Final report

4.8.3  Comments about Validation Tests 
Future validation testing involving a larger number and greater variety of coin-processing 
equipment manufacturers than were included in the present study should be completed prior to 
defining the final specifications of any new circulating coin materials of construction. 
A broader sampling of coin-processing equipment manufacturers will ensure that alternative 
material coins will have the desired acceptance rate across these many products used by 
individuals across the United States that enable automated, unattended points-of-sale to support 
US commerce.  These more-inclusive validation efforts, which are beyond the scope of the 
present study, include establishing the variability of material properties from multiple lots of coin 
materials and establishing the associated variability in finished coins through completion of 
simulated coin production runs each of approximately 1,000,000 test pieces for each material-
denomination combination of continued interest. 
229  

Test pieces made at different times (rather than a single continuous production-like run) and 
under a variety of common production conditions should also be struck and tested to establish 
more realistic standard deviations in the characteristics and properties of nonsense pieces.  Also, 
since coin acceptors must successfully operate in a wide variety of environmental conditions, 
future validation tests must also explore the impact of temperature, humidity, coin scratches, 
gouges, tarnish, corrosion and wear, slight bends in the coins and other stakeholder-defined test 
conditions.  These conditions are also important in defining the boundaries of the acceptance 
windows used within coin-processing equipment. 
4.9 
SECURITY 
A critical element in the design of coins is to ensure their security from those who would attempt 
to benefit from the production and/or use of low-cost substitutes that are accepted as legitimate 
articles.  People/organizations capitalize on coin characteristics that are inexpensively duplicated 
so that the fraud
111 
pieces pass for legitimate coins.  In hand-to-hand transactions, the circulating 
coins need to have qualities that are quickly recognized as unique from counterfeit coins.
112 
Therefore, the dimensions (diameter and thickness), image, weight, color and edge profile of 
counterfeit coins must bear some resemblance to the targeted coin.  Laser scanning technology 
and computer-aided manufacturing technologies exist that allow fraudsters to inexpensively 
produce high-quality dies needed for producing counterfeit coins.  In some instances, the quality 
of the counterfeit coins is so good that they are not easily and quickly detected even by experts in 
coinage [27].  In other instances, foreign coins having a lower value are pawned off on 
individuals who may not be familiar with local coins.  This type of fraud often occurs in 
locations where tourists visit. 
The methods used to fraud automated equipment include use of low-value foreign coins whose 
characteristics suitably match those of a higher-value local coin.  In addition, slugs 
113 
are 
produced that may bear little or no visual similarity to an actual coin.  Successful slugs must 
merely have characteristics and properties that fall within the acceptance windows for each of the 
characteristics and properties measured by the targeted coin-processing equipment. 
4.9.1  Elements of a Secur e Coin 
The coin design community has developed several rules that are useful in increasing the security 
of coins.  US circulating coins currently comply with most of these rules.  Therefore, the US has 
a relatively low fraud problem with its coinage. 
Rule # 1:  Use multiple materials, especially for high-value coins.
114 
Roll-clad materials are 
commonly used to satisfy this rule.  Plated designs offer a lower-cost multiple-material option 
for many coins; however, plated coins are less secure than clad coins (see Rule #7 below).  In 
other cases, bi-color coins are produced that have a small disk of one color joined to a washer­
111 
As defined by The WVA Coin Design Handbook [5], the term “fraud coin” applies to a wide variety of invalid  
coins including counterfeits, slugs, foreign coins and tokens used to attempt to trick a person or machine.  
112 
According to The WVA Coin Design Handbook [5], a counterfeit coin is one that is designed to look like a real 
coin.  It is mainly intended to fool a victim during hand-to-hand transactions.  
113 
The WVA Coin Design Handbook [5] defines slugs as a fraud coin that is designed to fool automated validation  
equipment.
114 
The threshold for defining a low-value versus a high-value coin is approximately at a quarter of a US dollar.  
230  

