An optical identification element for identifying an item comprises a binder material and one or more materials embedded in the binder material. The one or more materials provide an encoded composite X-ray diffraction pattern when illuminated by an X-ray beam. The encoded composite X-ray diffraction pattern is indicative of the item. The one or more materials are preferably powdered crystal materials. The optical identification element may be shaped as a microbead or a macrobead. Alternatively, the binder material may be in the form of a thread or fiber. The labeled item may be selected from the group, comprising: large or small objects, products, solids, powders, liquids, gases, plants, pharmaceuticals, currency, ID cards, minerals, cells and/or animals. The item may be a chemical or a DNA sequence. The optical identification element may be used for many different purposes, such as for sorting, tracking, identification, verification, authentication, anti-theft/anti-counterfeit, security/anti-terrorism, or for other purposes. In a manufacturing environment, the elements 8 may be used to track inventory for production information or sales of goods/products.