It’s been nearly three years since the captains of the Federal Reserve, U.S. Treasury, U.S. Secret Service and the Bureau of Engraving and Printing gathered with bankers, journalists and financial security types in the Cash Room at the U.S. Treasury building to unveil the new $100 banknote. The event -- pageant, really -- received obliging media coverage, but wasn’t exactly page-one material.

“Individuals, businesses and governments around the world put their confidence in our currency,” said then-secretary of the Treasury, Timothy Geithner. “They use the dollar because they know that it is backed by the most sophisticated anticounterfeiting technologies known to men, that the design can’t be stolen or replicated.”

Geithner was dutifully shoveling it. Making money always has been, and always will be, an endless arms race. Completely outsmarting counterfeiters, like terrorists, is impossible. The security wizardry moves an inch, and counterfeiting soon follows, and on and on. “You know, we just can’t rest,” said Douglas Crane, the vice president of Crane & Co., in a radio interview a few years ago. The Massachusetts-based firm is the Bureau of Engraving and Printing’s sole supplier of the souped-up paper used to make our cash supply. Pressure from counterfeiters is great for Crane’s business.

But the new $100 is so high-tech that it has even stymied its progenitor. In December 2010, Bureau officials tersely confessed to a problem: a printing error, affecting as much as $110 billion worth of paper. Taxpayers only paid 12 cents apiece for the faulty notes, or $120 million. That’s not that much money by sovereign-debt standards and provided you’re willing to ignore downstream costs like storing and securing the bad bills, redistributing older-series notes to banks and cash-management firms, investigating and remedying the screwup, determining what to do with the mountain of almost money, and producing vanilla video clips to keep the public informed.

The tangled story of the biggest snafu in the history of paper money dates back to 2000, when the Bureau launched its NXG series, starting with the new $20 issued in 2003. The new hundy was going to be the pièce de résistance, produced, in the words of one industry expert, with "the most complex security features ever incorporated into a U.S. banknote.

In terms of materials science razzmatazz, that’s probably true. The image of the Liberty Bell, set inside the inkwell floating just beyond Franklin’s shoulder, is one of two slick new ingredients. Tilt the note and the green bell emerges from the copper-colored inkwell. Tilt the note once more and it vanishes. Pretty cool for a piece of paper.

The even fancier new feature is the blue 3-D security ribbon. Microscopic lenses create the effect that tiny 100s and bells are moving up and down or side to side, depending which way you tilt the bill. A Crane consultant told me how dazzled he was the first time he saw a prototype of the so-called motion feature. “It was really a quantum leap. I’m a chemist and physicist, yet I had no idea how it worked! After the explanation I understood, but still -- amazing.” The engineering is that much more impressive because the strip can, at a reasonable price, be woven into the paper’s fibers, and can withstand the crumpling, folding, soaking and other physical abuse that banknotes must endure. The optics engineer behind it sold his invention to Crane, and is no doubt now living the good life on a tropical island somewhere.

So when can you have a NextGen Benny? The Fed won’t say. Here’s what we do know. In the summer of 2010, Bureau quality controllers began noticing that bills coming off the massive intaglio presses had a blank sliver due to a crease in the paper. Somehow Crane’s cotton-linen substrate wasn’t staying perfectly flat as it squeezed through the presses, resulting in a small fold. It’s like when you accidentally iron over a fold of a shirt and end up creating a sharp crease.

Early investigations came up blank, but eventually they zeroed in on the thread for the motion feature. When paper normally runs through the presses, it’s hit with more than 100 tons of pressure. Because of that force, the back edge spreads ever so slightly; to the naked eye a dollar is rectangular, but to a currency geek it’s trapezoidal. Somehow, the more rigid thread hosting the motion feature prevented smooth spreading of the usually flexible paper, resulting in the crease.

