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Show HN: Kong – Physical Cryptocurrency

• ccamrobertson 7y ago
  Hi folks, I’m one of the contributors at Kong — https://kong.cash/ https://kong.cash/. Kong is a physical cryptocurrency that looks, feels and works like traditional cash. You can think of it as an ultra-secure, time locked cryptocurrency wallet with a fixed face value — no one can access the token except for the holder of the note after a period of several years. It consists of a secure element and NFC chips mounted on a flexible PCB with a full color print. There are several gold elements that also serve as direct i2c interfaces to challenge the secure element’s authenticity by signing information with its private key. Kong is based on two primary observations; (1) it’s really difficult to use and secure cryptocurrency for most people and (2) cryptocurrency has been useful as a means of speculation, but poor for actually buying goods and services. It’s our hypothesis that by making cryptocurrency more like cash it may be possible that people ultimately use it as a means of exchange. Our background is in secure embedded hardware (Lockitron, YC S09); over the past year we did a deep dive to really consider how cryptocurrency key material is handled today. We found that cryptocurrency has a unique challenge and corresponding opportunity; unlike IoT products where the cost of a breach might be difficult to quantify, breaking a hardware wallet can yield clear rewards to the hacker. We developed Kong around the notion that security should be isolated to the smallest possible footprint — in the case of Kong, to an individual single purpose secure element chip. Doing so removes additional layers of firmware and software in order to limit the attack surface (it also broadly questions how good are our existing secure chips today). To date we’ve handed out close to 2,500 Kong notes; we’re now exploring more ways to distribute physical crypto. Take a look at https://ipfs.io/ipfs/QmRNRCocj4PwKMXrd1jeUGw7ASQSuEk7BDJu5KsGuWBXAX https://ipfs.io/ipfs/QmRNRCocj4PwKMXrd1jeUGw7ASQSuEk7BDJu5Ks... for an in-depth technical overview.
  • DeepYogurt 7y ago
    > with a fixed face value So how does a transaction work? Do I exchange a 500 kong note for a 10 kong item and 490 kong worth of notes?
    • ccamrobertson 7y ago
      Just like cash. So if you use a 500 Kong note to someone for a 10 Kong item, they will have to make 490 Kong in change. 4x 100 Kong notes, 1x 50 Kong note and 2x 20 Kong notes...etc.
      • deleted 7y ago
        [deleted]
      • pedalpete 7y ago
        How do you expect to get this into the market? And what market do you expect to get this into? Cash has an inherent agreement as to locality. When I'm in Australia, I use Australian dollars, when in the US, they have US dollars. Though you may be solving this problem, I can use Kong everywhere, you need to somehow seed the market. How do you see that happening? As you state, crypto is mostly a store of value atm. The benefit of not having physical crypto is that, in theory, I can trade my crypto for goods anywhere in the world. How will having a physical currency solve for this? I went to my corner store at about 10:30 a few weeks ago to pick up a late dinner. I took out cash to pay, and the guy behind the register had already entered my purchase into his FPOS (credit card) machine. He looked at me and said "wow...old school. First time I've seen cash all day". You clearly feel that you are not fighting against a dying mode of payment, what makes you believe that? Or is there a piece I am missing?
        • Jamwinner 7y ago
          I use almost exclusively cash and never get that response. Usually a smile as I sail out of the cashiers way faster than our abrtion of a chip+pin system customers possibly could. What part of the world are you in?
          • zxcmx 7y ago
            Much of the world has contactless payment (no pin, no physical card insertion). It is more or less instant. Common in .au, .nz at least. I'm actually noticing some cultural changes as a result of this, cash is starting to seem "dirty" since you often have to touch other people's hands to exchange it.
  • siavosh 7y ago
    I don't understand any of this.
    • erikig 7y ago
      Admitting that is often a good start
    • ixtli 7y ago
      It’s incumbent upon everyone here to consider how powerful that can be for the people who’re trying to sell Kong.
    • gnode 7y ago
      I'll try to sum it up: Kong notes are electronic devices which allow whoever has access to them to use a smart contract which after a given date can retrieve a given amount of cryptocurrency. They hold a key which allows them to operate on this smart contract, but don't reveal it, and are designed to be physically impractical to tamper with (https://en.wikipedia.org/wiki/Secure_cryptoprocessor https://en.wikipedia.org/wiki/Secure_cryptoprocessor).
  • deleted 7y ago
    [deleted]
  • jakelazaroff 7y ago
    This doesn't make any sense. Can only preordained organizations print the notes? Then we’re back to centralized cash. Can anyone print the notes? Then they can also print duplicates. Do we verify electronically when we transact to prevent that? Then we're back to electronic transactions. What am I missing? How is this not fatally flawed?
    • ccamrobertson 7y ago
      Today, Kong's printing is centralized to the Kong project (similar to a premine) because we cannot guarantee that someone else will use a secure element which conforms to section 2 of the paper (which would preclude the creation of duplicates). If anyone else wants to print Kong, and we can verify they source a secure element conforming to section 2 of the paper, then we'll share "printing rights" with them. The Kong recurring lockdrop, section 4.2, is outside of our control and open to anyone. We start to explore how someone could participate in printing Kong freely, without our influence, in section 5.1 but there are massive unsolved challenges to tackle here. There is a significant distinction between verifying a note electronically and conducting an electronic transaction. The former can be done in an offline fashion; the latter cannot and, in the case of credit card networks, Ethereum and, Bitcoin, incurs a fee.
      • jakelazaroff 7y ago
        Is this not strictly worse than cash, then? It’s still a centralized physical currency, but instead of a government with checks and balances that is ostensibly accountable to its citizens, Kong is controlled by an opaque organization accountable to nobody. After reading the paper, I’m still not exactly sure how the lockdrop works. Could you elaborate on it? As for verifying transactions offline, I’m skeptical of how useful that is. If you can lock down printing, the supply of fake or duplicate Kong should be low anyway. If you decentralize printing (or a lot of counterfeit/duplicate Kong gets introduced into the market some other way) then offline verification seems insufficient. What’s to stop me from printing and spending two copies of a note if I know the other parties won’t veriify the transaction online until much later?
  • suyash 7y ago
    What's the value of 1 Kong in USD, showing that would be helpful on your website front page.
    • paulgerhardt 7y ago
      Kong is very new. Only a few thousand are out there. Frustratingly, or perhaps amusingly, it doesn't yet have an agreed upon value. I don't think it's appropriate for us to set one.
      • arcticbull 7y ago
        Uh, well, then how do you know what denominations to print? What if the exchange rate ends up by 10,000 Kong per dollar? Are you going to issue Zimbabwe-style bills? What about as the exchange rate fluctuates wildly?
      • suyash 7y ago
        Lol, might as well use monopoly money then.
  • shpx 7y ago
    Which "secure computing element" are you using?
    • userbinator 7y ago
      From the description I suspect it's a standard smartcard chip of the type used in SIM, EMV, and other access control/authentication cards.
  • XMPPwocky 7y ago
    A user accepting these "verifies" them by assuming that two properties hold if they connect over NFC or via pogo pins to the "gold elements", send a challenge over this connection, and receive in response the challenge signed with a public key associated with locked Kong tokens. 1. the relevant private key is known to only a Kong note's secure element. this is (hopefully) enforced by the secure element's, uh, security, and by the issuer. 2. the relevant private key is known to the secure element on the specific physical Kong note the user has been given. 2 is unenforced in your current design, from what I can see. A crafted note can relay all communication to the secure element of another note (e.g. over low-power RF from a single-use battery or small ultracapacitor). better, a "dead" Kong note which performs no NFC communication can be given to a merchant; then, a high-power NFC transceiver can be used to pretend to be the note wirelessly (from a handful of meters away, but in a lot of situations that's more than enough). Of course, this one only works if the verifier is using NFC, but... This one is particularly nasty because it's relatively straightforwards to "weaponise" - imagine buying a "kit" off AliExpress which contains fifty dead notes, a ProxMark, and an amplified antenna. Then, in any situation where you're close enough to the person who'll be verifying your notes... just give them a dead one and relay communications. Verification passes, but what the merchant ends up putting in their cash drawer is worthless.
