With that setup, you’ll be able to transfer value from your banknote directly to your bank account. You want to deposit a $20 banknote into your account? No need to go to a bank branch or ATM: Just wave the banknote in front of your mobile phone and have the $20 transferred from the banknote to your bank account. Your bank balance increases by $20, the state of the banknote’s chip is changed to “no value,” and the note itself is visibly grayed out.

But that doesn’t mean you should throw the value-depleted banknote away: You might want to use it to withdraw money from your account later. Wave a gray banknote in front of your mobile phone, and transfer $20 back into it from your digital bank account. The state of the note’s chip changes to “valid,” and it recovers its full color. Now it can function as a normal banknote, and everyone will readily see it’s a valid because of its color.

With such a system of smart banknotes, everyone could take the matter of cashing in and out into their own hands. Your phone truly becomes a personal ATM.

This proposal brokers a peace agreement between digital and hard cash; it lets some people keep their money habits if they can’t or don’t want to change, and the rest of us who prefer our money in the cloud can operate totally digitally. Moreover, the specialized logistics, cost, and security risk of cash transport and storage disappears.

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	NBS (coinbooks.org) Web