shaped outer ring having a color and material that differs from that of the inner disk (for example 
a bronze center disk inside a silver ring).  Choosing materials that have a large difference in EMS 
in each portion of the bi-color coin allows coin-processing equipment to more securely validate 
coins through use of multiple-frequency sensors designed to test for type, location and thickness 
of each of the materials.  Aside from the 5-cent coin, all incumbent US circulating coins are 
produced with multiple materials.  Future high-value US circulating coins should continue to rely 
upon the use of multiple materials of construction.  Such options are among the nonsense pieces 
struck by the United States Mint in support of the current study.  However, a bi-color coin would 
require that the surface have clearly visible differences in color at different locations.  For 
optimum security, each material should cover a significant portion of the face of the coin and 
each material should have a unique EMS signature.  A coin of this design would necessitate 
upgrades to all EMS-based coin-processing equipment.  The conversion cost to do so would be 
of similar magnitude to that defined in Section 4.5 from changes to coin EMS for each of the 
stakeholders.  In addition, the production of bi-color coins requires additional process steps 
(including cutting the center piece and the ring-shape piece [assuming that the traditional 
concentric design is used], followed by assembly of these two pieces before striking).  These 
added process steps would add additional cost to the production of coins. 
Rule # 2:  Ensure higher denomination coins are larger in dimensions than lower denomination 
coins when all are made of the same materials.  This rule keeps fraudsters from machining the 
outer diameter or thinning any lower denomination coins to match the dimensions and other 
characteristics of higher denomination coins.  A corollary to this rule is to ensure that both the 
dimensions and materials of construction of a given coin are not similar to coins of larger 
dimensions and similar materials of construction, but are of lower value from another country.  
The incumbent US circulating coins meet the conditions of this rule.  CTC recommends 
maintaining this condition for future coins. 
Rule # 3:  Use high-value materials relative to the face value of the coin.  Obviously the material 
selection should not result in coins whose intrinsic value exceeds its face value.  Honoring this 
rule discourages production of fraud coins.  With the exception of the 5-cent coin, incumbent US 
circulating coins meet this rule.  The value of the various alternative material candidates 
evaluated in the present study meet this rule. 
Rule # 4:  Avoid coinage materials with similar electromagnetic properties to commonly 
available materials.  Materials that are somewhat unique to coins and do not have widespread use 
in other applications in the dimensions and raw material forms common to coinage are 
encouraged, especially for high-denomination coins.  Obviously, if the materials common to 
coins are readily available on the open market, fraudsters will have a ready supply of materials to 
support creation of fraud coins.  Incumbent US circulating coins generally meet this rule. 
Monolithic 302HQ and 430 stainless steel and alloy 5052-H32 do not meet this rule; however, 
these material options were only considered for low value coins where security is not as critical.  
From a security perspective, these alloys are suitable only for low-denomination coins. 
Rule # 5:  Choose materials that have stable electromagnetic properties.  Factors to consider to 
satisfy this rule include:  1) the effect of temperature on the electromagnetic properties, 2) the 
consistency of both the production processes used for producing the stock coinage materials and 
the processes used during minting of coins and 3) the stability of the electromagnetic properties 
during normal use of coins made from these materials (e.g., they are relatively constant with 
231  

circulation wear and coin usage).  Electromagnetic properties of materials are sensitive to 
changes in temperature.  This is an important consideration for automated, unattended points-of­
sale, especially vending, where machines are placed in environments that can range from –18 
degrees Celsius (°C) to 65 °C (0 degrees Fahrenheit [°F] to 120 °F).  The temperature of the 
coins themselves may be at even more extreme temperature conditions.  Equipment 
specifications necessarily must allow for some performance variability from unit to unit to 
ensure economical production of coin-processing equipment.  The variability permitted in 
materials and dimensions of the various constituents of coins must also be specified and 
minimized to the greatest extent practicable.  The electromagnetic properties of some metallic 
materials, including most ferromagnetic steels and many aluminum alloys, are very sensitive to 
variations in their alloy chemistry even within their accepted chemical composition limits.  
Materials whose properties (especially those properties that are used to automatically validate 
coins) are easily altered, either through normal use or by readily-available methods should be 
avoided in coin construction.  Coins made from materials that violate this rule require broad 
acceptance windows in the coin-processing equipment commonly used in vending machines, 
laundromat machines, car washes and the many other devices that rely upon automated coin 
validation.  Broad acceptance windows encourage the development and use of fraud coins in 
these devices.  Incumbent US circulating coins meet this rule.  Of the candidate materials tested 
in this study, the steel-based (plated and stainless steel alloys) and the 5052-H32 aluminum alloy 
may fall short of meeting this rule; however, use of these materials in low-denomination coins 
may pose only a minor security risk.  These materials are not likely secure options for high-value 
coins. 
Rule # 6:  Compare physical properties of contemplated coins to databases, which contain details 
of the world’s coins.  Such databases have been developed and used by mints and coin-
processing equipment manufacturers throughout the world to compare the properties of coins 
during development and, as necessary, to aid in defining the best materials or other 
characteristics and/or properties of the coin to avoid duplication of features in preexisting 
circulating coins.  These actions minimize the probability of fraud by the public or 
embarrassment on the part of the mint after release of new coins.  The most comprehensive of 
these databases is located at the International Coin Registration Office currently operated by 
Monnaie de Paris in Paris, France.  In addition, most manufacturers of coin-processing 
equipment have databases of common circulating coins and fraud coins throughout the world. 
While the databases from the coin-processing equipment manufacturers were consulted during 
Round Two validation tests, data from these databases remain highly proprietary and must 
necessarily remain secure.  For these reasons, these databases were not shared with CTC. 
Rule # 7:  Use a thick outer layer of material for plated coins.  The WVA Coin Design Handbook 
[5] recommends a 30-micron thickness (as measured at the centerline of the coin) for the plated 
material.  This thickness is recommended for several reasons.  First, it is sufficient to keep the 
plated layer from tearing during the stamping operation.  Second, this thickness has been found 
to be sufficient to mitigate pitting corrosion and/or normal edge wear from exposing the under­
lying core material.  The EMS behavior of coins is greatly impacted when the underlying 
material is exposed potentially causing such coins to be misvalidated in coin processing 
equipment.  Third, maintaining a sound outer layer typically keeps the coin from excessive 
corrosion.  Fourth, normal face wear of coins will reduce the thickness of the outer layer of 
material.  When this occurs and the thickness is less than 10 to 15 microns, the electromagnetic 
232  