The Treasury’s Office of Inspector General conducted an audit in 2012 to figure out what happened to our money. The assessment was scathing:

*We consider the delayed introduction of the NexGen $100 note to be a production failure that potentially could have been avoided and has already resulted in increased costs. We found that BEP did not (1) perform necessary and required testing to resolve technical problems before starting full production of the NexGen $100 note, (2) implement comprehensive project management for the NexGen $100 note program, and (3) adequately complete a comprehensive cost-benefit analysis for the disposition of the approximately 1.4 billion finished NexGen $100 notes already printed but not accepted by FRB [the Federal Reserve Board]. *

The report goes on to explain that a specialized unit of moneymakers and anticounterfeiting cops known as the Interagency Currency Design Group had made eleventh-hour modifications to the security features of the NextGen $100, which further undermined earlier testing efforts. Later, once the creasing had been detected, it took Crane a year to give the Bureau documentation about changes made to its product. Not exactly swift customer service but hey, there are perks to being the government’s sole supplier.

Meanwhile, the fate of $110 billion in sequestered cash, only some of which consists of defective bills, remains unclear. The OIG audit outlines three options: 1.) Scratch and replace the entire batch 2.) Find an automated way to separate the wheat from the chaff, or 3.) “Circulate the notes as-is after higher-quality new notes have been in circulation for a few years,” (because the public is that stupid). At present option 2.) looks like the winner. The Bureau -- and, ever present in the background, Crane -- is shopping for a technical solution. At FedBizzOpps.gov, you can find a request for proposals titled “single note inspection system” for a technology that would “inspect all Next Generation (NXG) $100 currency banknotes stored in vaults.” Got a brilliant idea for a machine that can scrutinize huge volumes of $100 bills and flag specific blemishes? Drop them a line.

It’s also worth noting that the audit mentions a second printing flaw. Known as “crow’s feet,” these are small wrinkles on the paper near the 3-D security ribbon. Crane has, of course, indicated to BEP that it will eliminate this hiccup, while BEP officials are already anticipating a new inspection challenge, unless someone out there comes up with detection gear that can detect bills with either the larger crease problem or crow’s feet.

But let’s assume all of this eventually gets resolved and the new $100 finally moves into circulation. Just how counterfeit-proof is the NextGen Benny? To look into this question, a few years ago I flew to Tokyo and met with a team of holography and secure documents experts at Dai Nippon, one of the world’s most famous printing firms. A man named Kenji Ueda leaned across the gray meeting table to hand me a gift card that Dai Nippon had produced for a major department store chain.

The image was a rough outline of the continents in blue, dotted with pink, yellow and silver crescents. When I tilted the card left to right or up and down, it looked like blue 3-D spheres moved inside the continents. The illusion of motion and depth was powerful, even though my brain knew full well it was dealing with a two-dimensional image. That card is printed with something called a “lens array” -- not the microarray of the moving bells and 100s on the new C-notes, but close. And that, the Japanese experts said, is the point.

“You can pass it,” Ueda said flatly, using the lingo of law enforcement. In poorly lit environments like bars, casinos or taxis, it would be hard to distinguish between this visual gimmickry and the movement created by the technology on the new $100 bill, which means counterfeiters may use lens array to mimic the microarray on the new $100, if they aren’t doing so already.

At the National Printing Bureau, Japan’s equivalent to the Bureau of Engraving and Printing, “the most sophisticated anticounterfeiting technologies known to men” made a similarly lackluster impression. Again an engineer passed me a sample document, handing it across the table with both hands. This one was a white-and-blue polka-dotted piece of microlens paper that when tilted mimics the 3-D feature of the new $100 bill. He had bought it at a stationery store. “They will use it,” he said, referring to counterfeiters. “I would say the motion feature is like a C or a C+.”

Perhaps no one in the world can copy the nanotechnology underlying the great American 3-D security ribbon -- not yet anyway. But that doesn’t mean they can’t mimic it closely enough. A counterfeiter, remember, does not aspire to duplicate. He only needs to imitate without detection. Which means the Bureau, Crane and the Federal Reserve are scrambling to deliver new banknotes that aren’t even that secure to begin with. Still, I’m sure the drug smugglers, Taliban insurgents and tax evaders of the world will be relieved to know that lawmakers in Washington have no immediate plans to cease production of their favorite medium of exchange and store of value. Besides, how could we the people not love this latest iteration of analog money? It’s our old friend Benjamin Franklin, but with blue highlights! Take that, purple fives.

Wired contributing editor @DavidWolman is the author of “The End of Money: Counterfeiters, Preachers, Techies, Dreamers — and the Coming Cashless Society.” A small portion of the above content is taken from chapter 3 of the book.

Homepage photo:Surat Lozowick/Flickr