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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 tradit

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

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