August 15, 2022

"Zhu and Davies are two ambitious young men, by all descriptions exceedingly smart, who appeared to understand the structural opportunity of digital currency rather well..."

"... that crypto is a game of creating virtual fortunes out of thin air and convincing other humans with traditional forms of money that those virtual fortunes deserve to be real-world ones. They built social-media cred by playing the part of billionaire financial geniuses, translated that to actual financial credit, then put billions of dollars in borrowed money to work in speculative investments they could cheerlead to success with their large, influential platforms. Before you know it, the pretend billionaire is a real billionaire shopping for super-yachts. They grokked the game, and the plan worked perfectly — until it didn’t."

ADDED: I haven't seen "grok" in a while.  That's a word coined in 1961 by Robert Heinlein in "Stranger in a Strange Land." It's not based on any other word, just, as the OED puts it, an "arbitrary formation."
Smith had been aware of the doctors but had grokked that their intentions were benign.... Now that he knew himself to be self he was free to grok ever closer to his brothers....
It means "To understand intuitively or by empathy; to establish rapport with... To empathize or communicate sympathetically (with); also, to experience enjoyment."

It seems to have peaked in 1968, when Tom Wolfe wrote " Instead they are all rapping and grokking over the sound it made..as if they had synched into a never-before-heard thing, a unique thing" (in "The Electric Kool-aid Acid Test") and Playboy Magazine saw fit to write: "He met her at an acid-rock ball and she grokked him, this ultracool miss loaded with experience and bereft of emotion." 

Back then grokking had a lot to do with LSD and the music it unleashed. These days, there's grokking about the "game" of the con of cryptocurrency. What a come down!

Don't confuse "grok" with "glom," which is an older word, slang based on the Scottish slang "glaum." The OED quotes the 1914 "Vocabulary of Criminal Slang": "Glom, to grab; to snatch; to take; implying violence. Example: 'Glom this short and drop off two blocks below.'"

There's a lot more glomming than grokking these days.

(The whole time I was writing this post, I had a sneaking feeling I'd plunged into the word "grok" before, and indeed I did, just 2 years ago, complete with OED quotes from Tom Wolfe and Playboy and much more about "Stranger in a Strange Land.")

58 comments:

Enigma said...

Tulips. The next big thing. Mark my words. Tulip bulbs.

John henry said...

"Money", as a store of value and medium of exchange is based on creation of goods and services. It is created by the Federal Reserve Banks (in the US) as a service to the citizenry who use it.

Crypto is the opposite of money. It is based on destruction. Specifically the destruction/consumption of energy to run computers calculating numbers.

Glad to see the fad fading.

We do need private, non-government, money but crypto is not it.

Yes, the Federal Reserve Banks are privately owned by their member banks and regulated by the Federal Government's Federal Reserve Board. So the money printed by the FRBs is technically private. In reality, they are govt for all practical purposes.

John LGBTQ+ Henry

Witness said...

"The Crypto Geniuses Who Vaporized a Trillion Dollars/Everyone trusted the two guys at Three Arrows Capital. They knew what they were doing — right?"

Who's 'Everyone'?

gilbar said...

compare/contrast with Enron

in the immortal words of PT Barnum: There's a Sucker Born, Every Minute

Saint Croix said...

A lot of African-Americans buy crypto instead of stocks.

There are all kinds of reasons to buy crypto. Bitcoin has been around for almost a decade. It is more valuable than gold, in my opinion, and way more useful.

Blockchain technology is peer-to-peer networking. Think of crypto as private companies working on technology. A huge amount of software engineers are doing crypto and blockchain stuff.

Bankers who mocked crypto are now trying to learn about it.

I didn't know anything about crypto (the learning curve is steep) a couple of years ago, and now I've written a dozen articles about them. I write for the Motley Fool and we have a whole division on crypto. The people who scoff at it are typically ignorant about it. Many bankers scoffed at it and now they're coming on board.

Crypto is like Trump. Institutions hate it, ordinary people love it.

takirks said...

Cryptocurrency is basically a modern take on The Emperor's New Clothes.

Convince me I'm wrong.

madAsHell said...

Tulip bulbs, Bernie Madoff, and now crypto-cash.

