How Bitcoin Mining Works 
I wrote this to try to explain Bitcoin mining.

Hereís an analogy for Bitcoin mining.

Letís say I open a giant factory to make origami sculptures. I open the doors and say that anyone that wants to work for me is welcome.

You bring your own paper.

I pay per piece and I pay in gold coins worth about $10 each.

I want an average of 3 sculptures per hour. If the people are producing more than that, Iíll make a more complicated pattern that takes them longer to fold.

Whenever someone brings me a completed sculpture, everyone else throws their paper in the garbage and the next pattern I want folded goes up on the big board.

The gold coin I pay per sculpture never changes but letís say the price of gold goes up 10% every day.

Do you bring your paper and come work in my factory?

Also, China sends a giant delegation of expert origami artists to work for me.

Note that just because you're not very good at origami doesn't mean you can't take a crack at this and maybe get a gold coin.

If you like, you can get together with a bunch of your friends and even a bunch of complete strangers and come to an agreement that you'll all go to the factory and, if any one of you earns anything, you'll pool it together and then divide it up based on how many folds you made. Even if all your papers ultimately went in the garbage, you should still get something out of this.

Obviously you're gonna want some ringers in your group and they'll be folding way faster than you are and with more accuracy. It's only fair that they'll get a bigger share of the loot. So number of folds seems like as good a measure as any to divide it up.

Steve will collect all the coins for the group and put them in a bucket in his basement. He'll give you access to a spreadsheet so you can check whenever you like to see how many coins your group earned and how much of it is your share.

One day Steve will tell you he went to put the latest coins in the bucket but found it empty. There's no coins in it. Steve has no idea how this could have happened.

Steve will then buy a yacht.

[ 3 comments ] ( 32 views )   |  [ 0 trackbacks ]   |  permalink
BitCoin GoFundMe for Gummy Bear 
I've been looking into the whole crypto-currency thing to understand how it all works. I think I've got a pretty good handle on it now.

FWIW, my conclusion is that the whole thing could go up in smoke at any time and is ripe for manipulation but that a lot of people are going to make a lot of money right up until it does. It's basically a giant game of hot potato and whoever is holding the coins when the music stops loses.

As part of my research, I went and got myself a Bitcoin wallet and would love nothing more than to see it actually do something.

To that end, I sent out a tweet and a few messages basically begging anyone who would listen to send me some small fraction of a Bitcoin. Just a penny's worth. Enough to buy a gummy bear. Nothing more.

So far, nobody has. I've utterly failed in my fundraising goal and will probably never be able to afford the sweet sugariness of a gummy bear.

You can see the balance and transaction history of my wallet here.

Nothing. Absolutely nothing. :)

[ 9 comments ] ( 473 views )   |  [ 0 trackbacks ]   |  permalink  |  related link
Time To Try New Tax Software? TurboTax Will Help! 
This was just too amusing to not post.

I was having a chat about tax software and someone mentioned that TurboTax might be worth a shot. Right now all my tax history is kept in some software called ProFile so my first thought was whether or not I can easily convert those files.

I went to the TurboTax website and right at the top is a box that says "Ask a question, get an expert answer". Sounds like exactly what I need!

So here is what happened:

Your Question
ďConvert profile historyĒ

Our Expert Answer
The vehicle plug-in conversion credit is 10% of the cost of converting any motor vehicle (new or used) to a qualified plug-in electric drive motor vehicle. The maximum credit is $4,000 per vehicle. The property must be placed in service after February 17, 2009 through 2011. TurboTax will calculate your allowable credit.

And that is all. Just that answer. Lol! Well there you have it. Probably not for me...

[ add comment ]   |  [ 0 trackbacks ]   |  permalink  |  related link
What is Wrong With the Greeks? 
So the Greeks seem determined to plunge the world into another deep recession.

Now... the fact that they're able to do this is a topic of its own, but that's not my point here.

I'm just wondering whether they're doing it on purpose to line their own pockets. The people in charge are part of the infamous 1% right? So this seems like the sort of thing they'd do... and rest of the world be damned.

If the Greeks look like they're about to resolve their issues and take care of business, the markets go up like a rocket.

If they give the indication that they're full of crap and can't resolve anything at all, the markets drop like a rock.

So if you're in charge there... and you buy a bunch of index funds... you'd do well to announce to the world that everything is under control.

Then you sell your funds at a massive profit. You then short-sell a bunch of ETF's and... I don't know... maybe announce that you've changed your mind and decided to let the people decide in some snap referendum.

There's another massive profit.

And so on and so forth.

I mean... these guys know exactly what's going to happen based on what they decide to do. How do we know they're not all just messing with us for their own gain? They're politicians, right?

[ add comment ]   |  [ 0 trackbacks ]   |  permalink
A Bit of Mortgage Advice 
I entered a contest on by writing a blog entry with some financial advice.

They didn't like it enough to put me in the final five, but I'd hate for nobody to ever read it. It took some effort to pare it down to (EXACTLY!) 500 words, so it would be a shame for that effort to be in vane.

So I'll post it here. Now 2 or 3 people will read it. :)

So here it is. My advice on paying down your mortgage early.


Your lender tells you about Accelerated Bi-Weekly payments as a way to pay off your mortgage quicker without much impact to your wallet. Take your monthly payment, divide it by two, and pay that amount every other week (bi-weekly). Itís like magic.

Itís a great idea.

Itís not magic though. Whatís happening is youíre choosing a bi-weekly payment and a shorter amortization period. Thatís the time itís expected to take to pay off your mortgage. The standard to start with is 25 years.

I suggest you take that further. You can make higher payments. Paying more each month may not make a huge difference now, but youíll thank me in 10 years when youíve got a year or two of payments left instead of 15 years. With 5 years left, youíll look forward to being mortgage free and thinking about how youíll spend all that money each month. With 10+ years remaining, thatís just science fiction.

Understand that the amortization period, so long as itís less than you got approved for, is an arbitrary number and you can ask for whatever you want.

RBC has a ďdouble-upĒ option that allows you to manage this yourself on a payment to payment basis. I expect other lenders have similar things. My wife and I used this to manage our mortgage as follows.

First, buy a house you can afford. If you can barely make your payments, then youíve taken away your options.

Next, decide how much you can pay every other week.

This should be higher than what the bank is expecting. Then drop it down to give yourself some buffer, and make that your payment. Finally, increase your payment to be up to double that (which should be way too much or you started too low) and test the waters, adjusting up and down as you feel comfortable.

Hereís an example.

You're borrowing $300k and the current variable rate is 3%.

A 25 year mortgage will have a bi-weekly payment of $655.27.

The "accelerated bi-weekly" option will change the amortization to 22.2 years and make the payment $709.87.

You then decide to make payments of $900.

Set the bi-weekly payment to $800, so even though you can pay $900, you can drop it down later if you were too ambitious, or just want to put $200/mo toward something else.

Ask the lender for an amortization period of 18 years and 10 months. Your bi-weekly payment becomes $801.43. Immediately set a schedule to add $98.57 to each payment, making it $900.

When your husband seems to have too much money at the end of each month, convince him that you can each pay an extra $200 a month toward your future. If it's too much, you can drop it back down again. So you increase your payment to $1100. Now, your mortgage will be paid off in 12 years and 7 months and you'll have paid $50,000 less in interest than if you'd done the accelerated bi-weekly option. How cool is that??

[ 2 comments ] ( 16 views )   |  [ 0 trackbacks ]   |  permalink