What about designing a scanner that merchants can obtain, and use to scan all dollar bills. In its simplest form, it scans only the dollar bill identifier (a long sequence of digits that uniquely identifies a dollar bill). The number in question (identifier), time stamp, merchant ID, location and type of payment (binary flag: involving a human being, or not) is transmitted to a central database.
A more sophisticated version could track additional metrics, such as the condition of the dollar bill (new, old), whether the customer is a return client or not, and metrics derived from a camera picture (linked to the scanner), such as gender, race and approximate age. Maybe also fingerprints, trace amount of cocaine etc.
The identifier on the dollar bill would be a special number, for instance simultaneously
Also the dollar bill number would be customized: each year and each state (where the dollar bill is first issued) use numbers that have specific properties.
This system would make counterfeiting more complicated, and thanks to all the metrics recorded (and assuming enough merchants adopt the system) would help fight money laundering and follow the trail of many dollar bills.
Indeed, I've been thinking of purely electronic, highly secure money system where all you need is to provide a number (the equivalent of the dollar bill number) to purchase a product from participating merchants. A bit like credit card numbers.
Do you see any flaws in my proposed anti-laundering system? How to incentivize merchants to participate? Though not willing to participate could be an interesting indicator by itself. Could it also reduce tax fraud?
I see a lot of risks to freedom from tracking additional metrics. People might end up reverting to barter.
We would need a lot of safeguards.