Another too good to be true investment.

madAsHell said...

i'm not sure if this post is about crypto-cash, or grokking, but I'm sure it attracts the same people.

tim maguire said...

Whenever I hear "grok" I think of The Electric Kool-aid Acid Test. And I assume (hope) it died with so much else of the hippie lingo.

This isn't crypto's first crash and the only people who lost money the last time were the ones who panicked and sold. The ones who held did fine. Which doesn't mean it will platy out the same way this time, but it probably will. There will be future runs and future crashes.

Lurker21 said...

Since his favorite teammate retired, Tom Brady has nobody to grok or gronk anymore.

"Grok" is a perfect science fiction or caveman word, but it sounds awkward in real life. We're apt to think that the word for empathy and perfect understanding wouldn't have such a harsh sound.

MikeR said...

This stuff is out of control.

Temujin said...

Gary Larsen was all over Grok. The Far Side.

Zhu and Davies follow a long line of grifters, crooks, financial fabricators. It's all been done before. It'll continue to be done as long as their are 'advisors' for your money.

Balfegor said...

A little off topic, but does anyone know where one could reliablyobtain a (used) copy of the OED? I think 1989 is the most recent edition. Given the sort of games dictionary sites have been playing recently -- editing entries to adhere to the latest newspeak -- I would rather like to have a hardcopy. But I also don't want to pay $1,000. I am also a bit dubious about the version from Amazon, since it boasts "adopted to the electronic age" which is I think both incorrect diction (adapt vs adopt) and somewhat unlikely for the authentic 1989 edition.

Joe Smith said...

Always seemed like a beatnik word to me.

If I ever say it, you have permission to kill me for being a poseur...

narciso said...

Now do janet yellen

gilbar said...

it's hard to believe, that getting loans to by options on margin, and then using the expected proceeds to finance bigger loans.. Which you then use to buy More options on margins; could EVER have a down side!
It seems like if you could just guess correctly 100 times in a row; you'd be set! Until time 101 that is.

Menahem Globus said...

I Grok Spock.

Original Mike said...

I am generally of libertarian bent. But I think I make an exception on crypto. It seems to me it should be banned because of the inordinate amount of energy consumed for such a non-productive endeavor.

ga6 said...

They began with grandpa showing them the pea and the three shell game.

boatbuilder said...

A local "entrepeneur" has rented and is renovating (very, very slowly) an old building which is being touted as a microbrewery bar. He has been selling "memberships" at $5000 per to potential customers, who apparently will be members with certain privileges such as a free first beer every visit, your own special mug, etc. (Apparently this is a thing for microbreweries to get off the ground--I wonder whether the SEC ought to be involved, but whatever...). While the stock market was booming, he sold quite a few 'memberships"

In any even a friend of mine told me that the entrepreneur is now looking for "equity investors" for the business, with the continued promise that the place will be open for business any day now. (It's been about 3 years now). My comment was: "There's an equity investor born every minute!"

Michael McNeil said...

Of course it wasn't based on any previous word. “Grok” is from Martian (an alien) language in a science fiction book.

TreeJoe said...

I have friends who have made small, mostly paper-fortunes on crypto. They've tried to sell me on it, but I've asked a few basic questions that have left them unable to explain their positions:

- Value is derived from a net present value of future contributions/value/cash produced from something. Why does this have value? Because you believe it will be worth more in the future? If so then...
- What prevents nations from banning these products in favor of their own currency?
- What happens to this product when it becomes regulated? Oh, you think it can bypass regulation? What controls the flow of internet traffic?

I could go on. I get the "benefits" of crypto currency compared to traditional cash, but man, as an investment vehicle it is BONKERS for anything more than pure speculation.

Michael McNeil said...
This comment has been removed by the author.
James K said...

I don't have a problem with crypto in principle. It's not fundamentally different from any of the social media apps that created "virtual fortunes out of thin air." It potentially provides a service that people value, over and above the energy usage that (I presume) come out of miners' profits.

The problem is the lack of transparency. For example some of the "stable coin" purveyors have apparently been found lying about claims that every coin is fully backed by Treasury bills, leading buyers to think they bear no risk if the company fails. Also the risk of high leverage leading to "too big to fail" failures that end up with bailouts by taxpayers. Otherwise, caveat emptor.

