Canada introduces newest coin technology

New $1, $2 coins enter circulation with upgrades
Published : 04/16/12
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In Canada, the future of money is now.

The Royal Canadian Mint announced April 10 that the long-awaited new $1 and $2 coins, featuring security measures for an increasingly digital world, would begin entering circulation the following day.
That announcement regarding the evolution of Canadian currency followed the unexpected jolt March 29 when the RCM announced it would end production of the 1-cent coin sometime in April.
Sandwiched between those announcements was an invitation to software developers to create a digital mobile payment application as the RCM works to bridge the gap between physical and electronic money.
New $1 and $2 coins
The new $1 and $2 coins are being struck from the RCM’s patented multi-ply plated steel alloy, which has already been in use for the 1-, 5-, 10- and 25-cent coins for about a decade. 
The composition features a steel core with alternating layers of metals such as copper, nickel and brass. The resulting coins are more durable and secure than other compositions and more economical to produce, according to the RCM.
The change to the plated alloy has long been anticipated — Canada’s Ministry of Finance announced plans for the new coins on March 4, 2010, with adoption expected in 2011. The timeline was moved forward to 2012 to address concerns from the vending industry that are now satisfied.
The change to Canada’s pocket change is all about saving money for the Canadian government: the move will save a maximum estimated $16 million a year for the Canadian government, according to RCM documents filed as the RCM sought approval. 
The savings are estimated at a present value of $107.5 million over 10 years. That estimate of savings is based on a projected demand of 30 million of each of the $1 and $2 coins for each of the next 10 years, with some of the production needed to replace coins that are withdrawn from circulation and melted through the RCM’s metal harvesting program. The RCM reported in the 2010 annual report that using a multi-ply plated steel blank for the $1 coins would save 30 cents per coin. 
Security features
The requested change in composition was also an opportunity for the RCM to add security features to make the coins even more resistant to counterfeiting.
The security features range from those that are evident to the unaided eye — laser marks, virtual images, edge lettering — to the alloy change, which will not affect the coin’s appearance. 
The $1 coin is being struck from multi-ply brass plated steel, while the ringed bimetallic $2 coin will have a center of multi-ply brass plated aluminum bronze surrounded by a ring of multi-ply nickel plated steel.
Though the main designs are not changing, the $1 coin does sport one striking change, the addition of a single laser mark of a maple leaf positioned within a circle on the coin’s reverse. According to the RCM, this laser mark is produced during the striking of the coins using a contrasting pattern micro-engraved on the coin die itself.
Three changes are visible on the $2 coin, including the addition of two laser marks of maple leaves, each within a circle, at the bottom of the coin’s reverse. In addition, a virtual image of two maple leaves appears at the top of the coin — a different image is produced as the coin is turned from side to side. The virtual image is produced by engraving different patterns on each side of two-sided grooves on the face of the coin.
Another visible security measure on the new $2 coins is edge-lettering of the words CANADA and 2 DOLLARS.
The coins will retain their standard diameters of 26.5 millimeters for the $1 and 28 millimeters for the $2. However, they will be slightly lighter; the previous $1 coins weighing 7 grams are being replaced by coins weighing 6.27 grams, while the existing $2 coins weigh 7.3 grams, slightly heavier than the new ones at 6.92 grams.
The thicknesses remain the same.
“The difference in weight is so negligible that they will not feel noticeably lighter when handled,” according to the RCM.
The weight should also make little difference for vending machine acceptance, but despite working with vending equipment manufacturers and operators to give them time to make upgrades to adapt to the changes, some machines do not accept the new coins, according to the RCM. The RCM indicated only a small number of machines do not accept the new coins.
Both coin versions will co-circulate but the older versions will gradually be removed over “several years,” the RCM said, and melted.
DNA technology
Perhaps the most tantalizing aspect of the new coinage, and the area that could be the most misunderstood, is a patented process that has been branded as Digital Non-Reactive Activation.
The RCM first publicly acknowledged the DNA technology in background information buried at its website with the April 10 announcement about the new coins, where it discussed the debut of the technology despite the fact that, according to one spokesperson, it is not ready to be fully implemented.
Alex Reeves, senior manager of communications for the RCM, on April 12 cautioned that the full infrastructure is not yet in place to implement the broad reach of the DNA technology as of yet.
The RCM worked with Signoptic, a digital security technology provider, to develop the DNA process, which reads the unique surface structure of every coin to create a unique digital “fingerprint” by using an algorithm. 
If the system were to be implemented, this data could be stored in a database and used to confirm the authenticity of every coin manufactured by the RCM even as the coin experiences normal wear during its life cycle. 
The RCM discussed the DNA process with industry professionals during the 2012 World Money Fair in Berlin.
Hieu Truong, executive director of research and development at the RCM, spoke Feb. 2 about the technology during the technical forum. According to Truong, the DNA process reads or “gives” the coin a signature that has the uniqueness similar to cellular DNA so that, if the RCM desired, the coin could be traced to the die it was made from and the time and date it was made. 
