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The video tutorial explains how to create a watermark on paper by soaking a sheet in water, spreading it out on a smooth surface, and allowing the wood fibers to absorb the water. Watermarks on banknotes are used to prevent replication, with an example being one depicting Captain Cook. Watermarks get their name from the use of water in the process. If you hold a banknote up to the light, the watermark can be seen as a white image.
