We're proud to officially announce that KRNC is being funded by the National Science Foundation. We've received a Phase I grant from America's Seed Fund to construct a Proof-of-Balance network.

It's our honor to count one of the world's most prestigious scientific institutions as a partner in commercializing Proof-of-Balance technology.

Here is the official abstract for the reward.

Award Abstract #2015162
SBIR Phase I: Asymmetric Sybil Resistance via Proof-of-Balance The broader impact/commercial potential of this Small Business Innovation Research (SBIR) Phase I project is upgrading the public's existing electronic U.S. dollars to match and exceed the capabilities of private cryptocurrencies. Distributed-ledger technology has the potential to transform every sector of the economy, but today's blockchains require users to purchase specific assets before sending payments or using related applications. This has delayed mainstream adoption of blockchain technology and raised concerns that a transition to decentralized commerce could threaten the value of savings held in traditional currency. The proposed project will develop a new technology for protected digital transactions. This SBIR Phase I project proposes to develop a decentralized blockchain that will eliminate the need for cryptocurrencies by allowing the owners of U.S. dollars to unlock fiat-derived tokens at zero cost. By adapting recent advancements in biological signaling theory to computer science, the project aims to advance new methods in distributed computing. It will replace symmetric Proof-of-Work and Proof-of-Stake vote-weighing mechanisms with a new technology, Proof-of-Balance, that can deliver significant enhancements to security and performance. The proposed work will explore application of the formal mathematical models by developing and deploying an operational Proof-of-Balance network. This award reflects NSF's statutory mission and has been deemed worthy of support through evaluation using the Foundation's intellectual merit and broader impacts review criteria.

About America’s Seed Fund

America’s Seed Fund powered by the National Science Foundation (NSF) awards $200 million annually to startups and small businesses, transforming scientific discovery into products and services with commercial and societal impact. Startups working across almost all areas of science and technology can receive up to $1.75 million in non-dilutive funds to support research and development (R&D),helping de-risk technology for commercial success. America’s Seed Fund is congressionally mandated through the Small Business Innovation Research (SBIR) program. The NSF is an independent federal agency with a budget of about $8.1 billion that supports fundamental research and education across all fields of science and engineering. For more information, visit seedfund.nsf.gov.

Last month, we started letting people register in advance for KRNC, and since then they've signed up to verify more than $100 million in bank deposits. That's a huge number, but it's not a typo. It represents how excited people are about Proof-of-Balance and forked fiat currency.

In fact, the raw number from all registered users is a lot higher. The $100-million figure represents U.S. Dollars from reputable individuals that our team has vetted. Many are high-powered executives and entrepreneurs. Some are coders and scientists. They are activists and artists, writers and journalists, famous lawyers and not-so-famous teachers.

What they all have in common is that they're real people who want to unlock the forked version of their fiat money on the KRNC blockchain. And the beauty of KRNC is that their self-interest – their desire to receive a version of their fiat money with the algorithmic scarcity of Bitcoin – is what will make the blockchain secure.

Today, with the ICO craze a thing of the past, it would be very hard to acquire a $100-million security budget for a new Proof-of-Stake protocol. It's a classic coordination problem: a protocol isn't valuable unless it's secure, but until it's secure nobody wants to risk their money by investing. Getting people to pledge $100-million worth of capital for an ICO is a tall order – and, even then, the cost of a 51% stake still won't exceed the resources of a wealthy attacker.

Proof-of-Balance solves the coordination problem by making consensus free to join. People have already incurred trillions of dollars in costs to acquire fiat money, so there's no need for a blockchain to impose new costs by forcing them to invest. Issuing stakes in proportion to everyone's existing fiat balances delivers thousands of times the security, while dropping the cost of participation to zero.

That's why people have already been willing to register more than $100 million for KRNC – and it's why the protocol could eventually attract billions (or even trillions) of dollars.

Of course, the ultimate measure of security will be the cost of acquiring forked dollars from their owners. For the KRNC protocol to function as designed, forked fiat currency must actually be accepted as money. That's where network effects come in.