Under the system, the coins would go through a machine that registers the DNA at a rate of 700 coins per minute, according to the RCM. 
A manual table-top machine is being built for use in the Winnipeg Mint in the pressroom for quality control purposes, Truong said, while a large-scale industrial machine for registration of coins at the Winnipeg facility, at a speed of 400 coins per minute, became operational in July 2011.
A second large-scale registration machine, able to register coins at a rate of 700 per minute, began operating in November 2011, and according to Truong, the RCM was set to put into operation four new high-speed machines in April “to meet the demand of coin registration for foreign circulation coin business.”
Peter Ho, RCM executive director, told Coin World in Berlin that the algorithm has multiple points of data so that a damaged coin could still be recognized when it is scanned, and that new data would override earlier data. 
According to Truong, the RCM subjected registered coins to a lengthy wear test to see how the process held up, placing coins in tumblers for many days, taking them out at various stages. “We tested it extensively, where the coin was so damaged it does not look like any coin that is in circulation, and it recognized it,” he said.
Two other countries are about to launch the DNA technology as a part of their coins, Ho said in February, though it is unclear whether that has yet happened.
“It’s going to explode — it’s going to come fast,” Ho said. Once the system is implemented, an individual will be able to take a picture of a coin with a phone to determine whether it is genuine, Ho said, illustrating the process by pulling out a smart phone and snapping a picture. “A shopkeeper can use this.”
The DNA technology can be applied to previously struck coins and can thus be employed for coins that are in museum or institutional collections, for instance.
“A collector who loans out their coins to museums wants to make sure he gets them back,” Ho said. 
Reeves said that when the RCM promotes the technology for commercial use, it will be targeted at merchants as Ho suggested, so they can ward against counterfeits. 
The mechanics of a system for commercial use by merchants and others — the machinery and associated costs — have yet to be determined, Reeves said, noting it’s much too early to discuss those matters. “There’s no visible system in the marketplace. We have developed the technology — it depends on us taking it to the next step.”
This technology can be used to authenticate all manner of circulation, collector and bullion coins, and mints and central banks could use the registration and authentication machines for their operations, according to the RCM.
Ho and Signoptic’s general manager, Yann Boutant, invited attendees to the RCM’s suite at the 2012 Berlin show to register a blank with their name, and then watch as table-top machinery recognized the item within nanoseconds. 
“It’s a living system,” Boutant said during the gathering. 
What kind of life it has, and the kind of effect it has on the future of money, remains to be seen.
Scrapping 1-cent 
The future of Canadian money, for the time being, still includes the 1-cent coin, though the Ministry of Finance began authoring the obituary for the denomination with the March 29 release of the new budget.
After more than 150 years, the denomination will pass away, the victim of inflation and rising metal prices, and the George Edward Kruger-Grey Maple Leaf design that has dominated the reverse canvas since a 1937 redesign will be displaced from circulation.
But the maple leaf’s prominence on the security measures debuting on the $1 and $2 coins means that, despite the end of production for the 1-cent coin, and eventual withdrawal, the maple leaf symbol is by no means disappearing from Canada’s coinage.
RCM officials have been unable to confirm when the final day of production for the 1-cent coin will be, other than to confirm that it will be sometime in April, with the final distribution in the fall.
RCM officials have still issued no word as to how that will affect collector products.
Eventually all cash payments will be rounded; electronic payments (including checks that are cleared electronically) will not be affected.
Electronic payments represent the next frontier for the RCM in the future of money. Sandwiched between the other news was news of a software development project related to digital money payment systems.
On April 4, the RCM announced it was launching a program for 500 software developers in North America seeking to test and challenge a digital currency technology and to determine its applicability to the current marketplace. 
The MintChip developer challenge, which will accept submissions through Aug. 1, is part of the RCM’s ongoing research and development efforts.
According to the announcement, MintChip uses innovative technology, for which the Mint has prototypes and five patents pending. It uses a secure chip to hold electronic value and a secure protocol to transfer electronic value from one chip to another. 
The MintChip Developer Challenge will be conducted by ChallengePost and is open to North American software developers, who are invited to create innovative mobile payment applications using the MintChip technology. The challenge will test the robustness and applicability of the technology with industry experts and help to guide its further development and testing by the marketplace. 
A Best Overall Application will be selected, with a grand prize and second- and third-prize winners to be named. Winners will also be named in three other categories — Best Person-to-Person app, Best Business-to-Consumer app and Best Micropayment app. In addition, members of the public will vote for a Popular Choice Award. All of the winners will be announced in the fall of 2012. 
Full details of the Developer 
Challenge are available online at, though all developer slots are filled.
The winners will share a reward totaling 31 ounces of gold (a combination of wafers and Maple Leaf bullion coins), with the grand prize winner in the Best Overall App category receiving 10 ounces, the category’s second-prize to be 6 ounces, and all the remaining winners splitting the rest. 
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