    • badrabbit 7y ago
      Is it more risky than getting a fake cash from someone? Is it difficult to validate NFC with say...your phone (make sure the NFC signal changes when you bring it close to your phone)? For 2) I get the part about relaying communication but regardless of that, what makes you think any sort of communication will cause it to output the private key? As far as high powered NFC, I am not sure that would work to begin with (someone who knows radio explained it to me but I cannot recall) but even if it did how is it different than existing mobile phone NFC payment? You also gotta keep in mind,this is in-person. If someone defrauds you, they face several risks including law enforcement,legal,phsyical altercation(violence) and more. Better would be nice but I can live with "as good as cash" or "as good as mobile nfc payment" when it comes to security.
    • londons_explore 7y ago
  • badrabbit 7y ago
    Hi, I love this. I have been wanting something like this for a while. Personally, I desired a coin instead of a bill. 2-3CM thick coin made with material good for radio security and longevity would be neat. A phsyical 'coin'. Any plans for something like that? Any reasoning against it?
  • easytiger 7y ago
    > To date we’ve handed out close to 2,500 Kong notes; we’re now exploring more ways to distribute physical crypto. Are you in a non extradition treaty country? This could be a relevant question for you soon enough
• lockit 7y ago
  How does this work? Is the first 2,500 part of your own ICO?
  • ccamrobertson 7y ago
    There is no ICO. We're selling packs of Kong in a limited fashion to cover the costs of manufacturing the hardware. We have a limited number of units available so we're slowly opening up sales to our mailing list. Take a look at sections 4.2 and 4.3 of the paper for information on our lockdrop; this is the only other way to get Kong token. Lockdrops are a novel means of distributing token based on opportunity cost rather than selling the token.
    • parkaboy 7y ago
      I'm impatient. Take my money now!
    • luminiferous 7y ago
      Just to clarify, that means that I would need to 1.) purchase some packs of Kong, which are unloaded, and then 2.) participate in a lockdrop to gain the tokens with which to load the Kong? Seems fine and dandy wrt the acquisition of bills, but how will adoption by vendors happen?
• russdpale 7y ago
  I fail to see how this solves a usability issue in developed nations. This also reintroduces the portability problems that are present in current fiat.
  • ccamrobertson 7y ago
    Japan is a fairly cash heavy developed nation. Likewise, the majority transactions under $25 in many countries are still conducted using cash. We don't necessarily expect people to revert to using cash; rather, Kong is a means of handling cryptocurrency that's vastly easier to understand as an introduction to cryptocurrency. The usability problems are also a feature -- if Kong is burned, stolen or otherwise destroyed, the value is lost forever. Billions of people understand that's how cash functions and they take measures to secure it.
• stanislavb 7y ago
  I'm curious, have you tried passing an airport border security with several of these notes, and have you been asked what they are :)? Do you have to declare them?
  • ccamrobertson 7y ago
    Yes, they look like a bunch of circuit boards under X-Ray, it's pretty cool. We've travelled with "unloaded" Kong thus far (i.e. not backed by token). See section 4.1 on minting in the paper. Even so, we're unaware of any value to the Kong token independent from Kong notes and we are not taking steps to list it on exchanges. If Kong was to become a means of exchange somewhere then it might need to be declared as a monetary instrument depending on the jurisdiction.
    • hadlock 7y ago
      How do they hold up in a saltwater environment? My feitan/yubikey U2F physical tokens are developing rust/corrosion just being on my keychain and being thrown in a drawer on my boat for a couple hours at a time. I2C leads + saltwater environment seems like it may cause some problems.
      • ccamrobertson 7y ago
        I doubt this version would hold up well in a salt water environment. The chips will ultimately have a conformal coating leaving only gold contacts which should fare better. We have considered more robust variants that would fully seal all the components, but this is a v2 problem. I should add that even a corroded chip should ultimately still be accessible; you might have to pull it off of the bill and decap it.
        • sgarman 7y ago
          Do v1 people just not get to redeem their value in x years since they become unreadable?
• TekMol 7y ago
  If the private key is inside of the note and stays the same when it changes hands, how do I know you did not make a copy of it when you created the note?
  • paulgerhardt 7y ago
    Another contributor here. This is one of the novel advancements made by Kong. Specifically, Kong notes use a secure element which 1) self-generates a key pair 2) can attest the key pair was self-generated and 3) does not leak the private portion of that key pair. Section 2 of the paper (specifically 2.2) goes into more detail[1]. [1] https://ipfs.io/ipfs/QmRNRCocj4PwKMXrd1jeUGw7ASQSuEk7BDJu5KsGuWBXAX https://ipfs.io/ipfs/QmRNRCocj4PwKMXrd1jeUGw7ASQSuEk7BDJu5Ks...
    • TekMol 7y ago
      So your answer is "trust us". Because how would I know if the claims of the hardware manufacturer (you or your supplier) are true? This of course holds true for all hardware. When someone creates or stores a Bitcoin key on a laptop, they are at the mercy of the laptop manufacturer.
  • Kuinox 7y ago
    There is also a private key inside simcard, and debit cards. Good luck fetching it. I mean, you can technically do this, but it would be really hard.
    • ccamrobertson 7y ago
      Yes -- see section 2.3 in the paper linked for our discussion on this. The chips you're referring to are broadly considered to be "smart cards" and usually based on something like Java Card.
• brunt 7y ago
  I'm assuming this is unrelated to the Kong API Gateway https://konghq.com/kong/ https://konghq.com/kong/
  • ccamrobertson 7y ago
    Yes, completely unrelated.
• the_gastropod 7y ago
  Poe's Law is a hell of a thing... Is this for real?
  • bduerst 7y ago
    I'm with you. The satire signals are so strong here.
• welder 7y ago
  So you can't backup Kong.cash? That's one main benefit of digital currency, why go backwards towards physical cash? Instead you should go towards the Wechat model of instant mobile payments.
  • paulgerhardt 7y ago
    We looked at various financial instruments and saw that cryptocurrency space lacked a cash instrument. We realized with our background we could create one. Cash is the dominant form of consumer payments (77% world wide!) and the move to ban cash in various places disproportionately affects the underserved and marginalized members of society - ostensibly the audience cryptocurrency is trying to serve first. This is an effort to meet others with terms and technology they are comfortable and familiar with.
• lazzlazzlazz 7y ago
  Is Kong stabilized/a stablecoin or is it a commodity-style asset?
  • ccamrobertson 7y ago
    No, there is nothing backing the Kong token. See section 4 in the paper for more of a discussion on the token issuance. We considered various stablecoin constructions, but most of them effectively pin to fiat which (1) seems to defeat the original intent of cryptocurrencies (i.e. think back to 2009) as not subject to the whims of central banks and (2) seems to just duplicate fiat currencies in a more expensive format. Likewise we are doubtful that most folks holding BTC/ETH/etc. would actually be willing to spend it on something, vs. just continue to hodl in a cooler format.
    • lazzlazzlazz 7y ago
      You mentioned two stablecoin methods, but not the interesting and somewhat successful MakerDAO approach. What do you think about that?
• rahuldottech 7y ago
  FYI: Your website is broken on the latest Firefox with uBlock Origin and Privacy Badger. The email 'request access' thing doesn't work
  • idigit 7y ago
    Odd - working for me on Firefox with those plugins. What error are you getting?
• onlyrealcuzzo 7y ago
  This seems like a step in the wrong direction. Given the option, most people prefer not to use cash. Making me carry something around everywhere I go to be able to use it -- I don't see myself being more inclined to use it. Potentially more people will accept it. But I doubt it.
