question is how wrong am I - how is making fake coins worth the effort?
From the Royal Mint:
The Royal Mint regularly conducts surveys to estimate the level of counterfeit £1 coins in the UK. A survey undertaken in November 2013 found that the rate of counterfeit UK £1 coins in circulation at the time had risen from 2.74% to 3.04%.
http://www.royalmint.com/discover/uk-coins/counterfeit-one-p...
And:
The move comes amid concerns about the 30-year old coin's vulnerability to counterfeiting, with an estimated 45 million forgeries in circulation.
Happy to be proven wrong of course
(I couldn't find an official estimate of number of coins lost every year, it would be interesting to look at that too)
(sources: m3 supply data http://www.tradingeconomics.com/united-kingdom/money-supply-..., inflation http://www.tradingeconomics.com/united-kingdom/inflation-cpi, minted quantities http://www.royalmint.com/discover/uk-coins/circulation-coin-...)
This provides some interesting incentives though... if you can sort the fake/real coins yourself in some way, you can deposit the real ones and use fake ones to pay all small bills (pay utilities, petrol, etc. with coins only)
The annoying bit for is that if they accept a high percentage of bad currency this is tracked and the drivers get disciplined so they tend to try and give it back as change before the end of the route (which is why you'll sometimes see them fumbling around in a pocket for change rather than the coin dispenser fitted to the bus).
Therefore always check the change from a bus driver meticulously!
Also if you know a bus driver as a friend, watch your change too as the total amount handed back to the mint for disposal is usually less than the amount collected. Some of it gets stolen usually and pocketed by staff as it's still pretty easy to use in pubs etc.
Source: I used to write route management and payroll software for bus companies that tracked this sort of thing.
I don't ride the bus very often, it's a bit too expensive. It seems either these are being phased out or you travel on buses in posher areas than I do.
One of the problems we had was bus drivers who would push coins into the machine through gaps near the ticket printer.
This would short out something in the machine, allowing them to switch to hand written tickets which made it much easier to steal from the bus company.
I was always pleased that they used £1 coins and not, for example, paperclips.
In particular, M4 includes liabilities of non-deposit taking financial companies (Other Financial Companies, or OFCs) which tend to be very active in repo (sale and repossession) markets with billions often in one transaction. OFCs include non-banking subsidiaries of banking groups - a trading subsidiary of a Highly Complex Financial Institution (HCFI, industry term) is likely not to have a deposit taking license (and this subsidiary, in theory, should not be bailed out; practice has proved different).
High powered money, or M0, or roughly Notes and Coin, is the best comparison. The latest edition of Bankstats http://www.bankofengland.co.uk/statistics/Pages/bankstats/de... , the Bank of England's monthly statistical release, shows ~68bn sterling outstanding at end January 2014 seasonally adjusted, and ~67bn non seasonally adjusted.
Still, my 0.015% is not a large number, even compounded over many, many, many years.
I also agree that as MV has to equal PY, perhaps the counterfeiters are doing a service! Monetary Easing for no minting / production costs!
QE finances itself by the government issuing debt purchased by a private buyer - liability issued and asset secured - the balance sheet balances. As purchases, the BoE issue cash (a liability) for purchase of gov't debt (an asset) - balance sheets again balance. Therefore, despite their charitable service, counterfeiters are procreating government debt for coin, and governments tend not to like this.
An interesting quirk in the UK that I'm not sure is present in many other countries or jurisdictions: The Mint (the producer of coins) has minting power independent of the Bank of England i.e. the Bank of England (the UK's central bank) cannot tell The Mint the mix or quantity of coins to, ahem, mint. They are completely different government entities with no power over each other (disclaimer: this was the case, circa 2005, the last time I checked).
My feeling on this particular story: All governments strive for a credible currency, and despite the alternate low % numbers you and I mention, is abhorrent to the idea of the public losing trust in it, even a little bit. Plus the budget could have appeared somewhat underwhelming to some, so why not have an easily digested story thrown into the mix to read with some tea and digestives.
I couldn't tell you whether defrauding such machines is the 'killer app' to drive coin counterfeiting on a large scale. The UK has millions of betting machines with small payouts (e.g. £50) but a smaller number with larger payouts, concentrated in betting shops, casinos etc.
I suspect generating them is less effort that many people think. This guy http://www.dailymail.co.uk/news/article-502292/Counterfeiter... - was convicted of creating 14 million fake £1 coins and the technical side was basically a one man operation.
Some fakes are amazingly real looking, some are so fake looking I find it amazing anyone actually believed it was real. I always seem to get them in small shops, pubs and take aways. Usually from independent traders who deal mostly with cash. I guess this is because the fraudsters can get away with passing them off more easily to those kinds of businesses?