Achilles said...

TreeJoe said...

I have friends who have made small, mostly paper-fortunes on crypto. They've tried to sell me on it, but I've asked a few basic questions that have left them unable to explain their positions:

- Value is derived from a net present value of future contributions/value/cash produced from something. Why does this have value? Because you believe it will be worth more in the future? If so then...

- What prevents nations from banning these products in favor of their own currency?

Nothing. See what the western powers are doing to the Ruble.

- What happens to this product when it becomes regulated? Oh, you think it can bypass regulation? What controls the flow of internet traffic?

Right now it is being placed under the CFTC in pending legislation. The SEC is trying to claw it's way into control but nobody likes them including most senators.


I could go on. I get the "benefits" of crypto currency compared to traditional cash, but man, as an investment vehicle it is BONKERS for anything more than pure speculation.

The difference between Crypto investing and Traditional Securities Investing is that the SEC is not in control of Crypto.

If you like the walled gardens the SEC provides you have fun with that.

Crypto Investing is the wild west. DYOR = Do Your Own Research. There are many nasty people out there trying to steal stuff. Rug Pulls happen.

But if you are willing to do your own research and take responsibility for your money you are free of the Fed and the SEC.

You need to say out loud that you like what the Fed and the SEC and the treasury department are doing.

You need to accept that you are a serf on their land. You need to admit you like being a serf.

Have fun with your Central Bank Digital Currencies. They can shut your money off any time they want. They can't print cash off and dilute your saving any time they want.

Stop pretending you are in some safe legitimate option.

Howard said...

Smat Kids. The low hanging fruit of the money changers that get the bad press while the big fish swim deep below the surface. Or like ablation material on reentry.

Jupiter said...

"It is created by the Federal Reserve Banks (in the US) as a service to the citizenry who use it."

You forgot to mention that the people running the Federal Reserve Bank have all taken vows of poverty, and live simple lives of quiet selflessness.

Mid-Life Lawyer said...

I've never seriously looked into Crypto because it is too scary to me... I only read Stranger in a Strange Land for the first time about a year ago. I had heard the term grok used through the years and I was aware it was from science fiction, but I only become aware of exactly where it came from on reading the book. I follow The Heinlein Society on Facebook and shared a photo they shared just this morning. It's a microscopic view of a blade of grass. I read some of the comments before sharing and several said they groked the photo. It's still a weird term to me. I can't see using it. It sounds like a prehistoric bird's call.

Dave Begley said...

Definition of crypto: All the things you don't understand about computers and finance.

Achilles said...

3AC's collapse was essentially a margin call. 3AC made investments and borrowed money against assets that went down in value.

US Banks invested in securities based off of debt they sold to Fannie and Freddy. The assets went down in value. They crashed.

The difference between 3AC and US banks was the US Banks got bailed out by US taxpayers and 3AC didn't.

All the people saying "That crypto stuff is cray cray" are refusing to admit they are playing in a rigged game. As long as you are investing in SEC controlled land and Fed controlled securities you are a serf donating your money to the people in control. They are printing money off at an insane rate. Inflation is obscene.

The only difference between the 3AC crash and the US crash was the corrupt Fed and US government bailed out the rich people and continue to give them more money while the rubes get screwed.

Tom T. said...

The stock market vaporized a lot more than that this year.

Saint Croix said...

I Was Worried About Crypto Until I Saw These 3 Charts

Saint Croix said...

3 Square Charts That Will Blow Your Mind

Saint Croix said...

Why Jack Dorsey's Opinion On Bitcoin Scares Me

Saint Croix said...

How a Blockchain Game Turned $10 Into $12,000.

boatbuilder said...

Saifodeen Ammous is a Columbia economist who has a good (but rather dogmatic) book about Bitcoin. His thesis is that the Keynesians are the sworn enemies of all that is good and wholesome, and that governments simply cannot resist the lure and power of "easy money." (The characterization of Keynes and Keynesians is not an exaggeration--he really, really despises both the man and his followers).

He posits that Bitcoin is the only stable cryptocurrency, because it is essentially governed and controlled by an open-source constituency consisting of the holders of bitcoin, and the "rules" upon which Bitcoin's value are premised are extremely hard to change even by very powerful holders, including governments.

