Iodine solution turns blue-black when mixed with any substance containing starch, such as potato, bread, crackers and flour. When iodine reacts with starch, it is trapped in the starch's helical structure forming a blue-black precipitate.
Iodine is not very water soluble, so in making an iodine solution, potassium iodide (KI) is added. This results in the formation of a triiodide complex, which is completely soluble in water. Iodine solution can be bought from scientific supply stores as Lugol's solution. Tincture of iodine may also be used for the iodine test.
One application of the iodine test is in the detection of counterfeit United States banknotes. Genuine banknotes use paper that does not contain starch. So, using a counterfeit banknote detection pen with an iodine-based ink leaves a yellowish or colorless mark when the banknote is not fake.