I think one pound is below the "worth bothering about" level, which probably makes it an ideal counterfeit target
There is a whole other economy out there - think drugs - where fake coins are just another thing to sell/launder. People that buy drugs with a view to selling them in order to make the money needed to pay for their own habit are well placed to 'shift' fake coins and notes. They are not going to snitch either, this is because most people that buy drugs have just the one supplier, perhaps with someone else they can call on in emergency drought situations. To grass on their dealer is just not going to happen - they would lose their supply, possibly get nicked themselves and create lots of enemies in their scene. If fake coins get passed on through that same supply route then nobody is going to tell.
The thing with the coins is that they only have to be passed off once from the 'black' economy to regular-commerce-land whereas the Royal Mint has to make coins that circulate for decades. For the counterfeiters it is easy to get the Queen's head stamped on there with some ridges around the edge, getting the weight and colour finish right has cost implications, hence this is not necessarily done to high-class forgery standards.
I do wonder what the police would view as more serious - selling class 'A' drugs or laundering fake currency. I suspect the latter. Nonetheless, I hope that you now see how counterfeit coins have a route to market, why they don't actually have to be that good and how it is that so many exist without anyone being able to say where they come from.
>> "The formula of the additive is now a secret waiting to be stolen."
True but it's possible that this, plus the strange physical design of the coin, could increase the cost of counterfeiting to make it unprofitable.
http://www.smh.com.au/technology/sci-tech/how-the-csiro-chea...
For those who produce the additive and detection machines of course, this will be a bonanza - I wonder whether the ink company also sells detection mechanisms? It'll be interesting to see how many vendor machines simply move to using cards instead in response - why bother buying a new detection mechanism when you could just stop accepting coins? I can imagine London Underground doing this in a few years for example.
At present machines and people go on form and weight, if the bank can add a certain response to UV or radio to that, it might make it significantly more difficult to copy the coins. I imagine the response of forgers to this will be to develop a UV coating to be screened on to coins which will fool machines (which are going to be pretty basic), rather than trying to mimic the material itself. Many machines will never use the much trumpeted benefits of this system, because it'd be too expensive, they'll probably just go on shape and weight as usual.
These clunky coins are going to be extinct in a few decades anyway though - governments already issue more of their currency in electronic form than physical coin, and I suspect most people will happily use the internet and cards for everything and drop cash and cheques. At that point physical currency will be withdrawn, because it is such a burden to produce and police, I'm not even sure if you need a replacement token which can be shuffled around like bitcoin, or if everyone will be happy using verified transactions and ledgers as they do at present with banks. So the mint will eventually be out of business except in selling commemorative coins.
A bit like the UK MoD taking on a weapon when the real market is to sell the weapon to other countries. It's a way for the UK government to support UK industry.
The Royal Mint is the world's leading exporter of currency selling to over 60 countries, and this is their sales pitch for the next 30 years.
By securing the use of the technology in the coinage of the UK as early as possible, they are able to use that as a strong signal to other countries in the future who are assessing their coinage needs.
The UK taking on this coin now, is a sales pitch. An effective one.
Patents.
The second part of why now is that they've patented all of this. The replacement cycle for coinage is long (30+ years), and if they fail to make significant sales in the next 15 years they are not going to be getting significant benefits from their patents.
They need to get as many sales in the next 15 years as possible to have effectively used the period of exclusivity the patents granted.
The skeptic in me thinks the only real way to prevent fake coins (or bank notes) from entering circulation is to make production more expensive than their nominal value (that approach is economically valuable because one could see the loss of value of a coin when recycled as a tax on each transaction. Let's say a one pound coin costs 1.5 pounds to make, with half a pound of raw materials, so that 1 pound is lost over its lifetime. In 30 years, that coin may change hands, 5000 times, so that the loss per transaction is .02 cents)
You could make it expensive to make a coin by putting more than the nominal value worth of raw material in each coin, but that, obviously, is a bad idea for a different reason: people would recycle the money.
So, a solution must be sought in making it hard to make coins. Any complicated technology will work.
The mentioned electroplating method might be such a technology. I think it might even be possible to write a pattern over the surface of the coin by using techniques similar to those used in chip making. Unbeatable? No, but it might drive the cost of counterfeiting a coin up enough to kill the market, that is, until somebody figures out a cheap way to replicate the technology, or until somebody finds a just good enough approximate technology that beats the scanners.
