Author: Scott Buchanan

Chip Shortages Shutting Down Auto Assembly Lines; Buy Your Car Now Or Else

Scott Buchanan4 Comments

Global supply chains and just in time inventory work great – – until they don’t. Every car these days is a rolling computer, with semiconductors in every vehicle. No chips, no cars. For various reasons, there is a big worldwide shortfall in the chips needed for cars and trucks, which is causing auto assembly lines to shut down for extended periods. Car prices are already rising in response.

Chip production as a whole was slowed down this past year because of Covid effects at the factories. More importantly, chip production was switched away from automobiles to lighter consumer products. Auto assembly lines were curtailed due to the virus, resulting in reduced demand for those specific chips in 2020. The thinking among chip makers was that in the midst of a deadly pandemic, consumers would be sitting home ordering goodies from Amazon or Alibaba, rather than cruising car dealers or spending on travel. Indeed, U. S. spending on durable goods exploded in 2020, fueled in part by generous unemployment and stimulus payments, and this has soaked up existing chip production.

However, car buying has come back earlier than expected. Chip manufacturing is a lengthy process, taking some 26 weeks from start to finish. Chip makers are scrambling to add new capacity and to reconfigure their manufacturing lines for autos, but this shortage will not resolve until later in the year.

Continue reading →

New Dead Sea Cave Finds: Scrolls, 10,500-year Old Basket, Lice Comb, etc.

Scott Buchanan1 Comment

The original 1947-48 finds of scrolls in caves near the Dead Sea were a huge sensation. Preserved by the aridity of that region in the southwestern part of Israel, these scrolls dated back to around 100 B.C.-100 A.D.  They included Hebrew texts of much of the Old Testament, which were about a thousand years older than previously known Hebrew Old Testament manuscripts. There were also other writings peculiar to the Jewish community that lived near those caves, which gave new insights into the religious and social currents of that day.

The last of those manuscript finds by scholars was in 1961. Since then, there has been only trickle of artifacts from looters who have dug up items to sell, but with no proper historical context. In the last few years, the Israel Antiquities Authority (IAA) has mounted an exhaustive survey of every nook, cranny, and hole in that Judean Desert area, in order to forestall further loss of ancient artifacts. The IAA has now announced some finds from that survey. They include further Bible texts (in Greek), the oldest known woven basket (10,500 years old), and a 6,000 year old mummified skeleton of a child, covered with a cloth. The searchers also found arrow and spear tips, coins, sandals and even lice combs, all from the time of the Bar Kochba revolt (133-135 A.D.).

Continue reading →

Cryptocurrencies 3. Blockchain: The Ingenious Basis of Bitcoin

Scott Buchanan1 Comment

Most of our financial transactions are managed by centralized institutions like banks and credit card companies. We trust that these companies will properly manage transactions, so no one can spend the same dollar twice. In other words, if you have $300 in your checking account, you can’t use your debit card to buy a $300 message chair, and then quickly purchase a $300 patio furniture set before the first purchase clears.

Satoshi Nakamoto, the enigmatic inventor of Bitcoin, wanted to set up a digital currency which would not be controlled by or dependent on any central institution. Rather, there would be a big network of thousands of independent computing nodes, which collectively would record and vet financial transactions. A big problem he faced was how to prevent the sort of double-spending described above. With a decentralized system, it was possible that one node, or a couple of nodes in cahoots, could quickly enter two transactions which would spend the same chunk of digital currency twice, before the rest of the nodes could catch the error. And without a central authority, who would have the authority to correct such errors?  

Nakamoto’s solution was the blockchain. He defined and implemented it specifically for Bitcoin, but the concept is so elegant and powerful that hundreds of other digital coins were quickly set up also using blockchains. This in turn has spawned a whole multi-billion dollar “decentralized finance” industry around these blockchain based currencies.

