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Smart money

The Economist has an intriguing, and possibly discomforting, piece on a developing technology for preventing counterfeiting and also for tracking money.

Apparently, within three years it may be economical for governments to print paper currency with radio-frequency identification tags (RFIDs), tiny chips (with tinier antennae) less than 1mm across and half a millimeter thick that not only uniquely identify each bill, but can also reply to signals from up to a meter a way. They would likely remain expensive enough only to be practical in larger denominations, but such bills could still deter counterfeiting and theft of cash, as well as organized crime and kidnappings (given that they generally rely on ransoms of untraceable cash).

RFIDs would be a valuable tool, but their possible use is still a little disturbing, because the anonymity of cash is valuable. This technology would hardly create a police state, but it would change the way the average Joe thinks about that $100 or $50 bill in his wallet, and how he spends it — even if his spending behavior is never tracked by anyone. And developments that affect how a general population feels about its freedoms are things we should pursue only reluctantly, and, when they are necessary, with sensitivity to their secondary impacts.

February 11, 2002 5:24 PM

Comments (and TrackBacks)

HA! When do I ever have $50 or $100 bills in my wallet? Unless they start bugging nickels and dimes, this ain't going to worry me! :-)

Seriously---do ordinary folks move enough money in the larger denominations to really be affected by this? I guess I spend 50s occasionally, but almost never anything larger. I am a privacy advocate for the most part, but this feels much less intrusive (to me) than, say, ID cards.

Posted by Sen on February 12, 2002 2:47 AM

Hmmm... interesting, Sen... I actually think a large number of people DO use larger denominations, and even if I don't regularly (I'm a nickles and dimes guy myself...) I would hate to think that maybe I couldn't, for fear of the government knowing what books I'm buying, etc.

Certainly something to think about, though I'll admit I tend to be the paranoid type re: this subject, I figure I balance out the folks who don't care at all.

Posted by Bill on February 12, 2002 9:58 AM

I honestly have very little idea how most folks use cash. I personally use a credit card for almost everything, since it's easier to carry (and I'm good about repaying the full balance each month). But this seems like one of those issues that people would worry about, even if in real life it would never, ever affect them. And I guess that's my concern -- the worrying, not the likely actual impact.

I agree with you, though, Sen -- this would be far less intrusive than national ID cards or other "security" measures; and in practice I think that, overall, it would be a good thing.

Posted by M on February 12, 2002 12:43 PM

Judging by the people who pay for hotel rooms, nine out of ten people think $100 bills have extremely large amounts of utility. I disagree with what little sanity I have left after depleting my drawer of change to break their bills.

Posted by Me on February 5, 2004 2:17 PM

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