As I understand the explanations, the basic measurement is obtained by illuminating the coin with light of wavelength λ_1, and measuring the intensity coming back of another wavelength λ_2 - let c be a putative coin, and I_c_{λ_1}_{λ_2} be the measurement. To detect a valid coin, the machine has a set of n standard values for a real coin 'C' at a range of (λ_1, λ_2) pairs I_C_{λ_1_i}_{λ_2_i} for i in [1, n].
To pass, a coin c has to match within a tolerance, i.e. for all i in [1, n], |I_C_{λ_1_i}_{λ_2_i} - I_c_{λ_1_i}_{λ_2_i}| < ε.
I am assuming that the set of I_C_{λ_1_i}_{λ_2_i}, and the (λ_1_i, λ_2_i) values will be public knowledge, because they are needed by privately manufactured machines working with coins.
The aim of a counterfeiter is to find substances s_j and the concentrations in which to mix in α_j for j in 1..l (to a base that has no fluorescence), so that the mixture c passes the intensity tests within tolerance. If we assume the substances do not affect each other significantly, then we can expect that
I_c_{λ_1_i}_{λ_2_i} = Σ_{j=1}^l α_j I_norm_{s_j}_{λ_1_i}_{λ_2_i}.
Using an off the shelf spectrofluorometer (or even a modified coin reader) a counterfeiter could obtain the I_s_{λ_1_i}_{λ_2_i} for a wide variety of substances s, which can be normalised to be per unit of concentration.
Given a bank of substances s_j for i in 1..l (the counterfeiter can choose an l that is large enough to make the attack work), with known I_{s_j}_{λ_1_i}_{λ_2_i} values, it is easy to solve for a least squares concentrations vector α. Let A be an l by n vector such that A_ij = I_norm_{s_j}_{λ_1_i}_{λ_2_i}. Let y be the column vector such that y_i = I_C_{λ_1_i}_{λ_2_i}.
Let t(A) denote the transpose of vector A. Using the simplex algorithm, solve t(A)y = t(A)A \hat{α}, subject to all concentrations being greater than or equal to zero, yielding the least squares solution \hat{α}. If the result is within tolerance, the counterfeiter has a viable solution, if not they need a larger or different pool of starting substances.
In practice, they might want to reduce the number or cost of substances they use. They could use an optimisation method such as a genetic algorithm to find the lowest cost set (taking into account set size and the price of substances) that results in an acceptable \hat{α} solution.
Of course, these coins are fairly low value, and in practice counterfeiting the coins might not be that profitable anyway given the low value of the coins and the amount of labour needed to get any significant amount of real currency in exchange for the coins without detection, so someone capable of making a counterfeit might be able to use their skills more profitably elsewhere.
I also wonder about someone's ability to take slices of the surface of a coin and spread that out over other cheaper coins. I guess you have to randomize the test, or make sure it covers more than just a couple predictable spots on the coin.
Anti-piracy is hard.
Specifically, the math breaks down at "subject to all concentrations being >= 0". This is exactly the same reason you can't generate all visible colors from RGB or CMY (http://en.wikipedia.org/wiki/Gamut) - there are colors outside the linear combination of the starting values. And the problem is much worse here, because the number of dimensions is much greater than three. (You also have to assume the mint will watch purchases of the necessary phosphors.)
For reference, the relevant patent (via SO) is https://www.google.com/patents/US20110305919
Or we all turn them ALL in for new ones by some switch-over deadline. And keep finding now-worthless coins in couch cushions, old jackets, bank boxes etc for a decade and going "Oh, dang!" Not popular either.
And further, coins are exactly that currency that's supposed to be intrinsically valuable! The founding myth was, they're precious metal and that's why they're tradable. A cut-off defies that myth. Unsettling.
(And "Billions" - Wikipedia claims there's an estimated ~1.5 billion pound coins in total circulation. The overwhelming majority of those are going to be exchanged during the changeover period, and even after that banks will tend to accept them for a significant amount of time. There's no way that the amount of money written off is going to be anywhere near that)
It has happened in other places, e.g. Sweden, Norway and ("recently") Denmark with exactly 3 years grace period: https://www.nationalbanken.dk/DNUK/NotesAndCoins.nsf/side/25...
Now one company wants to use plant DNA in a similar way as ISIS is used in metal coins. [2010] http://www.casinoenterprisemanagement.com/articles/october-2...
Joking aside, I once worked on a device to detect double-photon fluorescing marker that's probably similar to what they're using, once again aimed at anti-counterfeiting of various things. It's pretty neat to hit a substance with IR and have it glow green, and I haven't seen anything similar since. I still wonder how rare/common substances with this effect actually are versus their marketing spiel.