Photo by Cynthia Larsen

Some cryptic remarks about crypto

By Ed Goldman

There are two maxims about writing I learned early. One of them is to never start a sentence with the word “There,” which I clearly just violated. The other is to “Write only what you know,” which to me takes all of the mystery and fun out of writing.  

To recap, I make it a point of honor to rarely know anything I’m writing about. Accordingly, today’s entry is about something neither I nor millions of my fellow Americans, including the President of the United States (who’s its biggest fan), know anything about: Bitcoins. 

First, a brief history. In approximately 30 BCE, in what we now call the Negev Desert, none of the people knew anything about Crypto then, either. OK. Cut back to this year.

Since I’m sure you like scary tales, feel free to call today’s column “Tales from the Crypto.” Please cue the scary music—especially the one that goes YEEP! YEEP! YEEP! when someone’s about to walk into a room where terror awaits—and I don’t mean just a whole-life insurance salesman. 

If you’ve recently been out of the country, in a coma or had the good sense to ignore the knave new world of cryptocurrency, you may need an intro or a brush-up on bitcoins. In essence, it’s digital dough. It “moves” through a computer network and doesn’t depend on banks, government or credit unions for anything except resentment, anger and envy. And yet, for a largely aspirational form of cash—a bit like the Chinese myth about money trees (but a little less credible)—cryptocurrency is amazingly unstable. 

For example, in the past few weeks, more than a trillion dollars in bitcoin value disappeared, owing to what economists like to call “macroeconomic pressures” and “institutional behavior.” A third reason could be “investors wising up.” (A fourth would be “To pay Elon Musk’s new salary.”) 

Just in case you need to prove you’ve got the ephemeral equivalent of that roll of bills you used to flash when bribing a maitre d’ to not set you at a table not facing the kitchen, rest assured the record of your bitcoin reserves are stashed in what’s alternately called a blockchain or digital ledger. That’s a computerized database which allegedly secures and verifies your records and manages the creation of even more bitcoins. The thing that controls the symbolic scratch is referred to as a “consensus mechanism” (something neither Harvey Weinstein nor Jeffrey Epstein apparently knew existed in the world of sexual transactions). 

Be advised that “cryptocurrencies” aren’t currencies at all. Some places call them commodities, securities or “a distinct asset class”—you know, like hedge funds, derivatives and Monopoly money. 

Some things you can’t do with bitcoins that you can do with actual cash in your wallet or credit cards is lose them. On the other hand, other things you can’t do with bitcoins include (a) flipping one to see who gets to pick the first tiles in Scrabble, some of which may be worth more than bitcoins, particularly Z and Q (10 points each); stuff a bunch of them in your fists between your fingers (as you can with quarters) and have them be almost as effective as brass knuckles, should you get into a statistics argument in a sports bar; (c) jingle them in your pocket to get baristas’ hopes up that you’re about to generously reward them for leaving a cup of coffee on a counter for you to pick up yourself (to the baristas’ credit, they did go through the trouble of misspelling your name on that cup).    

So: Is switching to crypto right for you? Ask yourself at least a couple of these questions: