On November 8, Prime Minister Narendra Modi announced that the Rs 500 and Rs 1000 banknotes until then in circulation would become demonetised effective immediately and that they would be replaced by new notes. Subsequently, he also announced that a new Rs 2000 note would soon enter circulation. Ever since, it emerged that the nightmares presented by the newer Rs 500 notes not being readily available would be exacerbated by a debilitating shortage in the number of Rs 100 notes – as well as extant ATMs not being ready to dispense the Rs 2000 notes.

In the avalanche of consequences, which have ranged from some daily-wage labourers having to consider begging for a livelihood to pockets of Indians celebrating the demonetisation for its targeting black-money, a few misconceptions have also tumbled through. Most of them concern the new Rs 2000 note. Since November 8, the finance ministry has passed information around the media and on social networks about what the Rs 2000 note looks like and what some of its security features are. This, however, hasn’t prevented people – including, sadly, some journalists – from spreading misinformation.

One of the first suspicious bits to be passed around was that each Rs 2000 note would be embedded with a “nano GPS chip” that would be able to communicate with a satellite that, in turn, downlinked to the income tax department. The belief was that this chip would allow the government to know how many Rs 2000 notes were being carried by every person at all points of time. A video doing the rounds on Twitter on November 19 also showed a group of journalists at Aaj Tak discussing how the chip would be be able to communicate with the satellite even if it was 120 metres underground. In effect, such a chip would have to contain a powerful radio-frequency transmitter.

Old gossip on a new vine

This is false. The story of such a chip goes back at least as far back as 2001, when conspiracy theorists in the US began to claim that new $20 bills introduced at the time contained a plastic strip that could be ‘read’ by an American satellite and counted, etc. However, the US government had installed the simple polyester strips to make it harder for the notes to be counterfeited. And this urban legend had its roots in the 1980s, when rumour-mongers claimed that some dollar notes had been printed with magnetic ink so they could be picked up on by metal detectors.

When dealing with currency bills being embedded with chips of any kind, one ought to consider two factors immediately. First: the cost of manufacturing and embedding such a chip in a banknote. It costs Rs 3-4 to print the old Rs 1000 note, so it could cost about Rs 5 to print a Rs 2000 note. However, the chip alone would cost at least about Rs 10, so it doesn’t make sense for the finance ministry to install such a high-profile security feature. Second: how the chip would communicate with a satellite of any kind. Ignoring the lack of a consistent power source, the chip would have to transmit ultra-low-frequency signals to be able to penetrate more than a hundred metres of rock while the satellite will have to be equipped with an antenna between 10 and 50 metres wide to detect the signal. Again, neither sounds feasible.

Electromagnetism was also involved in a myth surrounding another feature of the Rs 2000 note. Once they’d come in possession of the note, many people complained that its pink pigmentation seemed to come off when rubbed against cloth. The finance ministry has since claimed that this is supposed to happen as well as that, somehow, is a security feature. According to a PSA published by the ministry – and then circulated by the Press Information Bureau – the note transfers ink to the cloth through the “turbo-electric effect”.

There being no known “turbo-electric effect”, the ministry official responsible for this message is presumably speaking of the triboelectric effect. Even then, this doesn’t clarify much. The triboelectric effect describes how electrons are exchanged between a pair of surfaces when they rub against each other with the creation of friction as a result. However, if this very small electric current could be a conduit for the transfer of ink, as in an electrostatic printing system, has not been spelled out. And this is all the more confusing given the mention of ‘intaglio printing’.

Bleeding pink

‘Intaglio’ is Italian for ‘carving’. It is a printmaking technique. Imagine a flat, rectangular printing plate that has been cut with grooves, flanked by ridges. If ink is applied to the ridges and the plate then placed on top of a sheet of paper to transfer the ink, the technique is called relief printing. If the ink is applied in the grooves, on the other hand, and a sheet of paper made to take on that ink by having itself pressed into the grooves, then that’s intaglio.

An apparent link between intaglio printing and the triboelectric effect appears to be the phenomenon of electrochemical adhesion. Sometimes, the triboelectric effect can be strong enough to force two surfaces to exchange enough electrons and form a chemical bond – as if they underwent a chemical reaction. If the surfaces are appropriately chosen, this bond can be strong enough to force the surfaces to stick to each other, as if an adhesive has been applied between them.

However, it is not known if the pink ink on the new Rs 2000 note got there through intaglio printing; the finance ministry ‘clarification’ calls the technique a security feature, after all. Shaktikanta Das, the secretary of the Ministry of Finance, went so far as to say during an interview that if some ink doesn’t bleed off of one of the new notes, then it might be fake (video below). At the same time, an Economic Times article on November 11 – as well as a Reserve Bank of India factsheet – claimed that the intaglio technique was being used to print a raised picture of Mahatma Gandhi on the note for visually impaired people to be able to easily identify it. Given all this persistent confusion: the finance ministry ought to clarify how a ‘feature’ that diminishes a note’s appearance can also be responsible for its security.

More advanced features

In fact, they might even seem primitive when compared to those security measures actually in place – in the new notes as well as in currencies around the world. By the late 1990s, for example, the US Bureau of Engraving and Printing had introduced security threads (ribbons threaded into the paper), microprinting on the sides of notes and the use of colour-changing ink on dollar bills (higher than $2). Euro banknotes also contain holograms as well as plastic threads that are visible only under ultraviolet light, increasing the complexity of each note and making it harder to counterfeit. Features of the new note include microprinting, colour-changing ink and security threads.

However, such security features must not get too complex either or it becomes counterproductively harder to check for a note’s authenticity. In fact, had the Aaj Tak journalists or any of the other Twitter users not been carried away, their discussions might have even sounded plausible.

It was once believed that the European Central Bank (ECB) had embarked on a project in 2001 to have its €200 and €500 bills embedded with a radiofrequency identification (RFID) chip. Though this was never confirmed, the company that the ECB was supposedly in talks with to develop such a chip had in fact built one. In 2003, Hitachi unveiled the ‘μChip’: 60 micrometres thick, with an area of 0.4 mm2 and costing Rs 38 each. By 2009, improvisations had led to the chip becoming 80-times smaller and five-times cheaper.

All versions of these chips came encoded with a 128-bit ID that couldn’t ever be modified. If such a chip were to be embedded in a banknote, the note would become impossible to counterfeit. At the same time, checking would be simple: simply place the note under a scanner that reads out the ID number. In fact, this was how an RFID chip on a banknote had originally been envisaged: as not transmitting signals directly to a satellite but only signalling to powered, reader-equipped devices that they were genuine. So in effect the chip would be able to directly tackle counterfeiting only, not any unspent black-money.

In the future, these measures may be implemented in Indian currency bills but it is worth bearing in mind that technology is seldom capable of becoming cheap, miraculous and ubiquitous all of a sudden. And news outlets that depict it so are doing a disservice. Even worse: fitting notes with chips that government agencies can track and count remotely should ring alarm bells about the privacy that informal or legitimate transactions still have a claim to first. Pride can wait.