BACKGROUND

Currency as a form of legal tender for debts permits governments to stabilize and simplify commerce. It also provides a convenient medium of exchange for individuals and businesses. Simply paying cash for a purchase is the easiest way to complete a transaction in most situations.

However, currency has various limitations. For example, counterfeit currency can often be produced at a fraction of the nominal value of the currency. This potentially yields far-reaching effects. Not only is an individual inconvenienced when counterfeit currency ruins a transaction, but follow-on effects come into play as well. Lack of faith in a currency due to counterfeiting can destabilize the markets depending on that currency, and can eventually wreak havoc with government functions overall as the money supply fails to live up to its main purpose.

Thus, it can be useful to provide a form of currency which can be validated. Some responses to this situation involve various indicia of validity incorporated into a bill, such as security strips, watermarks, holographic features and other measures. However, these responses do not provide for third-party validation of currency, only for a check on validity of a bill or note based on physical features. Finding a way to allow for validation based on an authoritative third party can allow for greater confidence in physical currency, while still providing flexibility in transactions.

