8 ms·

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

by 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.
  - paulgerhardt 7y ago
    One simple interpretation of Kong is a self-generated, non-extractable private key anchored to a smart contract. Kong is a very simple contract that escrows tokens. One can imagine significantly more complicated contracts.
  - jazzyjackson 7y ago
    An app that confirms it is genuine ! (of course there are empirical methods for proving gold is gold, but being able to do it with NFC is neat)
- james_s_tayler 7y ago
  >The bills are intended to be spent hand-to-hand in meatspace with cryptographic validation. Then what problem is it solving? >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. It has to be physically manufactured. You're now the entity.
  - paulgerhardt 7y ago
    The problem is how to make a sound cash instrument backed by cryptocurrencies. It matters because cash is the dominant form of payment worldwide. Section 4.1 goes into how to manufacture these so we're not the sole entity. Manufacturers of mining equipment set an...ok...precedent here. I think we can do better in this space which is why we're trying to minimize trust in these black boxes and move to open silicon with ARX - section 5.1. [1] [1] https://ipfs.io/ipfs/QmRNRCocj4PwKMXrd1jeUGw7ASQSuEk7BDJu5KsGuWBXAX https://ipfs.io/ipfs/QmRNRCocj4PwKMXrd1jeUGw7ASQSuEk7BDJu5Ks...
    - james_s_tayler 7y ago
      >The problem is how to make a sound cash instrument backed by cryptocurrencies. It matters because cash is the dominant form of payment worldwide In what way is cash failing that it needs to be replaced by your type of cash? The "it's decentralized and doesn't rely on a state level actor" argument has been thoroughly lost at this point.
      - darawk 7y ago
        Cash is controlled by a central authority. Governments can print as much or as little of it as they want. Kong does not have this property.
        james_s_tayler 7y ago
        Not having that property so far hasn't proved to be useful in the real world.
- zelly 7y ago
  > The bills are intended to be spent hand-to-hand in meatspace with cryptographic validation. See section 2.1 [1] When I accept a physical note, do bits move on the Ethereum blockchain? If not, how do I know that it's really mine? This reminds me of when people sold Bitcoin private keys ("paper wallets") on eBay. I've heard some people do OTC trades by swapping private keys when they don't want the transaction recorded, but I assume these people know each other well. You save money on miner fees and gain some privacy, but you sacrifice trustlessness.
  - paulgerhardt 7y ago
    Nothing is moved on chain when the bills are transferred between parties. Token is stored in an escrow contract. The self-generated, non-extractable key stored on the note is the only key that can be used to claim funds out of that escrow contract when it matures. This is basically a smart-contract implementation of how promissory notes issued by goldsmiths (the predecessors to modern cash) worked in the 1600's. A big difference is that every note has its own contract. It's possibly more correct to say every bill owns itself and people transfer those bills. Section 3 of the whitepaper[1] expands on this. [1] https://ipfs.io/ipfs/QmRNRCocj4PwKMXrd1jeUGw7ASQSuEk7BDJu5KsGuWBXAX https://ipfs.io/ipfs/QmRNRCocj4PwKMXrd1jeUGw7ASQSuEk7BDJu5Ks...
mrb 7y ago
I've been working in crypto for 10 years (well, the only "crypto" that existed back then was Bitcoin) and I agree with zelly's criticism. Another simple flaw of Kong is that when I receive a Kong note, someone could have intentionally fried it with, for example, high voltage on the I2C contacts to damage the secure element without leaving any visible defects. So I need to verify each Kong note I receive by reading them over NFC using a smartphone. Not great for usability.
- ccamrobertson 7y ago
  "Another simple flaw of Kong is that when I receive a Kong note, someone could have intentionally fried it with, for example, high voltage on the I2C contacts to damage the secure element without leaving any visible defects." That would "fry" the secure element chip entirely, thus destroying it precluding anyone from accessing the token in the future (NFC would fail as well).
  - arcticbull 7y ago
    Right but asking people to verify every single note they receive is a regression in usability. It also makes the notes less reliable to store than a gold coin or a paper note, which can't be damaged by things like water, high-voltage or microwaves.
    - darawk 7y ago
      You could make this same criticism of cash, though. It's not a usability regression, they just both have the same flaw. People pass off counterfeit currency as real all the time.
      - arcticbull 7y ago
        Sure but cash isn’t affected by water, freezing, bending, pressure, moderate temperatures above whatever the 70C limit is on these ICs, static electricity, ionizing radiation and microwaves. People don’t pass off counterfeit currency as real all the time either, that’s a false lead. Currently 0.01% of currency is fake and it’s actively sought out and removed from circulation [1]. That’s almost guaranteed way less than Kong bills that will become damaged and destroyed in the most ordinary of ways. We’re extending SFYL to IRL. [1] https://www.google.com/amp/s/www.frbsf.org/education/publications/doctor-econ/2004/april/money-supply-currency-counterfeit/%3famp https://www.google.com/amp/s/www.frbsf.org/education/publica...