Continue reading →

Cryptocurrencies 2. How Hashing Puts the Crypto in “Cryptocurrency”

Scott Buchanan2 Comments

There are several conceptual pieces that are put together to make the working Bitcoin digital currency. The data which defines Bitcoin transactions is stored in a data structure called a blockchain.  A key feature of blockchains involves cryptographic “hashing”. That is the focus of today’s post.

A hash function is any function that can be used to map initial data of arbitrary size to fixed-size values. The initial data may be called the key or the message.  The values returned by a hash function are called hash values, hash codes, digests, or simply “hashes”. A common use for hashing in the past has been to do large-scale data storage and retrieval more efficiently, as described in Wikipedia. That link also discusses how some actual hashing calculations are done.

Here we will focus on cryptographic applications of hashing. For this purpose, hash functions are chosen which are for all practical purposes one-way. It is straightforward to start with the “message” and compute the hash. But it is not feasible to start with the hash and back-calculate the initial message, even if you know the algorithm used for the hash function. Typically the only way to find the message is to run a brute-force search of all possible inputs until you find a match to the output hash.

Continue reading →

Cryptocurrencies, 1: What Exactly Is Bitcoin?

Scott Buchanan1 Comment

Everybody knows that Bitcoin is a “digital currency”. But what does that really mean, and what is Bitcoin really good for? Who developed it? Turns out, oddly, that we don’t actually know. Can you buy a pizza with it? Turns out that perhaps the most famous pizza purchase of all time was made with Bitcoin.

Continue reading →

The Massive SolarWinds Hack: A Work of Art

Scott BuchananLeave a comment

With all the uproar around the election in December, the news of the SolarWinds data breach did not get the attention it deserved. Some well-resourced foreign organization, almost certainly in Russia, succeeded in infiltrating the data systems of an astounding 18,000 or more U.S. organizations. These included major federal agencies such as the Pentagon, the Department of Homeland Security, the State Department, the Department of Energy, the National Nuclear Security Administration, and the Treasury, and other big targets like Microsoft, Cisco, Intel, and Deloitte, and organizations like the California Department of State Hospitals, and Kent State University. Security watchdogs run out of adjectives (“11 out of 10”) in characterizing the magnitude of this hack.

At the same time, security experts cannot help admiring the sheer artistry of this exploit. Hackers themselves often view their codes as a work of art. According to one cybersecurity expert, “Programmers and hackers like to sign their work like artists…So they sign that code in various ways. Often, they’ll leave their initials or they’ll try to be cute and put some sort of cryptic message.” So how was this hack accomplished?

Continue reading →

Why Short Selling Is a Good Thing for the Stock Market and Investors Large and Small

Scott Buchanan4 Comments

We noted earlier the hubbub over a hive of little investors on Reddit outfoxing some big Wall Street firms who had made massive short bets on the stock of GameStop. Some of the narrative around this event has painted short selling as a secret, evil practice only available for the big guys. But none of that is true.

Continue reading →

Reddit GameStop Stock Bubble Deflates; Roaring Kitty Speaks; Hearings Loom

Scott Buchanan3 Comments

Last week we noted how a hive of millions of small, mainly young investors in the Reddit user group, r/wallstreetbets (“WSB”) targeted GME, the small, heavily shorted stock of troubled video game retailer GameStop. In a classic short squeeze, the stock price was driven up from a more or less rational price of $20 per share, to over $400.

Continue reading →

The GameStop Short Squeeze: Swarm of Small Investors Stings Wall Street Hedge Funds

Scott Buchanan4 Comments

If you think the price of a stock is going to go up, you can buy shares and wait for the price to go up, then sell the shares to someone else. This is called being “long” a stock. If it turns out that the stock price goes down and stays down, the most money you can lose is the amount you put in, since the stock price cannot go below zero.

But what if you think the stock price is going to go down instead of up? You may believe the price has run up irrationally high, or your analysis uncovers poor earnings prospects. A favorite tactic of Wall Street pros, including hedge funds, in this case is to “short” a stock.

Continue reading →