If you have ever stepped up to a vending machine, arcade game or slot machine and inserted a $1, $5, $10 or $20 bill, your money has been scrutinized by a "bill validator." Relatively unchanged since they were first tested in the late 1960s for $1 bills, in the past few years these chunky sensors have gone high tech.

For decades, bill validators simply had a magnetic head--similar to a tape recorder's--that brushed up against the lengthwise center of a bill, drawn by rollers. Magnetic ink in one of the note's seals, and in the middle of the portrait, created characteristic signatures that circuitry compared against a table of reference values to determine the bill's denomination and authenticity. But the magnetic head got grimy as ink flaked off, requiring frequent servicing, and counterfeiters could sometimes fool the machinery with "bills" duplicated on copy machines that used magnetic toner.

This article was originally published with the title On the Money.

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