by zelly 7y ago

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.
- paulgerhardt 7y ago
  One simple interpretation of Kong is a self-generated, non-extractable private key anchored to a smart contract. Kong is a very simple contract that escrows tokens. One can imagine significantly more complicated contracts.
- jazzyjackson 7y ago
  An app that confirms it is genuine ! (of course there are empirical methods for proving gold is gold, but being able to do it with NFC is neat)
james_s_tayler 7y ago
>The bills are intended to be spent hand-to-hand in meatspace with cryptographic validation. Then what problem is it solving? >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. It has to be physically manufactured. You're now the entity.
- paulgerhardt 7y ago
  The problem is how to make a sound cash instrument backed by cryptocurrencies. It matters because cash is the dominant form of payment worldwide. Section 4.1 goes into how to manufacture these so we're not the sole entity. Manufacturers of mining equipment set an...ok...precedent here. I think we can do better in this space which is why we're trying to minimize trust in these black boxes and move to open silicon with ARX - section 5.1. [1] [1] https://ipfs.io/ipfs/QmRNRCocj4PwKMXrd1jeUGw7ASQSuEk7BDJu5KsGuWBXAX https://ipfs.io/ipfs/QmRNRCocj4PwKMXrd1jeUGw7ASQSuEk7BDJu5Ks...
  - james_s_tayler 7y ago
    >The problem is how to make a sound cash instrument backed by cryptocurrencies. It matters because cash is the dominant form of payment worldwide In what way is cash failing that it needs to be replaced by your type of cash? The "it's decentralized and doesn't rely on a state level actor" argument has been thoroughly lost at this point.
    - darawk 7y ago
      Cash is controlled by a central authority. Governments can print as much or as little of it as they want. Kong does not have this property.
      - james_s_tayler 7y ago
        Not having that property so far hasn't proved to be useful in the real world.
zelly 7y ago
> The bills are intended to be spent hand-to-hand in meatspace with cryptographic validation. See section 2.1 [1] When I accept a physical note, do bits move on the Ethereum blockchain? If not, how do I know that it's really mine? This reminds me of when people sold Bitcoin private keys ("paper wallets") on eBay. I've heard some people do OTC trades by swapping private keys when they don't want the transaction recorded, but I assume these people know each other well. You save money on miner fees and gain some privacy, but you sacrifice trustlessness.
- paulgerhardt 7y ago
  Nothing is moved on chain when the bills are transferred between parties. Token is stored in an escrow contract. The self-generated, non-extractable key stored on the note is the only key that can be used to claim funds out of that escrow contract when it matures. This is basically a smart-contract implementation of how promissory notes issued by goldsmiths (the predecessors to modern cash) worked in the 1600's. A big difference is that every note has its own contract. It's possibly more correct to say every bill owns itself and people transfer those bills. Section 3 of the whitepaper[1] expands on this. [1] https://ipfs.io/ipfs/QmRNRCocj4PwKMXrd1jeUGw7ASQSuEk7BDJu5KsGuWBXAX https://ipfs.io/ipfs/QmRNRCocj4PwKMXrd1jeUGw7ASQSuEk7BDJu5Ks...

mrb 7y ago

I've been working in crypto for 10 years (well, the only "crypto" that existed back then was Bitcoin) and I agree with zelly's criticism. Another simple flaw of Kong is that when I receive a Kong note, someone could have intentionally fried it with, for example, high voltage on the I2C contacts to damage the secure element without leaving any visible defects. So I need to verify each Kong note I receive by reading them over NFC using a smartphone. Not great for usability.

ccamrobertson 7y ago
"Another simple flaw of Kong is that when I receive a Kong note, someone could have intentionally fried it with, for example, high voltage on the I2C contacts to damage the secure element without leaving any visible defects." That would "fry" the secure element chip entirely, thus destroying it precluding anyone from accessing the token in the future (NFC would fail as well).
- arcticbull 7y ago
  Right but asking people to verify every single note they receive is a regression in usability. It also makes the notes less reliable to store than a gold coin or a paper note, which can't be damaged by things like water, high-voltage or microwaves.
  - darawk 7y ago
    You could make this same criticism of cash, though. It's not a usability regression, they just both have the same flaw. People pass off counterfeit currency as real all the time.
    - arcticbull 7y ago
      Sure but cash isn’t affected by water, freezing, bending, pressure, moderate temperatures above whatever the 70C limit is on these ICs, static electricity, ionizing radiation and microwaves. People don’t pass off counterfeit currency as real all the time either, that’s a false lead. Currently 0.01% of currency is fake and it’s actively sought out and removed from circulation [1]. That’s almost guaranteed way less than Kong bills that will become damaged and destroyed in the most ordinary of ways. We’re extending SFYL to IRL. [1] https://www.google.com/amp/s/www.frbsf.org/education/publications/doctor-econ/2004/april/money-supply-currency-counterfeit/%3famp https://www.google.com/amp/s/www.frbsf.org/education/publica...