• dtemkin 7y ago
  Not sure if this is a common problem but their contact link just dumps you to the gmail 'about' page.
  • idigit 7y ago
    It's a "mailto" link, so it just opens up your default email app.
• jasonlaramburu 7y ago
  Cool! What is the cost to produce each note today, and how do you anticipate funding that longterm?
  • paulgb 7y ago
    They're literally printing money, if people actually buy it I don't think funding will be the problem! (I could be wrong but from skimming their technical spec it doesn't seem to be redeemable for anything other than digital Kong tokens)
  • paulgerhardt 7y ago
    Just a bit more expensive than the higher end notes produced by Switzerland/Australia and less expensive than limited edition postage stamps. We looked at existing hardware wallets like trezor and ledger and realized we could create something like this for 1/20th the price. Once we realized the numbers we were playing with we ran with it. Conceptually, I prefer validating something with a cryptographic signing operations rather than looking at some watermarks. Kong is a proof of concept but we could always print these for other governments.
    • modeless 7y ago
      OK, but how much is that? I don't see the point in being vague about it.
      • weego 7y ago
        I'm sure it mentioned somewhere in the range of $3 per bill, but I can't find it now. It's utterly impossible to sustain, it's highly likely that the physical cost could be higher than the face value
• dmitrygr 7y ago
  This seems like a VERY cool technical solution in a desperate and fruitless search of a problem. > They consist of a flexible circuit board, specialized secure element chips and an independent NFC interface capable of powering the secure element. Each secure element stores an internally-generated ECDSA key pair that is associated with a unique smart contract on the Ethereum blockchain Who wants bills that cost $3 ea, and are not likely to survive a wash? > flexible circuit board FPC != "meant to be constantly flexed". Most are not designed for a certain (not small) bend radius and to be bent no more than a dozen times. They are more meant to be curved once into a particular shape than to be constantly bent. > I2C, raspberry pi connector That will do great with dry pockets and ESD > raspberry pi connector tiny holes, so your notes can catch on your keys and any other thin sharp object in your pocket
  • ebg13 7y ago
    > Who wants bills that ... are not likely to survive a wash? Americans are already used to this.
    • dmitrygr 7y ago
      I have washed $20 bills in my washing machine (by accident) a number of times with no ill effect
    • bitwize 7y ago
      American bills are made out of linen. They wash just fine.
  • paulgerhardt 7y ago
    Glad you think it's cool, given your background that comment means a lot to me personally. I would contend it's not "in search of a problem" but trying to solve one. Specifically the usability nightmare that is cryptocurrency. Cash has tradeoffs but it has great usability properties. The space needs rebalancing in that direction. Linen notes last about 4,000 bends before breaking, FPC lasts about 6,000. The stuff thats critical to validation is not in the 'bendy bit' pathway. Did some ESD testing but the NFC chip bears most of the brunt here and not the secure element. Likewise the tiny holes dont bug me so much as the QF Packaging. Want to go slimmer in our next revision.
• myrloc 7y ago
  Why limit the bill faces to Western philosophers? Seems like a more international approach is appropriate for both end-user adoption and the crypto space in general. Edit: or are they all Greek gods?
• neiman 7y ago
  I understand many people here, and in the world, don't like cash anymore. But there are many others, like me, that still think that physical money gives them a better feeling of their spending. So in my eyes Kong is a really nice take on the cash technology, not to mention it's beautifully executed.
  • cortesoft 7y ago
    So why not just use regular cash?
    • bananabreakfast 7y ago
      Unverifiable compared to simply checking an NFC
    • newguy1234 7y ago
      Because "regular cash" requires trust and that trust has been routinely violated by various governments of the world so I would rather have trustless currency instead. I trust math, science and verified algorithms rather than people or governments.
      • cortesoft 7y ago
        No amount of math, science, and verified algorithms are going to make someone else value your digital currency... you are still having to trust other people to maintain a somewhat stable value of the asset. Since this is always going to be true, I am probably going to go with the best bets based on track record... I will use the currencies that have held pretty consistent value over the last 100 years.
  • newguy1234 7y ago
    I think the big point to get here is that having digital crypto vs physical crypto is not mutually exclusive.
• sansnomme 7y ago
  Governments do not like this. See: Liberty Dollar
• kristianc 7y ago
  So physical Kong notes collateralized by ... digital Kong tokens? Don’t see how that could possibly go wrong. It’s Kong tokens all the way down.
• etxm 7y ago
  I’ll tell you what, it looks really awesome. Kudos to the designers.
• mNovak 7y ago
  So in theoretical use, is everyone expected to validate authenticity of each note exchanged? That seems painful for small transactions, but without it you lose absolutely all the security benefits of crypto, right? (e.g. vulnerable to good old fashioned counterfeiting)
  • undersuit 7y ago
    Just do it like we do it in the US, $50s and $100s get checked consistently for counterfeits, $20s sometimes, $1s, $5s, and $10s never, and $2s are automatically assumed to be fake.
    • tehwebguy 7y ago
      Yeah but what the hell is a Kong worth at the moment of sale? Unless the price is listed in this particular crypto people will have to do a live conversion to even know what this space cash is even worth. Also, very funny (and accurate) about the $2
      • undersuit 7y ago
        A Kong is worth what I think it's worth. If I saw Kongs trading for 1 beer in the morning and some guy insisted that the rate was now 1.45 Kongs a beer in the evening I might object.
        • tehwebguy 7y ago
          Yeah for sure, especially since there apparently aren’t partial Kongs.
    • alasdair_ 7y ago
      >$2s are automatically assumed to be fake Steve Wozniak used to keep uncut sheets of $2 bills that he perforated and would tear off to give tips to people. He has a great story about secret service agents detaining him and accepting his fake ID ("Laser Safety Officer" - it showed him with an eyepatch on) and generally having no idea $2 existed. https://www.coinbooks.org/esylum_v18n36a40.html https://www.coinbooks.org/esylum_v18n36a40.html
• advisedwang 7y ago
  Does this mean someone needs to verify every banknote handed over to them? If not, what's to stop me giving people unloaded notes and them assuming they have face-value?
  • paulgerhardt 7y ago
    The imagined usability is like cash. Low denominations notes are glanced at to sure they're intact, high denomination notes are scrutinized more closely. The difference is one can validate these notes with a cryptographic operation rather than a highlighter.
    • jiofih 7y ago
      Online validation dissolves you’re anonymity value proposition instantly. Bank notes are recognized as a financial instrument by the government, and have the accompanying legal repercussions to counterfeiting. I expect no such strictness being applied to a private digital token, what exactly de-incentivized someone from going crazy counterfeiting notes? Especially considering their transactions would be anonymous too?
      • ccamrobertson 7y ago
        You could cache a list of existing notes directly from an Ethereum node for offline verification; this cached information would work for verification until the claim date in the smart contract. Correct, there is no secret service that will remove counterfeit Kong which is why you should verify it yourself or only accept it from parties you trust and have attested to previously verifying it. Habits around verification would likely be governed by the prevalence of counterfeits in a local money supply. If I hear about a bunch of 1 Kong notes failing to verify as counterfeit, then I'll likely verify every 1 Kong note before acceptance.
• akersten 7y ago
  So once the time lock or whatever expires, I'm free to extract the value from my Kong and then go double-spend the physical bills in a corner store? In the hypothetical world where people use this, how are they expected to validate every note they receive? Is there an equivalent to a starch pen like a suspicious cashier might use on a $100 bill today? Or is the process more painful? Does it require the internet? Remembering that many cash transactions happen person-to-person, in places with low or inconvenient connectivity.
