Decrypting Crypto

I have been intrigued with cryptocurrency since I first heard about it. Even the story of how the first cryptocurrency, Bitcoin, came to be is shrouded in mystery and drama. Created in secret by a still unidentified developer known as Satoshi who unleashed it to roam the world without further intervention of the creator, Bitcoin, like Frankenstein’s monster, is its own beast. The way fortunes were created from nothing and lost again (sometimes literally lost in a dumpster), has all the makings of B grade movie. I am thinking of something along the lines of Bride of Tulipomania Meets Bladerunner.

Then there is the powerful underlying technology which has potential to disrupt the financial industry as we know it, by eliminating middleman institutions like credit card companies and banks. 

But like any new concept or technology, it is hard to understand and see its potential until someone else has really made it ‘work.’ Crypto doesn’t quite work yet. 

I am what is called an ‘early adopter.’ (euphamism for ‘person who wastes money on unproven technology’) I had one of the early cassette recorders in the early 1970s when many were still rocking reel to reel if they had a tape recorder at all. I talked my mom into buying the first Macintosh computer in 1985 (I couldn’t afford to buy one myself) and I had one of the first Newton MessagePads (the precursor to modern smart phones) back in 1995. I bought one of the first iPhones. Likewise the iPad. I bought the first Apple Watch sight unseen from behind the firewall in the Apple Store where I worked at the time when it went on sale at 3:00 a.m. in March of 2015. 

I buy these things less for what they can actually do, since early models often don’t do very much, but more to understand how they work and what their potential might be in the future. That is to say, I like to play with toys. 

It was that kind of curiosity that led me to buy some cryptocurrency in 2017.  I did not buy it because I thought it would be a good investment. On the contrary, I expected that it might well become worthless and that I would, or at least could, lose every penny. 

I had wanted to own some Bitcoin for a while but what pushed me over the edge was the formation of a new kind of company, the ‘crypto bank.’ Previously, owning crypto meant needing to store your crypto in digital form on some kind of device. Preferably a hard disk or thumb drive that was not on a computer connected to the internet and ideally physically secured in a fireproof safe. If someone could gain access to the code that represented your crypto, they could steal it. It all seemed a bit too fussy for me and I was pretty sure that I would misplace the drive or lose the key to the safe.  

That changed when crypto banks created the equivalent of a brokerage account that could hold ones crypto in a password secured online account. One account could hold multiple currencies the way a Charles Schwab account can hold stocks in multiple companies. Yes, that account could be hacked just as any online account can be but I figured a big company would probably be better at managing security than I. They at least seemed like they knew what they were doing. I opened an account and bought:

•  $200 of Bitcoin

• $250 of Etherium

• $250 of Litecoin

Today there are dozens or even hundreds of cryptocurrencies, but in 2017 those were the big three. I figured if I actually owned some of the currencies I would be more likely to pay attention to what was happening as the technology changed and developed and perhaps even be able to explain it to others at some point. Here is my attempt to do just that. 

Cryptocurrency uses something call blockchain technology, which works something like this. When a transaction or a transfer takes place with bitcoin, that transaction is recorded over the internet on tens of thousands of computers at the same time. That makes it almost impossible to falsify or ‘counterfeit’ a crypto transaction. In the Bitcoin model, the same process that records and verifies the transaction also ‘mines’ or creates new crypto for the computers doing the verification, thus incentivizing the owners of those computers to do the necessary work of recording the transactions. The fewer computers doing the work, the greater the chance of success each individual processor has of earning more Bitcoin. This tends to keep the level of processing high enough to sustain the system. 

Currencies other than Bitcoin may use different systems but the basic idea is the same. The fact that the transactions are recorded publicly means that it is virtually impossible to falsify them. This has a huge advantage over paper money, which is relatively easy to duplicate. Those issuing paper currencies (governments) are constantly trying to stay one step ahead of the counterfeiters as printing technology gets continually better and cheaper. 

Blockchain technology can substitute for the ‘trust’ institutions that we pay large sums to use. Credit cards are an example. When I walk into a Starbucks to buy a coffee, I have two choices. Pay now or pay later. There might be many reasons I might want to pay later. Maybe I don’t have any cash on me or maybe I don’t have any money until next week when I get paid. 

But Starbucks could be reluctant to accept an IOU backed by the full faith and credit of the Bank of Cherrytree. Also, it would be a huge pain to have to make the rounds on payday and settle my debts at establishments all over town. Enter the credit or debit card. This bit of plastic assures the seller that there is an institution standing behind me that will ensure they will be paid for the goods they are handing over to me. In exchange for this assurance, the seller pays a fee of around 2.5% of the transaction, which ultimately, I pay as it is factored into the cost of what I buy. Additionally, if I choose not to pay my balance in full every month (God forbid!) I pay interest on the balance of between 13-25% annualized. Needless to say it is an extremely profitable business for the credit card issuers. 