He essentially posits that Bitcoin (and none of the others) should replace gold as the standard for currency stability. He does not favor investing in it as a speculative venture--except that, he argues, because other "currencies" are rapidly losing value, Bitcoin is a way to hedge against that. (at least that is my understanding of his thesis).

I have not, so far, been persuaded to actually invest in any cryptocurrency, Bitcoin or otherwise.

The Cracker Emcee Refulgent said...

"It's full of geeks and Nazis."

-Curb Your Enthusiasm, I believe.

Crypto has never made any sense. It's value stems from what has been expended, not saved? And all of it virtual?

Like trannies in women's sports and defunding the police, the short expiration date is there for anyone willing to look.

n.n said...

Em-pathetic appeal in the land of grok.

Steven said...

A little off topic, but does anyone know where one could reliablyobtain a (used) copy of the OED?
The least-expensive option for a proper OED is to look for a used copy of "The Compact Edition of The Oxford English Dictionary". This is a two-volume print version that you'll need to use a magnifying glass to read (one is included), and can often be found for less than $150. (It currently seems Amazon has one listed at $130. Take care not to confuse buying a used copy with the $80 rental option.)

It used to be that the best thing to do was grab a copy of the OED on CD-ROM, which was actually cheaper than a new copy of any printed edition while generally easier to look things up in, and had some updates from what will someday be the third edition. However, it's now out-of-print, and used copies quite properly cost an arm and a leg. (You certainly can't have my copy.)

I am also a bit dubious about the version from Amazon, since it boasts "adopted to the electronic age" which is I think both incorrect diction (adapt vs adopt) and somewhat unlikely for the authentic 1989 edition.

Don't worry about it; that was part of the blurb copy for the CD-ROM version that got pasted over when Amazon started stocking the print version. (Twenty years ago, you could buy the CD-ROM version on Amazon, but not the print 20-volume set.)

Saint Croix said...

What prevents nations from banning these products in favor of their own currency?

Fear. You'd piss off a shitload of voters.

And the crypto market isn't competing with dollars. We're not investing in money. We're investing in technology.

Dollars themselves will shift to electric currency. That's already happening. I rarely keep paper money in my wallet anymore.

Bitcoin is virtual gold, a store of value. Ethereum and Solana are competing blockchains. One of them -- maybe both of them -- will be the foundational blockchain. Solana will be faster and cheaper than the Visa network. Eventually I think retailers will shift to Solana for payments.

The government is way more interested in taxing crypto than destroying it. Quit coming up with theories about what might happen, and look at what has happened (over the last decade) and what is happening now.

Neither the Republicans nor the Democrats have any interest in destroying crypto. You know who are the big crypto investors? Libertarians, black people, and millennials. It crosses party lines.

Saint Croix said...

I am generally of libertarian bent. But I think I make an exception on crypto. It seems to me it should be banned because of the inordinate amount of energy consumed for such a non-productive endeavor.

That's just Bitcoin.

The rest of the crypto universe does not require what you're talking about.

Bitcoin is "proof of work"

the rest of crypto is "proof of stake" (Ethereum is switching to this later this year)

completely different validation mechanism.

Jupiter said...

"But if you are willing to do your own research and take responsibility for your money you are free of the Fed and the SEC."

It kind of looks like your money is free of the Fed and the SEC as well. Like, three trillion dollars worth of your money. Is that a feature or a bug?

~ Gordon Pasha said...

Anna Sorokin was not asked to comment on selling monetary vapor ware?" I'm shocked, shocked to find out that gambling is doing on here."

Dave said...

"You lure your customers in with some good pancakes and French fries...and then you fuck 'em with some NFTs!" --Butters (AKA Vic Chaos)

Scholarly reference:
https://www.youtube.com/watch?v=N8f-BQFo7lw

Paddy O said...

I don't know much about crypto, and my general financial knowledge definitely precludes my digging more into it, but I'll admit that I'm really pleased if it crashes and goes away, because I need to get a new video card for my computer, and this crypto obsession has really made computer parts and gpus in particular really over-priced.

Selfish, sure, but there's life for you.

Achilles said...

Saint Croix said...

I Was Worried About Crypto Until I Saw These 3 Charts

Ethereum is in my opinion on it's way to death. It is a pile of band aids. The technical debt is too high and it's foundations are bad.