  • paulgerhardt 7y ago
    The expiration mechanic is how Swiss Francs work and we believe a necessary tradeoff for decentralized cash issuance to work. Validation can be performed with any smartphone. Notes are issued in blocks so technically if you downloaded the 2019 Kong Registry contract you would not need connectivity to validate a note. Purpose built hardware can also be built or existing android based POS systems updated to support kong-like validation. Other anti-counterfeiting techniques have been explored but it the only thing that really matters is securing the root of trust. Technically with Swiss Francs, the notes have no value after their "expiration date", with Kong the escrow contract unlocks and the token can be claimed off the notes but the precedent made us comfortable enough with this tradeoff. Alternative implementation 1) notes are not escrowed and funds can be claimed off the bills immediately - this is effectively how paper wallets, java smart card wallets, and trezors work. This is a gift card instrument not a cash instrument. Alternative implementation 2) funds are locked up into perpetuity - all tokens are eventually lost to breakage. Our back of the envelope expectancy was 10 years for these notes. We wanted the majority to be reclaimable well before their anticipated breakage so we set a claim date relatively soon in the future.
    • gamblor956 7y ago
      More importantly: you keep people trapped in your walled garden for several years waiting until they can cash out.
• fatjokes 7y ago
  Why would drug cartels prefer this over existing cash? I'm phrasing the question facetiously but the underlying intent is there: how is there more anonymity, usability, etc.?
  • paulgerhardt 7y ago
    We're not interested in doing business with drug cartels. What is a lovely property of Kong is the only digital breadcrumb is leaves is when notes are loaded at creation and unloaded at de-circulation. Every person to person transaction of the instrument leaves no digital record or footprint. Usability is superior for new users - everyone understands how cash works.
    • seandougall 7y ago
      > Every person to person transaction of the instrument leaves no digital record or footprint That's true of cash as well, but that doesn't mean it's totally untraceable, as bills still have serial numbers. I think what GP is getting at is, Kong notes must completely lack any sort of persistent unique identifier in order to be an improvement over cash in anonymity. Can Kong make this claim?
    • james_s_tayler 7y ago
      >What is a lovely property of Kong is the only digital breadcrumb is leaves is when notes are loaded at creation and unloaded at de-circulation. Every person to person transaction of the instrument leaves no digital record or footprint. What problem does that solve for me though? What benefit does that afford me? Why does that matter to me?
    • elil17 7y ago
      Except that real cash, in comparison, has no digital footprints. Why the hell wouldn't I just use cash?
• account73466 7y ago
  In your paper, why you acknowledge people by their name but you don't disclose your names?
• aazaa 7y ago
  I really like the concept of physical electronic cash, but in practice nobody has figured out how to make it work. There are many attacks to consider. The most obvious is to obtain the private key. If you did so, you could give the note to someone else in an environment lacking network access. This would enable double-spending - the main problem Bitcoin solves. The attack can range in complexity from breaking into the secure element to physically separating the element from the note. The latter approach was used way back to pull private keys from Casascius coins by dissolving the adhesive on the security sticker. I suspect not all of these kinds of attacks have been considered by the creators. If it becomes necessary to verify Kong with a network connection, the main value proposition disappears. That can be done already without a physical note.
  • paulgerhardt 7y ago
    We have considered both of those attacks and address them in section 2.2 and 3.2 of the white paper respectively[1]. The short version is the key extraction attacks on this specific hardened chip are more expensive than the value they escrow, and in the event a key was extracted it creates a race condition at the period of claim not during the lifetime of its use - still providing some utility. What Kong does that Casascius didn't is provide guarantees that the minter never saw the private key. [1] https://ipfs.io/ipfs/QmRNRCocj4PwKMXrd1jeUGw7ASQSuEk7BDJu5KsGuWBXAX https://ipfs.io/ipfs/QmRNRCocj4PwKMXrd1jeUGw7ASQSuEk7BDJu5Ks...
    • melcor 7y ago
      > in the event a key was extracted it creates a race condition at the period of claim not during the lifetime of its use - still providing some utility. So say the key was extracted, you would not be aware until the "maturity" or whatever time you can claim the real value? How would one then know and trust that the note I'm holding on to won't be claimed by someone else at the period of claim? As far as I see it my best option would be to try and offload any Kong in my possession as soon as possible for real goods or other currency.
  • rglullis 7y ago
    I haven't read the paper (yet), but from I read down-thread Kong is keeping reserves for the notes which can be redeemed later. Wouldn't this mean that if the notes are destroyed the value of the other notes would increase?
• spir 7y ago
  Have you guys considered decoupling your physical cash technology from the underlying token? Physical DAI or ETH would be most excellent.
  • ccamrobertson 7y ago
    Yes; DAI is a bit of an odd one since it's largely just a more expensive dollar bill, but there definitely some cases where this could be interesting. ETH would easily work too.
• luminiferous 7y ago
  Question: since bills can be either loaded or unloaded (either because they haven't been put in circulation yet, or because they're counterfeit), doesn't that mean that e.g. a vendor taking my Kong who has no trust in me would have to individually check each bill via NFC or i2c to make sure that the contract backing the bill is valid (and the correct amount, etc.)? And that I would have to do the same for all the bills I get back as change? As a completely trustless transaction, this seems like it could be entirely too slow for most applications, without some kind of device to quickly verify multiple bills.
  • ccamrobertson 7y ago
    Ideally you should check every Kong note. In reality behavior would probably be similar how bills are verified now; businesses regularly check $100 and $50 notes under backlights and with special pens but don't worry about lower denominations. A dedicated "Kong scanner" could do this very quickly.
• ISL 7y ago
  After I buy a grilled cheese sandwich with Kong, how do I handle my taxes? It makes every transaction have possible capital-gains tax implications. The taxation difficulty is the single biggest reason why I stopped making small transactions with Bitcoin. The paperwork, come April, was awful.
  • Twixes 7y ago
    It should be just like normal, non-blockchain backed currency, should it not?
    • nostromo 7y ago
      It’s more like selling stock to buy a sandwich. If you bought the stock for $100, and now it’s worth $200, and you sell $10 worth to buy a sandwich, you have $5 of income to be reported.
      • Twixes 7y ago
        Would that be the case if you were to buy that sandwich with, say, euros instead? They too could appreciate between purchases.
        • hanniabu 7y ago
          If you're in the US and pay with euros then yes it would technically be the same.
          • iudqnolq 7y ago
            No. The issue is because cryptocurrencies aren't classified as currencies like euros are by the IRS.
            • hanniabu 7y ago
              Actually yes because there's still capital gains.
• GordonS 7y ago
  So, I'm Scottish, and still often have problems in London (and indeed abroad!) when I hand over a Scottish bank note. Scotland and England are of course both part of the UK, and while, yes, technically Scottish bank notes are not legal tender, they have been defacto legal tender since forever. How do you plan to tackle this mentality, where there is such hostility to anything in the slightest bit unusual?
  • aey 7y ago
    Just personalize the currency to your bank teller. Would Mark reject a deposit in SuperMarks?
  • 3saryHg6LP2e 7y ago
    I mean they are not "not technically" legal tender, they are not legal tender and that is why you have problems with them being accepted (because they don't have to be!)
    • GordonS 7y ago
      Given Scottish notes are defacto legal tender, and have been since forever, yes, I do think it's fair to call it a technicality - there literally isn't a bank in the whole of the UK that would decline Scottish notes. Also, while I do sometimes have problems with them abroad too, it's 50/50 - I've had them accepted in all sorts of places, including India, Nepal and China
      • 3saryHg6LP2e 7y ago
        There is no such thing as "defacto" legal tender. By definition only legal tender must be accepted as a form of payment - you can choose to accept something else but you don't have to.
        • GordonS 7y ago
          Sorry, but (at best) this is pure pedantry. Literally every bank in the UK will accept Scottish bank notes - if that's not a defacto legal tender, I don't know what is.
• stevespang 7y ago
  I clicked on specific amounts, but nothing happens . . . is the website actually working ?