Blockchain technology has the potential to disrupt this business by providing real time assurance that the money has been received for the goods at the moment they are handed over and at a very low cost per transaction. The seller knows instantly that they have been paid, and I walk out the door with coffee in hand. No cut for Mr. Visa or Ms. Mastercard.  The money saved should theoretically end up back in your pocket in the form of cheaper goods. 

But like the widely mocked Newton MessagePad, in 2022 block chain technology is not quite ready for prime time as cash. Nor does, crypto does not stand up to scrutiny as an investment into which any sensible person should invest a meaningful portion of their assets. 

Let’s tackle the “Is it money?” question first.  Well, what is money? 

According to widely accepted definitions, money has three characteristics.

1.  It serves as a medium of trade and is widely accepted in exchange for goods and services.

2. It serves as a store of value and can function as a way of holding the value of my work or productivity for the future when I need to use that value to buy things I need like food or clothes or to pay the guy who mows my lawn. 

3. Finally, money serves as a unit of account so that we can measure the relative worth disparate goods. Using units of currency, I can compare the price of a share of Apple to the earnings of the company. Or I can compare the cost of a pound of rice to a pound of potatoes, or precisely answer the question,’How many hours do I need to work to buy 100 grams of saffron?’

Major cryptocurrencies like Bitcoin are increasingly being accepted as a medium of exchange. Though far from universally accepted, if you are determined you can pay for some things with Bitcoin. Likewise, as there is an exchange rate for cryptocurrencies, you could value anything you wanted in whatever currency you like. 

But, the big problem with crypto as money is that it is much too volatile to serve as a store of value. Even with inflation running at 8%, the US dollar is far more stable than Bitcoin. Even the Russian ruble, as beaten down as it is now, is more stable than Bitcoin. 

Bitcoin is just too volatile to be super useful as money right now. 

But is it a good investment? First of all, I am probably the wrong person to ask this. Over the course of my investment life, almost every decision I have made to invest in an individual stock has been a poor one. Just once, I made a good decision but that must be chalked up to pure luck. So, to determine if crypto makes sense as an investment let’s turn to someone who could probably lay claim to being the greatest investor of all time, Mr. Warren Buffet the CEO of Berkshire Hathaway.

Buffet says that crypto is a poor investment because it has no underlying value. It produces nothing and is only worth what someone thinks it is worth at a particular moment. 

If you invest in a farm or a factory, for example, you can evaluate the value of what those things produce. Not to say, that the value can’t change over time, it certainly will but you can evaluate that value at the time you invest and decide if it is worthwhile or not. 

When you buy crypto (or a tulip bulb) as an investment you are counting on ‘the greater fool’ theory for your profit. Crypto has no value in and of itself (even a tulip bulb at least has a nominal value). Rather, your profit depends on you finding someone who is a greater fool than yourself to buy it from you at a higher price than you paid. Sooner or later, the world may run out of fools and someone will be left holding the bag. It might be you. 

Buffet and his partner Charlie Munger have notable reputations as Bitcoin haters. Both in their 90s, it would be easy to dismiss them as cranky old men who don’t understand the 21st Century. But to be clear, the Oracle of Omaha has never said that the technology that runs Bitcoin isn’t useful, only that Bitcoin itself is not a smart place to invest any money that you aren’t prepared to lose. 

Gold, incidentally, is an asset a lot like crypto. It has very little intrinsic worth. To be sure, it has some industrial uses and is valued as jewelry and ornamentation. But it produces nothing and it doesn’t really appreciate. In real terms an ounce of gold has about the same purchasing power today as it did in ancient Rome. (Warren doesn’t buy gold either.) But at least gold has a track record of being valued by people that goes back thousands of years. Cryptocurrency and its bastard cousin the non-fungible token don’t have that history and you can’t make either into a pretty chain to wear around your throat if the price goes south. In addition, mining Bitcoin takes heaps of computer power which uses tons of energy most of which is being produced with fossil fuels. So unlike gold which doesn’t tarnish, Bitcoin is tainted with the environmental damage it is causing. (Mining gold causes huge damage to the planet also.)

So crypto doesn’t work well as money and it’s not a sensible investment. It isn’t even much use as a toy unlike my 27 year-old Newton Message Pad, which still works! So, what is it good for? 