sensors, especially those operating at low frequencies, can no longer discriminate the coin from 
an uncoated blank of the same material as the core of the coin.  Slugs of the core material may 
pass for coins when the acceptance windows include coins with such thin plating layers.  
Currently, the one-cent coin is the only US circulating coin that is plated.  Its plating thickness, 8 
microns, violates this rule; however, as a low-denomination coin, security is not a significant 
concern for the US one-cent coin.  However, corroded one-cent coins, which have a green color, 
are not uncommon among the pool of US coins currently in circulation.  None of the plated 
nonsense pieces evaluated in this study met this rule.  Hence these nonsense pieces, though 
several were found to be economical to manufacture, are susceptible to large variation in EMS 
performance over their expected lifetime.  Further testing is needed of worn nonsense pieces in 
coin-processing equipment to adequately quantify the impact of deviating from this rule by using 
such materials of construction. 
Rule # 8:  Ensure distinction between the denominations within a given coin set.  The WVA 
Coin Design Handbook [5] recommends that all coins have a diameter between 17 and 30 
millimeters (mm); an edge thickness between 1.7 and 2.8 mm and a weight between 2 and 12 
grams.  Edge design (smooth, reeds or lettered) and varying color among denominations can also 
add to coin security, especially for hand-to-hand transactions.  The spread in dimensions among 
the various coins that make up a country’s coin set should be easily distinguishable; at least 1 
mm difference in diameter should exist between all coins.  The incumbent US circulating coins 
meet this rule.  CTC recommends maintaining size distinction between coins.  Depending upon 
the materials selected for future coins, if in fact any changes are made, some color confusion 
could exist.  It is generally recognized that color differences are preferred between the dime and 
one-cent coins; a color difference between the quarter dollar and dollar coins should also be 
maintained. 
CTC’s recommendations for alternative materials coinage that follow in later sections follow 
these rules developed by the coin design community for increasing the security of circulating 
coins. 
4.9.2  Coin Secur ity Issues of Impor tance for  the Cur r ent Study 
During Government fiscal year 2011, the United States Secret Service (USSS) received and 
assessed $5,491.25 worth of counterfeit coins that were used in financial transactions and passed 
to them by law enforcement and/or financial institutions.  Although the actual amount of 
counterfeit US coins is not known, this small quantity is evidence of a low rate of counterfeit 
circulating coins in the US.  Attempts to counterfeit rare coins notwithstanding, frauding US 
circulating coins is generally not worth the time and effort of fraudsters, since as several coin 
experts from coin-processing equipment manufacturers have noted in one-on-one interviews, 
“US coins are currently overdesigned, relative to security.”  The fraud rate for the British one-
pound coin is estimated to be 3% of the total pound-coin population [28].  This fraud rate is high 
enough that the Royal Mint has considered withdrawing it from circulation and issuing a new 
coin of a different construction to replace it [28].  The primary reasons given for this high fraud 
rate are the high value of the coin (equal to 1.58 US dollars as of April 16, 2012 [9]) and its 
simple construction, which is a monolayer of nickel-brass alloy (70% copper, 24.5% zinc and 
5.5% nickel) [29].  Design guides, as defined by the above eight rules, coupled with added 
guidance available in The WVA Coin Design Handbook [5], should be heeded in defining the 
233  