• krick 7y ago
  I don't get it. Is it some sort of concept art? What's the point? Sure, it can be used as money (assuming what authors say is correct). Virtually any physical items that are hard to fake can be used as money, as long as people believe it's worth something. And if we are okay with complicated and rather expensive manufacturing process (since Kong isn't something you find in the forest), it really is a non-problem to create a new "government-independent currency", print it and sell it. Nobody really gives a fuck about that, because money is worthless unless you can spend it. And as long as Costco doesn't accept Kong (or any other made-up currency), it would be hard for you to spend it on anything other than unique hand-crafted chairs or cocaine. And it would be hard for them to start accepting Kong notes, while being a government-compliant entity that pays taxes, as every physical bill they get must be accounted for and put into a cashier machine. And, by the way, since every Kong bill is unique, it isn't any more anonymous than dollar bills: i.e. pretty much anonymous as long as they change hands without touching real cashier machines or ATMs, which, as it happens, is not so long, because people don't generally exchange unique hand-crafted chairs for cocaine, they buy/sell it, then go to Costco to get some more conventional goods or services.
  • paulgerhardt 7y ago
    Kong has the useful property of peer-to-peer validation. Most paper currencies printed in your basement don't. Tokens loaded onto Kong Cash instruments and exchanged ephemerally in person between party A and party B are more anonymous than tokens sent directly from party A to party B electronically which will be recorded for everyone to see forever. It's programmable money. It's cooler than non-programmable money. We're putting it out there as a toy.
    • manigandham 7y ago
      If you're handing off physically then just use cash. How is this any better? The exit to real currency will always reveal Kong transactions at some point. Real cash is more anonymous because it's seamlessly transacted everywhere.
      • 7y ago
• nostromo 7y ago
  One of the best things about Bitcoin is that it’s not physical. If you want a physical currency that can’t be printed, use gold bullion.
  • ilaksh 7y ago
    Maybe silver? I mean even a tiny 1/10 oz gold coin is worth $140
    • asdf21 7y ago
      You also can't tell if gold is real or gold plated, etc.
      • newguy1234 7y ago
        You can but you have to use a scientific instrument called an xrf meter.
    • SRTP 7y ago
      Mate, you got got.
  • mc3 7y ago
    Well if you have some colliding neutron stars you can make more gold!
• Twixes 7y ago
  I don't believe this will ever gain traction without a government to back you but I've got to say, the design of these notes is amazing.
• Jaxkr 7y ago
  Have you considered how this will fare in the current regulatory environment? European countries banned Libra because they didn't want it to compete with the Euro and the U.S. showed hostility to pre-crypto complementary currencies. Have you considered licensing the tech to governments to make counterfeit-proof bills?
  • bananabreakfast 7y ago
    And have governments rely on Ethereum for official validation? It would collapse nearly immediately
  • biolurker1 7y ago
    You mean they would treat it as illegal goods and confiscate it at border? How would they ban this
    • saxonww 7y ago
      However they want? Some people might not remember the Liberty Dollar[0] from 10-20 years ago. The depository was raided after a few years, the company issuing the currency was shut down, and the owner/proprietor was convicted of illegally minting coins. Kong couldn't be shut down the exact same way - these aren't coins - but I'd be shocked if a similar thing didn't happen were Kong to become as popular as ALD (which, come on, it won't). [0]: https://en.wikipedia.org/wiki/Liberty_dollar_(private_currency) https://en.wikipedia.org/wiki/Liberty_dollar_(private_curren...
      • sah2ed 7y ago
        Exactly. I’m surprised that this point about the legal ramifications isn’t higher up in the thread. Things get complicated real fast once you move from peddling virtual to physical currencies. I fail to see how the US wont use the same laws to shut them down the way they did to the liberty dollar.
        • __m 7y ago
• Barrin92 7y ago
  I genuine can't tell if this is satire or not. This is like one of these web-framework to desktop and back again pieces of software Why should anyone buy a crypto currency you can barely use anywhere in physical form if I can just use regular cash?
  • biolurker1 7y ago
    You are missing the point of crypto in general. It is a trust less fixed inflation and issuance decentralized non government controlled global currency
    • Barrin92 7y ago
      it is none of these things. The value of cryptocurrency swings wildly, the primary way to interact with it is through exchanges which are ordinary trusted institutions, and they are far from globally useable. What you are missing is that I need to pay my bills in practice, not in theory. I measure the value of cryptocurrency against what it delivers in practice, not on the white paper of the people who are going to benefit from its adoption.
      • biolurker1 7y ago
        I have paid numerous things in bitcoin and you can even pay some bills. People do exchange it directly just not in your circles. I'm not saying that adoption is massive yet but you need to differentiate the idea with the current status. Value is in price discovery mode and will be for the foreseeable future but the volatility is going down. Lastly you can argue without down voting different opinions.
    • UncleMeat 7y ago
      It seems to me like the risk of a Kong crash is much larger than the risk of most local currency crashes.
• Akababa 7y ago
  The world is moving towards cashless/mobile payments (albeit with the U.S. strangely behind), so why do you feel physical cryptocurrency is a step in the right direction? Do you expect Kong to face greater challenges for adoption (compared to other cryptocurrencies) since it needs a higher critical mass of users?
  • withinboredom 7y ago
    You haven’t been to Germany lately? Most places only accept cash, your debit card is plastic trash.
  • duderific 7y ago
    In the paper, they note that 77% of all transactions globally are still done using cash.
• EvanAnderson 7y ago
  I immediately thought of the currency "Kongbucks" from "Snow Crash". I was hoping this was partially a tip-of-the-hat to Neal Stephenson.
  • paulgerhardt 7y ago
    Read section 4.3: https://ipfs.io/ipfs/QmRNRCocj4PwKMXrd1jeUGw7ASQSuEk7BDJu5KsGuWBXAX https://ipfs.io/ipfs/QmRNRCocj4PwKMXrd1jeUGw7ASQSuEk7BDJu5Ks...
• zelly 7y ago
  IMO this breaks the entire security model of cryptocurrency. If these bills are intended to be spent hand-to-hand in meatspace without cryptographic validation on a computer, then it is no longer a cryptocurrency. It is another paper currency like the U.S. Treasury's. The innovation of Bitcoin was money as a purely digital artifact that cannot be double spent. As a merchant accepting Kong bucks, I have no idea how many duplicates of a particular Kong note there could be out there. I could find myself in a race between many other people to move the Ether out of that private key. To rely on embedded chips and watermarks to prevent counterfeiting and double-spending seems like a huge step backward, like you're trying to make a better $100 Benjamin instead of a better cryptocurrency. I get the idea of quick, zero-fee transactions. But there needs to be some finality or pseudo-finality. The Lightning Network uses a similar model as yours, but it has collateral. Analogously, in the way Lightning solved this problem, the merchant has 5 actual Ether on file for a customer that the customer sacrifices if they ever double spend a Kong buck at the store.
  • paulgerhardt 7y ago
    The bills are intended to be spent hand-to-hand in meatspace with cryptographic validation. See section 2.1 [1] The innovation of Bitcoin was decentralized electronic peer-to-peer cash. Kong does not remove any of those elements and makes the overhead of the peer-to-peer bit easier. Physical cash is still the dominant form of payment. The advancement here is figuring out how to issue physical cash without needing a central entity. I like Bitcoin but it is anti-privacy by specification. For small transactions I prefer cash. I would like the best of both. [1] https://ipfs.io/ipfs/QmRNRCocj4PwKMXrd1jeUGw7ASQSuEk7BDJu5KsGuWBXAX https://ipfs.io/ipfs/QmRNRCocj4PwKMXrd1jeUGw7ASQSuEk7BDJu5Ks...
    • monocasa 7y ago
      What does Kong bring to the table that a gold coin does not?
      • ottolin 7y ago
        Honestly I dont think it does anything that a gold coin cant do in practical level. However, a gold coin will remain valid if dropped into water or fire.