As of now, cryptocurrency and NFTs simply serve as a proof of concept for these innovative technologies. When the World Wide Web appeared around 1994 most of us couldn’t have begun to imagine how this technology would transform the way we shop, learn, and consume news and entertainment. 

A digital currency issued by the US Government or the EU could one day solve some of the problems related to money in its current form. It could eliminate counterfeiting, dramatically reduce the cost of transactions, and allow central banks like the Federal Reserve to respond with more agility to recessions and to inflation by changing the money supply more quickly. 

The US Treasury is looking into developing a digital currency but the day when all our money is truly digital could be years away just as my MessagePad proceeded the iPhone by nearly 15 years. No doubt there will be incredible applications of this technology that my poor imagination cannot begin to fathom. 

Meanwhile, as of this writing I can, according to current prices, sell the crypto I purchased for $750 to a bigger fool for $6,859. But I have no plans to sell. I am holding on to hope that there is a still bigger fool right around the corner.

Spring Feeding

Writing this on Thursday, I am rushing to complete the annual ritual of cleaning my home, especially my kitchen, in anticipation of the Jewish holiday known as “Dry Cracker Week.” The purge includes any grain resembling barley, rye, oats, wheat and spelt. Frankly, I am not sure what a spelt is, but I can assure you there is none to be found here. Also banished are liquors that contain these, like scotch and bourbon and condiments like soy sauce (wheat) and more.

This is also the one time of year that I clean the oven and the fridge, whether they need it or not. My rule of thumb with the fridge is if something has been opened in there since last year, it should probably go, for example, the jar of horseradish I bought for last year’s Seder.

Whatever the tradition, most holidays are about the food. Sometimes it is about special foods that you eat, sometimes it’s about foods that you don’t eat. Passover tends to be more about the latter as are the Jewish dietary laws in general.

Cooking is the transformation of nature into culture. What we eat or don’t eat says more about us than what we wear, how we vote, or where we went or didn’t go to college. In some sense our food choices are tied to our deepest identity and sense of holiness. One person’s comfort food is revolting to another.

Here is a poem about a point in my life nearly 30 years ago when I decided to try following Jewish dietary laws for the first time while navigating the challenge of frequent business travel. I often found myself in sometimes awkward situations where attempting to select food that met the restrictions of the law was difficult and sometimes embarrassing. I hope you find it amusing. And I hope that whatever your tradition and whatever you are eating or not eating in the coming week it is an expression of your deepest identity that ties you to your tribe and culture. Or, at very least, I hope it is tasty and delicious.

Holy

For I the Lord am your God; you shall sanctify yourselves and be holy; for I am holy.

--Leviticus 11:44

After I started observing the dietary laws,

I travelled to a conference in Charleston where a

stately catered lunch was served in the grandeur

of the U.S. Custom House. As the waitress approached

our table, I asked if she could tell me

about the soup. “Honey,” she said, “The chef

calls that Every Creeping Thing Chowder.”

I passed and chewed thoughtfully on an oyster

cracker as my fellow diners slurped and moaned

with delight. When the main course arrived,

the waitress leaned toward me liberating a small

jade cross from where it lay nestled. It swayed

like a tire swing over a limpid Carolina creek.

“Sweetie, this bad boy right here,” she whispered

nodding toward the plate she was setting down

in front of a woman in a shiny blue dress, “while it

splitteth the hoof, it does not cheweth the cud.

It is unclean for you.” She oinked discretely in my ear

in case I had failed to catch her drift. “How about

the green beans?” I asked, knowing that

the aromatic brown sauce adorning them was almost

certainly a lost cause. “Rabbi,” she laughed,

“They’s ‘bout as trayf as it gits.” “Y’all go ahead,”

I said to my companions. “Please don’t wait.”

She returned with a plate containing a huge mound

of plain mashed potatoes. All eyes dropped away,

pretending not to stare as if I had been disfigured

in an accident or had just wrapped tefillin on my arms

and begun to daven. “Belinda, would you help yourself to

a biscuit and pass the rest down,” the blue dress

drawled. A colleague looked at my plate and then

at me. I reached for the pepper, busied myself with its

application. He was wondering how,

or perhaps, if, to ask.

Marmalade Skies

“Bought marmalade? Oh dear, I call that very feeble.” — Julian Fellowes

The first time I tried marmalade I was pretty disappointed. All I knew of the stuff was that it was beloved by Paddington the Peruvian bear who had somehow made his way to the London railway station he was named for. When I finally had some for the first time, I found it sweet but at the same time unpleasantly bitter. What did I know? I was eight years old!