A few of the EVM(Ethereum Virtual Machine) based coins might make. The problem is they are going for the fork and there are going to be new bugs introduced and that means hacks and theft in crypto space.

Polka Dot and Cardano are 2 chains that have much better foundations. They are decentralized and building Trustless lending systems that are over collateralized.

All of the hacks are on the EVM side.

Solana is centralized and has had it's own issues.

Lucien said...

Boatbuilder: have microbrewery investors never seen “The Producers”?

Achilles said...

Paddy O said...

I don't know much about crypto, and my general financial knowledge definitely precludes my digging more into it, but I'll admit that I'm really pleased if it crashes and goes away, because I need to get a new video card for my computer, and this crypto obsession has really made computer parts and gpus in particular really over-priced.

Selfish, sure, but there's life for you.


The Ethereum patch is going through soon. Video card prices are crashing as we speak.

A bunch of Eth miners, the people that are buying all of those cards, are saying they are going to start their own chain. They will be the only ones on it though.

There are going to be fire sales on video cards soon.

Achilles said...

Jupiter said...

"But if you are willing to do your own research and take responsibility for your money you are free of the Fed and the SEC."

It kind of looks like your money is free of the Fed and the SEC as well. Like, three trillion dollars worth of your money. Is that a feature or a bug?

What are you talking about?

Narr said...

Yep, two years ago. I was there.

I do not grok crypto.

Narr said...
This comment has been removed by the author.
Spiros said...

It's a bubble -- bitcoin's trading price far exceeds its natural intrinsic value (which is zero).

Will Cate said...

Well I still use the word "grok" ... whether anyone still understands it or not

Gospace said...

When bitcoin first appeared anyone with a home computer oils mine some. I didn’t. I didn’t foresee the appeal. Oh, well.

The maximum number of bitcoins there an he is 21 million, or a few less actually. The number of fiat dollars there can be infinite. So if you buy a. It kin today at $21,400.00 and the fed inflates the money supply so in 3 years today’s $21,400.00 requires $500,000.00 for the same purchasing power, if all holds constant, your bitcoin should sell for$500,000.00 or thereabouts.

Various other digital currencies are similar to fiat dollars- an infinite number is possible. They are, IMHO, total scams.

Another thing- once the maximum number of bitcoins is achieved, the supply starts to get smaller. People can lose them, and have. Hard drives with all their digital keys have been erased or sent to the dump.

The dollar is subdivided into pennies. Little today is available at that price, but the penny is still computed and used. The penny is also subdivided into 10 mills, but I honestly don’t think anyone keeps track of mills anymore in any way.

The bitcoin can be infinitely subdivided. So no matter how many are lost- you’ll still be able to trade in them.

I’ll continue my disinterest in cryptocurrency. Any business, any item, that is purely internet based can be worth a fortune one day, nothing the next. Far quicker than physical presences. MySpace was once a valuable holding. Facebook may suffer the same fate.

Narr said...

I got the two-volume microprint OED (1971) for about $75.00 at an estate sale around the corner a few years ago. Barely used then, slightly more used now.

Achilles said...

Spiros said...

It's a bubble -- bitcoin's trading price far exceeds its natural intrinsic value (which is zero).

At the current rate of inflation what is the value of the dollar going to be in say 2 or 3 years?

I love watching your Fed cheer leaders and Yellen fans get your angst out.

Education Realist said...

Grok is a terrific word. Used badly, it's a synonyn for "understand". Used properly, it leaves "understand" in its dust, meaning that your embrace goes beyond mere dry understanding.

It's always been current in the tech world. Probably a thousand or more company names using "grok".

fvc said...

Geniuses? I doubt it. The people who write about this stuff are idiots. These guys were probably smart engineers or math students. At most, perhaps “genius” con men! “… put billions of dollars in borrowed money to work in speculative investments they could cheerlead to success with their large, influential platforms” — that’s the textbook definition of market manipulation. Crypto is unregulated, and it doesn’t take a genius to make money doing what would otherwise be basic crime. Just like, it doesn’t take genius to make money at insider trading or any of the other dishonest abuses that the US outlawed after the crash of 1929, any more than it takes a genius to rob a bank!