• bransonf 7y ago
  Serious question: Who is going to accept Kong as a valid form of payment? What incentive is there to accept Kong and what guarantees its value? One of the biggest issues plaguing cryptocurrency as a transactional currency is the volatility of decentralized assets. What problem is Kong fixing? “We made a physical crypto asset” isn’t connecting the dots for me.
• rkagerer 7y ago
  Could you elaborate a little on how this is different or better than past projects like BitBills? Also what do you mean by "after a period of several years"?
  • paulgerhardt 7y ago
    For lack of an epistemological framework, we can call Kong a 4th generation wallet. If you'll bear with me: Paper Wallet were 1st gen - one couldn't guarantee the person giving you a paper wallet didn't have two copies or kept a copy of the private key for themselves. Probably ok for personal use assuming you trust your printer firmware. Hardware Wallets were 2nd gen - seed phrases made recovering from device loss nice but again, seed phrases were designed to be exported and cant be used as cash. They are very useful for other applications. Java smart cards were 3rd gen - meant to be used as pre-paid gift cards but again these were designed for banks who wanted to handle the key material in software and have dangerous APIs for doing such[1]. Kong - uses a specific kind of secure element which allows for key generation but not extraction. On chain contracts convert the R1 keys used by the chip to K1 used by most cryptocurrencies today. The paper goes in depth on this in section 2.3 [2] [1] https://docs.oracle.com/javacard/3.0.5/api/javacard/security/DSAPrivateKey.html https://docs.oracle.com/javacard/3.0.5/api/javacard/security... [2] https://ipfs.io/ipfs/QmRNRCocj4PwKMXrd1jeUGw7ASQSuEk7BDJu5KsGuWBXAX https://ipfs.io/ipfs/QmRNRCocj4PwKMXrd1jeUGw7ASQSuEk7BDJu5Ks...
    • userbinator 7y ago
      Kong - uses a specific kind of secure element which allows for key generation but not extraction In other words, just like almost every other smartcard (including EMV).
      • paulgerhardt 7y ago
        See section 2.2 in the whitepaper [1]. There is not an industry specific term that succinctly captures these requirements. Secure element isn't ideal but it's not an HSM or TPM. PUF's are a feature not a chip category. If it's programmable, we don't want to touch it. That goes for most smart cards / java cards. EMV cards specifically have 'get private key' API's which would not work for this application. [1] https://ipfs.io/ipfs/QmRNRCocj4PwKMXrd1jeUGw7ASQSuEk7BDJu5KsGuWBXAX https://ipfs.io/ipfs/QmRNRCocj4PwKMXrd1jeUGw7ASQSuEk7BDJu5Ks...
• mc3 7y ago
  Kong? I'll stick to Dong, thanks.
• skosch 7y ago
  Can you comment on the history of the name, printed as 港 on the bills? For those unaware, the character means "harbour"; it's the Kong in Hong Kong – is there any relationship to the HKD?
  • paulgerhardt 7y ago
    Context: https://news.ycombinator.com/item?id=21758004 https://news.ycombinator.com/item?id=21758004
    • godot 7y ago
      I am not familiar with Snow Crash myself and I read the Wikipedia page [1] on it and it makes sense what you're going for; but just want to say that for someone who was born in HK, seeing the term 港幣 really can only mean HKD in my head, and it's difficult for me to process that it means something else. Even as you keep the name Kong, have you considered calling this something else in Chinese aside from 港幣 specifically? [1] https://en.wikipedia.org/wiki/Snow_Crash https://en.wikipedia.org/wiki/Snow_Crash
      • paulgerhardt 7y ago
        Would love to talk about this over email. Please drop me a line.
  • z2 7y ago
    The Chinese name 港幣 may be confusing for Chinese speakers as it's already common short hand for HKD, e.g. the "二十塊港幣" shown on the Kong illustration already means "twenty HKD bucks," not some new currency like "twenty Kong." https://en.wikipedia.org/wiki/Hong_Kong_dollar https://en.wikipedia.org/wiki/Hong_Kong_dollar
• smashah 7y ago
  Vaporcash
• Animats 7y ago
  From the "white paper": "An additional 7,340,032 Kong was issued to the Kong project for discretionary Kong noteprinting and distribution. The upper bound for Kong token created after five years (the point at which only the recurring lockdrop rewards remain) is roughly 72,700,000 Kong." So, the promoters of this skimmed off 10% before launch. Or, more like 20% of the first year's production. Now, if this was set up so that it's denominated in something they don't control, like Etherium or Bitcoin or dollars or euros or yuan, it would be more interesting.
  • ccamrobertson 7y ago
    That's not quite fair; at launch 20% of Ethereum went to the foundation. A massive amount of Bitcoin it still held in the wallets of its creator(s). If Kong develops a market of its own (???) then having some token for the project to fund the very real costs of making more Kong is helpful.
• TrumpSucks 7y ago
  So dumb.
• elil17 7y ago
  I see so many people here frustrated with the fact that the creators are giving nonsense answers. It's important to remember that this is a money-making scam. Asking them how their technology provides any value to users is like asking a Nigerian prince about the philosophy behind constitutional monarchies.
  • relluic 7y ago
    This is the right response. I'm surprised people are even entertaining the idea.
  • drudu 7y ago
    It is a particularly strong scam in the crypto space. I'm very impressed with the innovation in their area.
  • jotakami 7y ago
    Usually I would agree with you but this is an intriguing concept. They explicitly state in the white paper that this is an experiment, so treat it as such. All I’m hearing is a lot of “contempt prior to investigation”.
    • the_pwner224 7y ago
      I agree that it is an intriguing concept. But at the same time they seem to be ready to sell Kong for $$$. And they don't explain why there are three tiers of rarity to the cash - shouldn't 500 KONG == 500 KONG all the time every time? Seems like a mechanic to raise more money, just like 'rare' cosmetic items in video games.
      • ccamrobertson 7y ago
        The "tiers" are just bundle names. We could have been super dry but decided to make it more like collectable cards packs; our expectation is that most people will buy Kong since it looks cool (that's totally fine with us). Our margin on Kong is typical of other startup hardware projects; not great. We're not raking in cash from a digital token sale. We've made a physical product, we'll sell it to cover the costs of doing so.
• toomim 7y ago
  > Kong is the first crypto-cash No it's not. - https://casascius.com/ https://casascius.com/ - https://en.bitcoin.it/wiki/Casascius_physical_bitcoins https://en.bitcoin.it/wiki/Casascius_physical_bitcoins It looks like Kong might be the first crypto-cash with an issuer that hasn't seen its private keys. And that's cool, but it'd be good not to exaggerate what this is.
  • toomim 7y ago
    Also, why not apply this to an existing coin, like Bitcoin, rather than inventing yet another freaking asset? Oh yeah, because then the founders can't get rich in the ICO. Yuck.
    • paulgerhardt 7y ago
      There is no ICO. There is no token sale. Bitcoin script does not give us enough operations to do the validation. Using the EVM was the next best candidate. We're selling an extremely limited number of packs to validate the concept and cover manufacturing costs. Section 4.1 of the paper goes into details of why a purpose built token is more suitable than one designed for other purposes[1]. [1] https://ipfs.io/ipfs/QmRNRCocj4PwKMXrd1jeUGw7ASQSuEk7BDJu5KsGuWBXAX https://ipfs.io/ipfs/QmRNRCocj4PwKMXrd1jeUGw7ASQSuEk7BDJu5Ks...
      • toomim 7y ago
        Wonderful to hear! Thank you for responding to my fear with the light of information. You're converting me into a fan.
      • gamblor956 7y ago
        What you have described is literally an ICO...
  • hanniabu 7y ago
    I think their statement is accurate. The link you referenced is a physical implementation of Bitcoin. This seems to be "strictly" physical.
• seibelj 7y ago
  A really cool experiment that made me think. Thanks for making this, very cool!
• foobar_ 7y ago
  Unless this is going to transfer ethercoins, this is a SCAM. They are trying to build a bank on top of smartcoins. The functionality seems like that of a promissory note. As they keep the kong coins in their kong bang ... they will try to make money using the volatility or something.
  • ben174 7y ago
    > CTA: "Request Access" > Need more Kong? Reach out and we'll see what we can do. Yes everything about this reads like a scam. Uses the most basic scam tactics, make it seem urgent, and desirable and exclusive.
  • paulgerhardt 7y ago
    The functionality is basically exactly like a promissory note. A big difference is every note stores its face value token in its own smart contract. The only thing which can claim the funds stored in that contract is the key self-generated on the secure element. You can manually validate that key was self-generated (and not say programmed on there by the manufacturer). The paper [1] details all this. You can go and make your own using the code we've released on etherscan and github[2]. It is completely unlike other things that have come before because it only stores keys on the secure element and only stores code in the EVM. We're putting this out there as proof of concept. We're selling a limited number as validation of the idea and because we believe in shipping product in a space notorious for shipping vaporware. There is no ICO. It is technology demonstration first and foremost. [1] https://ipfs.io/ipfs/QmRNRCocj4PwKMXrd1jeUGw7ASQSuEk7BDJu5KsGuWBXAX https://ipfs.io/ipfs/QmRNRCocj4PwKMXrd1jeUGw7ASQSuEk7BDJu5Ks... [2] https://github.com/kong-org/defi_hackathon https://github.com/kong-org/defi_hackathon
• WikipediasBad 7y ago
  This is a fantastic project and great idea! One thing, I believe there are 2 hurdles to adoption: Kong - the unit of account/currency and Kong - the paper money. Don't you think you're trying to do 2 things at once? Why not try this unique technology with Dai or Tether which has a lot of traction? In fact, I would LOVE to have Dai bills.
  • paulgerhardt 7y ago
    We've discussed this. It was a bit lower risk to validate the hardware works with a new token than the additional complexity of Dai. A lot of other challenges there too but we're a small team.
    • WikipediasBad 7y ago
      Sounds fair. I really like the technology though and think you guys have the most unique take on paper crypto so if the actual token itself becomes a barrier to adoption due to volatility/stability (which is a leading reason why stablecoins are all the rage right now - as I'm sure you guys are aware), you guys can license out the tech or produce bills for Tether, Dai, USDC, and other high traction stablecoins. Our small stablecoin team (releasing product Q1) would be interested ourselves if we were to ever get into the 9 figure market cap range.
  • newguy1234 7y ago
    I agree as well. I find the idea of a crypto-backed paper note to be very intriguing and very useful as well. I think most others here are simply jumping too far ahead of what is being done here. This is a proof of concept type project. It can certainly be improved going forward, I'm sure.
• cryptocoder 7y ago
  Adding ‘secure’ to the name of some chip (“‘secure’ element”) does not automatically make it secure through magical or other means.
  • ccamrobertson 7y ago
    Correct. It's an industry term for a class of chips.
• sabujp 7y ago
  these are basically like debit cards with fixed cash on them
• wiggler00m 7y ago
  Who is behind this project?
• pimlottc 7y ago
  Who is the audience for this product? The page is certainly not written for the general public. Heck, I'm a developer and I don't really understand how this works or why it's better than existing hard currency.
  • newguy1234 7y ago
    I think the audience is 3rd world countries that don't have reliable internet, electricity and so on. They can use these paper notes instead of United States dollars or their domestic currency which might be in hyperinflation.
  • biolurker1 7y ago
    Hard currency has central authority this doesn't. Same. With bitcoin. Can't be simpler than that
• oarabbus_ 7y ago
  My personal sentiment is one of the most powerful use-cases for crypto is transmitting money to people across the globe within (minutes/hours). It seems this physical crypto lacks that feature.
• drudu 7y ago
  I hate crypto currency and I love this. It's a way to project all the insanely bad parts of crypto (if you hold it you own it) into the physical world. If general btc/eth transactions are a very very complex version of SWIFT this is the same for paper money. I can buy coke with my bitcoins but I can't do a cool in person coke buy with bitcoins(and/or ETH). Kong solves my problem.
  • zelly 7y ago
    > I can't do a cool in person coke buy with bitcoins Why not? Each of you can have Bitcoin wallets on your phones. I'm sure coke heads can figure out something to talk about for 10 minutes waiting for 1 confirmation.
    • drudu 7y ago
      The operative word was "cool".
• drudu 7y ago
  All the downsides of cryptocurrency and paper money rolled into a banknote that can be break. Imagine if a large bill could become worthless since a little chip inside got hit by a stray cosmic ray.
• Uptrenda 7y ago
  From the whitepaper: "Kong notes do not use a secure element that allows for general programmability." Looks like they thought this through more than a typical drive-by 'blockchain' project. With a limited secure circuit you'll be able to call functions that generate ECDSA key pairs on the card but without exposing an interface to retrieve the private key. Without this basic property you would have to fully trust that the issuer had not mass-extracted private keys (similar to how early privacy coins had a trusted setup phase.) Looks like they're also trying to structure this as 'reward cost for key extraction vs cost of mounting attacks' showing they have a plan in place for attacks. I'd argue the notes still have a tx cost though because the only way to know if a note has a valid private key is to challenge it with a unique, large, random number - which takes time and effort. Users of the notes will need an app for that and have to check every note against an on-chain 'smart contract' before accepting them? NFC might make some of that easier but there are still usability issues there.
  • paulgerhardt 7y ago
    The NFC challenge only takes a second and ATM like machines could probably go much quicker than that. A broader goal with ARX is to bake bounties into "licensing fees" (or accurately, manufacturing costs) for secure elements that would validate keys couldn't actually be extracted. Putting (very) public bounties at various reward tiers lets one establish something like a demand curve but for security.
• Jotra7 7y ago
  How can I get some?
• tossAfterUsing 7y ago
  Kong seems worthless to me. ETH has demonstrated it's not a reliable store of value, if the DAO hack can just be reversed. Instead of garbage paper tokens, here's a thing that already exists: ... can be used just like cash ... isn't limited to a particular denomination ... value can be added at any time ... fits in your butt https://opendime.com/ https://opendime.com/
  • taywrobel 7y ago
    Can be used just like cash? Apart from the needing to wait for up to an hour to get confirmation of payment. And having fees on every single purchase. Bitcoin is not currency. You even said it in your critique of ETH- “it's not a reliable store of value” Currency is NOT intended to store value. It’s intended to facilitate the transfer of value. In that regard, etherium and bitcoin fail equally.
    • tossAfterUsing 7y ago
      look, you clearly haven't a clue what you're talking about. you may very well disagree with me, and that's your prerogative. cash has been variously shells, giant stones, glass beads, shiny metal, complicated paper, etc... fundamental to the hand-to-hand nature of this Kong nonsense, is the feasibility to be transferred offline. whatever Kong is, it's primary function will be a way to rip people off. and taywrobel: as a side note, i realize my statement may appear unbelievably ironic to you. just know that's your problem and not mine.
      • taywrobel 7y ago
        Out of curiosity, how much of your background is in economics?