Money is valuable because we expect others to accept it as money, and we expect others to act in their own self-interest when they choose what to accept as money. The world is unlikely to adopt Bitcoin as a global monetary standard, because that would be a form of charity: the owners of Bitcoin would receive one of the largest transfers of wealth in human history, at the expense of the present owners of fiat money.

KRNC has a charity-free path to mass adoption. Owners of fiat currency will automatically become owners of forked fiat currency, and forked fiat currency will protect their wealth more reliably because there's no centralized authority with the power to print an unlimited amount in the future. Forked fiat money has all the advantages of Bitcoin or Ethereum, but none of the baggage that comes with trying to launch a new unit of account from scratch.

If you're interested, why not take 30 seconds to sign up?

Dear Fellow U.S. Dollar Owners,

The value of our money is in danger. Bitcoin could make traditional currencies like the U.S. Dollar obsolete. If that happens, your savings could be destroyed, since the money you own will lose its purchasing power.

This brief letter will explain why the threat is real, why governments can't stop it, and how you can protect yourself without buying Bitcoin.

1. If Bitcoin wins, you lose

Bitcoin is the symptom of a much deeper problem in our monetary system. All U.S. Dollars used to be backed by gold, which guaranteed that the government could not print an unlimited amount of money.

In 1971, Richard Nixon killed the Gold Standard, so that now there is no limit to how many new dollars can be created. The problem should be clear to anyone familiar with the law of supply and demand: the more of something there is, the less it is worth. The Federal Reserve has the power to create an unlimited number of Dollars, so it could reduce the value of your money to zero.

Bitcoin has been marketed as a solution to this problem. It uses blockchain technology to limit the quantity of new crypto-money that can be created. There's no Central Bank that can issue more Bitcoin, so crypto-money has the same guaranteed scarcity as gold.

Sounds great, right? Well... There's a catch. A giant one.

Yes, Bitcoin is a superior form of money. But it's also designed to work like a pyramid scheme. Most of the Bitcoin that will ever exist is already in the hands of a small group of early adopters. If Bitcoin replaces U.S. Dollars as money, then that small group of people at the top of the Bitcoin pyramid will become some of the richest people in history – and everyone who owns U.S. Dollars will become poorer.

2. The government can't stop Bitcoin

When people recognize a threat of this magnitude, they turn to the government for protection. Unfortunately, this time that won't work.

Why not? Because the government is the source of the problem. It's the government that broke its promise to back your Dollars with gold, and it's the government that could destroy the value of your savings by letting the Federal Reserve create unlimited quantities of new money.

Banning Bitcoin would temporarily eliminate the Dollar's biggest potential competitor, but it won't do anything to fix what's wrong with our money supply. The power to print unlimited quantities of money is like a "Doomsday" button. Eventually, it will get pressed – and when it does, your savings will be wiped out.

Going back to the Gold Standard also won't work: the government has already broken its promise to back money with gold, so making the promise again is meaningless. As soon as another President like Nixon comes along, the gold backing will disappear, and we'll be right back to where we started.

3. How to protect the value of your U.S. Dollars

What we really need is a way to use blockchain technology to protect the value of the money everyone already owns. That would deliver the core benefit of Bitcoin – the guaranteed scarcity of "digital gold" – but without the parts of Bitcoin that are like a pyramid scheme.

In other words, instead of distributing digital gold to a small group of early adopters, we need a way to assign digital gold to everyone who already owns U.S. Dollars. That would allow a new version of the Gold Standard to be created – one where every existing U.S. Dollar could be backed with digital gold to guarantee its scarcity.

This blockchain version of the Gold Standard would eliminate the flaws that killed the original. It wouldn't rely on the government to keep enough physical gold locked in vaults. Instead, when an electronic payment is made using dollars (like with a debit card), the digital gold can be transferred alongside it – maintaining a 1-to-1 relationship, and ensuring that everyone's money holds its value.

If that sounds good to you, I've got great news: It's not just an idea, it's a real blockchain protocol that I've spent the last two years of my life building. I call it KRNC, and it's almost ready to change the world.

This is the first blog post on the official website. If you have more questions, check out the FAQ. Or just sign up now to receive your digital gold once the protocol is launched.


Clint Ehrlich

Founder & Chief Computer Scientist

Krnc Inc.