construction of all future US circulating coins.  The USSS also recommends that circulating 
coins be wear resistant, have highly consistent properties and low defect rates. 
Application of the above eight rules, while not guaranteeing that fraud will not occur, will 
greatly reduce the risk of large quantities of fraudulent coins entering the circulating coin supply. 
Other precautions have been offered to increase the security of coins.  Both ferromagnetic-steel­
based and aluminum materials have been discouraged for use in coinage, except for low-
denomination coins.  EMS properties of these materials are more sensitive to temperature 
variations than more commonly used cupronickel (75% copper and 25% nickel) and other alloys 
found in incumbent US circulating coins.  Thermomechanical processing and minor changes in 
alloying additions of steels can result in wide swings in EMS properties.  Furthermore, with its 
ability to be magnetized, the effective EMS properties of a ferromagnetic-steel-based coin can 
change significantly over its otherwise useful lifetime. 
Most countries do not expend significant resources attempting to protect low-denomination coins 
from fraud.  It is rarely worth the fraudster’s time, expense and risk to produce low-value 
fraudulent coins.  As a result of inflation and the associated cost to produce coins, many mints 
and reserve banks, throughout the world have chosen to construct their low-denomination coins 
around a steel-based core.  Given the increasing number of countries that have switched to steel-
based coins, the opportunities are very limited for securely introducing new steel-based US 
circulating coins that offer unique EMS and other characteristics or properties from preexisting 
steel-based circulating coins from other countries. 
Coin-processing equipment manufacturers have also identified a few other issues that can impact 
the size of acceptance windows on their devices.  The magnitude of the impact of each of these 
conditions must be experimentally evaluated.  Moisture can impact the sensor readings and must 
be taken into account during a comprehensive assessment of new coins by the device 
manufacturers.  When present, moisture is often due to sweat.  Dirt on the coin, especially if 
coupled with moisture, can impact the position of the coin with respect to the sensors and in turn 
alter the acceptance rate of coins.  Tarnish, corrosion, scratches and wear are also known to 
impact coin acceptance rates in these devices.  Another variable in coin validation is the natural 
randomness of the coin’s position relative to the sensors as the coin passes through the coin-
processing equipment.  The design of the image on the coin can impact the acceptance rate 
within coin-processing equipment, as was noted by several manufacturers relative to the various 
images used on the 50 different state quarter dollar coins.  Finally, typical lot-to-lot production 
variations also add to the width of acceptance windows required for circulating coins.  Improved 
security in coins can be achieved by tightly controlling factors such as material specifications 
and production practices during production of materials delivered to the United States Mint 
along with the process steps taken by the United States Mint during coin production. 
4.9.3  Futur e of Coin Secur ity 
Recent and ongoing research has been conducted throughout the world to develop additional 
security features for circulating coins.  These efforts include the following: 
x  Image recognition under various lighting conditions 
x  Use of latent images that become visible at selected view angles 
x  Incorporation of radio frequency identification (RFID) tags 
234  

x  Three-material coins, including tricolor coins, bicolor coins with a clad center piece and 
five-layer clad coins 
x  Laser etching of unique marks on individual coins that are later individually validated 
against a database of the associated information 
x  Coin embedded taggants developed by the RM that glow under certain harmless 
wavelengths of infrared (IR) radiation. 
While various innovative security technologies may prove useful in future construction of US 
circulating coins, the infrastructure to take advantage of these features is still many years from 
being developed to a level that such feature can be used to robustly validate circulating coins. 
Also note that each of these technologies would add cost of an unknown magnitude to the 
production of circulating coins.  CTC recommends that the United States Mint continue to track 
these technologies into the future and as they fit into United States Mint security strategies.  The 
most promising of these technologies appear to be:  1) use of three-material construction and 2) 
use of embedded taggants. 
4.10 
ADDITIONAL REMARKS 
Many of the stakeholders that were contacted for this outreach effort thanked the United States 
Mint and CTC for reaching out to obtain their input as the United States Mint moves forward 
with a potential change of materials in US circulating coins.  Stakeholders, in general, have 
asked to remain informed about the progress of the effort as the process of introducing 
alternative materials into circulating coins moves forward; several stakeholders volunteered to 
test sample coins (or nonsense pieces) in their coin-processing equipment.  These volunteers 
agreed to provide feedback to the United States Mint about their experiences and observations.  
Discussions with other mints and with coin development experts throughout the world have also 
confirmed the need to engage stakeholders early and often while in the process of developing 
new materials of construction for coinage.  This sentiment is also echoed in The WVA Coin 
Design Handbook [5]. 
The Advanced Counterfeit Deterrence (ACD) Steering Committee, an interagency group devoted 
to ensuring the security of US currency, recommends policies related to currency.  The ACD 
defines when the design of US notes will be changed [17].  When such a change is enacted, bill 
acceptors must be reprogrammed to recognize and accept the new note designs.  Those 
stakeholders that accept both currency and coin payments, a common situation with vending and 
laundromat machines, may benefit from the Federal Reserve simultaneously introducing coins of 
alternative metallic construction into circulation with that of the next low-value (either $1 or $5 
notes) currency design.  Dialog between the BEP and the United States Mint to that end is 
recommended.  Both currency- and coin-acceptance equipment upgrades could be made during a 
single service call if a simultaneous introduction of US currency could be coordinated.  The 
overall impact to the effected stakeholders is expected to be reduced compared with two separate 
and uncoordinated releases of new notes and coins from the BEP and the United States Mint, 
respectively. 
235