I came to love marmalade, the more bitter the better. For a time, my ‘go to’ marmalade was Dundee’s Three Fruit that came in a white jar and is made with oranges, lemons and grapefruit. Dundee was a brand established in Scotland in 1797 by grocer James Keiller. Keiller bought a load of bitter Spanish Seville oranges on speculation and, according to legend, his wife had the brilliant idea of turning them into marmalade thus inventing this citrus preserve. Dundee’s is thick cut, meaning there are large bits of citrus rind in it, but the chunks were still never thick enough for me. 

I can rarely find Dundee’s anymore and almost never the Three Fruit kind. And the white jar, sadly, has been replaced with plain glass so now when I get a craving for the stuff, I make my own. It’s crazy how easy it is. Here’s how. 

Note: If you hate marmalade, the same process can be used to make jam with any kind of fruit or berries. Or just stop reading right now. 

Homemade Marmalade

There are just two ingrediants. Three, if you count water.

citrius fruit, sugar, water.

Take some citrus fruit, it doesn’t matter how much. If you only want to make one jar, a couple of pieces will suffice. Seville oranges are traditional but you can use pretty much any orange, lemon, or grapefruit or a combination. I have never used limes, but they should also work just fine. 

Since you are going to be boiling and eating the whole fruit including the rind, I highly suggest using organic fruit if you can get it. If you can’t, wash the fruit very well. If it is organic, wash it anyway. 

Slice the fruit in half lengthwise and then slice perpendicular into thin half-moons. You can vary the thickness depending on how thick you want the fruit rind in your final product.

Cut the fruit on a board or something that can catch the juice. If you have a wooden board that you use for chopping onions or garlic, you might want to avoid using that so the jam doesn’t taste of onions. 

Place all the sliced fruit and accumulated juices in a measuring cup. Push it down and note the volume. Pour the fruit, seeds and all it a pot and add an equal volume of water. Citrus seeds have a lot of pectin which helps the final product gel. Eventually you will remove them but not yet. 

Boil the fruit and water on a low simmer for 2 hours. Turn off and let sit overnight. 

The next day fish out the seeds with a slotted spoon. Conveniently, the seeds turn a dark color so they are easy to see. After removing all the seeds measure the volume of the fruit and water again and add back to the pot along with an equal quantity of white sugar. Yes, that is a lot of sugar. It doesn’t have to be super exact because when you cook it, water evaporates until the sugar to fruit ratio is correct. In essence, it adjusts itself. 

Place over a medium heat and gently stir until all the sugar has melted. Then bring to a boil and adjust the heat to a low simmer.

Now comes the tricky part.  Cook until done. 

How do you know when it is done? Here’s how. 

Take a small plate and place it in the freezer. 

After some time, maybe an hour, the liquid will start to look thicker. The bubbles will be bigger and rise more slowly. It should start to coat a spoon. Think of sugar that is starting to caramelize. 

When you think it might be done, take the plate from the freezer and place a small spoonful of the liquid on the plate. After a moment or two push it with your finger. You should see that it is gelling and becoming more solid like, well, jam. If you are not sure, let it go longer and try again. How long you let it cook depends a bit on how solid you like your marmalade. Remember it gets more solid as it cools and sets and when you refrigerate it. 

Close to the gel point. Note the gelled bits on the side of the pot.

When you think it is about there, turn off the heat, let it rest a few minutes and then spoon it into as many glass jars as you need. I would not use plastic as the jam is hot and could melt the plastic. After the jars cool, place them in the fridge. 

If you are not going to can the jam by sterilizing and sealing the jars (a whole process I am not going to get into here), you need to keep the final product refrigerated just as you would with an open jar of jam. 

It will keep for a long time in the fridge. Sugar is an incredible preservative. Unless you see mold growing in it, it should be fine to eat. I have had a jar of marmalade in the fridge for months. You only use a little at a time after all. If you are lucky, some the sugar might crystalize around the edges.

I recently made a batch using just organic lemons, bright and sweet with just a little bitterness. It is divine stuff and is amazing on a fresh buttered roll with a cup of coffee. 

There are things that can be made at home and should be made at least once just for fun and to understand the process but in general are not worth the trouble. The store-bought versions are perfectly good, thank you very much. Examples of these include: butter, mayonnaise, pasta, ice cream, peanut butter. 

On the other end of the spectrum are things that must be made at home (at least in the US). These include: pita bread, hummus, pasta sauce, whipped cream, salad dressing.

Marmalade is somewhere in between. If you find a brand you like, the store-bought kind can be decent. But if, like me, and your marmalade can never have too much ‘thick cut’ fruit in it, then this is easy to do.  You’ll have Mrs. Keiller eating her heart out – with your marmalade on it.