  • ududhdhd 7y ago
    That thing obviously cannot be used just like cash. Jesus how fucking dumb are you people
    • 7y ago
• deleted 7y ago
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• CptFribble 7y ago
  If I can't take your space money down to the diner and buy a plate of bacon and eggs with it, then as far as I'm concerned it's not real. There's a chicken-and-egg problem that I think goes missed or unmentioned by all these crypto startups trying to piecemeal a "solution" to the centralized banking problem: in the monetary system, individuals have absolutely no power, because we're at the bottom of the hierarchy of spending. Joe Schmoe's dollar has value because he can buy a soda at the diner with it. The diner takes the dollar because they can use it to pay their staff and buy more supplies. The supplier takes the dollar because they can pay their staff and and buy raw materials. And in between every layer, the banks store the excess operating capital and profits. Decentralized currency can only work if it can occupy every layer at once, across the world. Anything less is just straight out worse than regular money from a usability standpoint, and that's before you mention that now we're all responsible for our own money security. Yes, people out there have been wronged by the current system, but the average modern human's relationship with money can be essentially summed up as follows: 1. Perform labor 2. Receive paycheck 3. Deposit in bank 4. Purchase food, shelter, and netflix So what is this kind of pseudo-money-computer-chip-paper for? No matter the fancy technology thats woven into its fibers, if I pay the Kong people for 10 Kongs, how do I, Joe Schmoe, turn 10 Kongs into a pizza? How do I, Jane Pizza-Maker, find a supplier that will sell me tomatoes and flour for 10 Kongs? How do I, Rachel Dough-Maker, find a wheat farm that will accept Kongs? All of this has to happen simultaneously, because business owners are busy and don't have the time or the energy to incrementally work space money into their cash flow. Yeah sure, centralized banking has issues. But a bottom-up approach is doomed to failure because we don't live in barter-based villages anymore. Every transaction is part of a hierarchy of money-transfers that extend from the local diner through dozens of entities across the planet and back again. Are you making enough Kongs for all of them?
  • cptaj 7y ago
    It goes unmentioned. Definitely not missed. But its hard to get funding or user buy-in if you say that.
  • paulgerhardt 7y ago
    By that definition, any foreign currency isn't real. I might suggest an alternate definition: Money is a transferable record of debt valid for a period of time and amongst a network of peers. Generally we think of money as local to a country and its government. However, one could imagine a 'minimum viable money' that could work in a space as small as a table and with only a handful of people - and for the purposes of a game like Monopoly, while the game is ongoing the money in the game serves a real purpose. From there things get pretty blurry as any World of Warcraft or Eve player will tell you.
• bunkydoo 7y ago
  I think in a big way this is necessary, this in essence makes crypto that is truly anonymous. If I slide a briefcase full of cash across the floor to someone - nobody knows that happened. Tree falls in the forest and no one is there to see it essentially. If I send a bitcoin in the forest - well I damn well better hope I have an internet connection. The Brixton Pound is a very similar concept but for a much smaller market. I'm interested to see where it goes from the standpoint of the future of physical cash finding a place in a digital world - but it isn't without it's flaws.
• jitl 7y ago
  Still too confusimg.
• sandGorgon 7y ago
  Monero has the concept of private view key and spend key. The view key only lets you check balance without loss of privacy. View keys can be printed as a mnemonic seed (a set of meaningless English words). Would printing of view keys mnemonic not be equivalent to this? With the added advantage that printing is not centralized?
  • ccamrobertson 7y ago
    I don't know enough about Monero's construction; wouldn't this be trivial to counterfeit? Can you use this key to ultimately transfer the funds?
    • sandGorgon 7y ago
      no - the view key does not let you do any transactions. It only lets you verify the balances. It also does so in a privacy-preserving manner. this is full text of a View Key A keypair specific to Monero. The public part of it makes up the 2nd half of monero address, and is used by the sender to generate a one-time stealth address to where the funds are actually sent. The owner of the wallet uses the private view key to scan the blockchain and find the funds sent to his address. At the protocol level, the sender performs an encryption with the recipient's public view key, and the recipient attempts to decrypt all the outputs on the blockchain to find the one belonging to him (where decryption was successful). For audit purposes, it could be shared with the auditor, along with the signed key images to prove the balance of a wallet. Sharing only the view key would enable the auditor only to see received transactions, but he wouldn't be able to tell if any funds were spent, so he couldn't know the actual balance. In the trivial case that each kong is a wallet - a view key would actually show the balance.
• torgian 7y ago
  I’m very skeptical. While the idea is nice ( I love physical cash and use it every day ) there isn’t much control over counterfeiting, etc. granted, this is also true for Fiat, but there are more controls involved. Make a currency exchanger that exchanges bits with a scan of your device, instantaneously, and you’ll have my attention.
  • ccamrobertson 7y ago
    > there isn’t much control over counterfeiting, etc. Correct, this is the primary challenge of creating sound cryptocurrency and indeed why we go into length about the hardware we use in section 2 of the paper. > Make a currency exchanger that exchanges bits with a scan of your device, instantaneously, and you’ll have my attention. Can you elaborate?
• wesleyfsmith 7y ago
  If someone could pull this idea off--or a similar idea around physical cash it could be a huge boon in countries like Venezuela that are primarily cash based still but the local currency is very weak.
  • notahacker 7y ago
    Or they could use dollar bills, which unlike Kong, are redeemable for goods and services because hundreds of millions of people want them to pay bills, debts and taxes.
• eat_veggies 7y ago
  Can a Kong manufacturer build custom secure element chips that leak key material? It seems that a lot of Kong's security comes from the security of the little HSM, and if you don't trust the manufacturer then a lot of it seems to break down. In addition, the paper cites the cost of decapping and side channel equipment as part of what makes double spends impractical. Given that they're fixed costs that undoubtedly many governments and labs already own, it still seems like it could be worth it for some people to extract Kong keys.
  • ccamrobertson 7y ago
    > Can a Kong manufacturer build custom secure element chips that leak key material? It seems that a lot of Kong's security comes from the security of the little HSM, and if you don't trust the manufacturer then a lot of it seems to break down. This is perhaps the most important question. In short, yes. We use an off the shelf secure element; if it's shown to be broken/backdoored it will influence a vast number of embedded and IoT applications. > In addition, the paper cites the cost of decapping and side channel equipment as part of what makes double spends impractical. Given that they're fixed costs that undoubtedly many governments and labs already own, it still seems like it could be worth it for some people to extract Kong keys. We cite fixed costs in hardware, but not in time. Certain extraction techniques would still take hours of time per chip. The secure element we're using has no published attacks thus far (which is not to of course imply that it won't be, simply that it isn't trivial).
    • eat_veggies 7y ago
      > We use an off the shelf secure element; if it's shown to be broken/backdoored it will influence a vast number of embedded and IoT applications The scenario I'm imagining is one in which someone manufactures a note that looks and behaves exactly like a Kong but has known key material (i.e. a "fake" secure element). You can't verify that the secure element is real without expensive hardware. And what is the vision for who can mint Kongs? If only the Kong developers can, then it's no better than USD. If anyone can do it, how will you guarantee consistent chips, construction, design, etc. between manufacturers?
• dav43 7y ago
  I should start a currency too
• Aeolun 7y ago
  I honestly don’t care about the whole crypto part of this. I just see someone selling funky banknotes and I’m going to hold onto them in the vain hope that I’ll someday run into someone that’s done the same thing.
• jangid 7y ago
  Counterfeiting will be difficult. That's for sure.
• larodi 7y ago
  why is this 'Show HN' even here and getting so much attention?
• numlock86 7y ago
  These so called "currencies" that you can't actually use as a currency (read as: pay or trade something for) are getting more and more. Has this become some new form of trolling in the internet now?
• jcoffland 7y ago
  What's to stop someone from passing many duplicate notes?
• Shengbo 7y ago
  I like the idea of fancy cyberpunk cash but I feel like in the real world I'd be getting the worst of both worlds if I tried to use cash thats also a cryptocurrency.
• fiatjaf 7y ago
  This is just a fancy https://opendime.com/ https://opendime.com/ with its own shitcoin instead of Bitcoin.
• arcticbull 7y ago
  You can actually obtain something like this by going to your bank and asking for a roll of quarters.
  • badrabbit 7y ago
    Oh really genius, can you look at the HN guidelines and not post sarcastic remarks? A bank coin is backed by a bank. You can also get a wad of cash from the bank too,so are you claiming kong is useless?
• hypewatch 7y ago
  “Physical Cryptocurrency” sounds a lot like a “physical social network” to me. Isn’t this effectively cash?