Vacation!

black DSLR camera near sunglasses and bag

Prepping for a trip, and making sure the future is secure

Tomorrow is the Fourth of July, which means today is a national holiday. Whee! To keep from going insane, my wife has taken off a few days next week. I took Monday off as well, and we will be heading out tomorrow morning to spend a few days with my father in law. Hiking, canoeing, and fireworks will ensue. We’ve got a lot of work to do to get the house ready for our departure. I’ll be cutting the grass and weed-eating, then I need to get our security cameras connected to our new ASUS ZenWiFi AC access points before we leave. We’re also hosting our quarantine family over movie and game night.

I won’t have to worry about Zombie, LLC for the next couple days, but I’ll probably be doing some work for my consulting projects. I just picked up another client yesterday, for a local political advocacy organization. I already got the wordpress site setup, and the client is going to handle the copy and content, so it should be a quick win that hopefully won’t serve as a distraction from my main project, which I’m into the third month on.

It’s Friday, which means that my cron jobs on my workstation upstairs is about to purchase twenty five dollars of BTC and transfer it to the wallet belonging to one of my daughters. All I have to do is keep the funds loaded, since there’s no way to initiate a funds transfer over API. I could do it using the exchange’s automated service, but they’d charge over a dollar for the transaction.

Since it’s the first weekend of the month, it’s probably a good time to review finances and take some optimization steps as well. I’m in the process of moving USD out of my daughter’s Lending Club accounts, converting it to BTC and dropping it in their BlockFi accounts, where it will earn a higher percentage yield. My own BlockFi account is earning a nice amount as well.

My IDEX masternode seems to be paying off now as well, after several years of middling returns. The IDEX token has doubled in price recently, and daily volume has been picking up, so I’m anxiously watching it to see how things progress. I’m currently hosting a level one node, and am hoping I’ve got enough staked that I’ll be able to run a level two node when it’s released.

I was reading something earlier this week that said that one doesn’t have to hyper optimize everything, that it’s ok to be happy knowing that you’re on the right path without worrying that you’re milking every last percentage point out of the markets. I’m currently holding positions in over three dozen publicly traded equities, and have at least a dozen cryptocurrencies in various wallets. Less than a third of them are even worth two percent of my portfolio, so I’m not getting caught up in micromanaging every one of them. Even the recent parabolic run on XHV, while placing it squarely in the top off the profitable coins that I’ve mined in the last two and a half years, hasn’t made my rig profitable.

And that’s why I turned off my mining rig, named lambo1, a few days ago. Managing it is just not worth my time right now. Finding coins to mine is a crapshoot, and keeping the blockchains current for a dozen different bags is just too cumbersome. I’m going to have to spend some time figuring out a way to not only manage what I have, but to make sure that I have documentation packed away in case something happens to me.

And that goes for all the things I’ve mentioned here today. If I was incapacitated, my wife would have to call in an expert just to retrieve my Bitcoin and Ethereum. Showing her how to use my hardwallet has been on my todo list for several weeks. Now that I’ve got a home intranet setup, I can start documenting all the various components of our finances to make sure that everyone knows where everything is. It seems like a great way to make sure that my kids know about the investments that I’m making for them and the family, and that they are crypto-natives as they grow up.

I mean, that’s why I’m into this whole blockchain thing in the first place, isn’t it?

Evening pages

macro shot of chronograph watch

Work, and stack sats while I sleep

I wasn’t going to write tonight cause I wanted to do some testing with Docker, but I figured it was best to do it to keep up the habit. I already posted once today as I never actually published the phishing piece that went up on on my professional network yesterday, so that’s live now. I stayed up late last night, not too late, and my my morning routine was interrupted due to a visit to Hangover City and a visit by my dad for breakfast. We didn’t do much today other than cooking a huge breakfast on my new outdoor griddle and cutting the grass. Ordered Chinese takeout and watched half of Attack of the Clones with the kids.

Actually, that’s not quite accurate. I did have a sort of business call with someone who found my short-lived crypto podcast and wanted to talk about some non-profit business venture that he was trying to pitch. I wasn’t terribly impressed cause it’s not really my wheelhouse. I gave them some local resources to check out and told them I’d follow up in a month to see how things were going.

Also, I went ahead and opened up two additional BlockFi accounts for my daughters and moved their BTC over to it. I also started withdrawing cash from their LendingClub accounts so that I can start the process of converting them to USD coins and add that to BlockFi as well. It’s kinda funny, my oldest is only getting three percent return on her LC account, and her little sister is up around seven. It almost isn’t even worth moving her over to BlockFi, but I’m going to have the interest payments paid out in BTC, so I they can stack sats faster. Migrating their funds will take a while, since the loans are up to thirty six months, so it’s just something that I’ll have to add to my quarterly plans.

That’s it for tonight. No games tonight, just another hour until screens off and books in bed. I’m reading Digital Minimalism by Cal Newport, since I’m doing the exercises in Designing Your Life. It reminds me of the Team Human stuff. And given how much time I’ve been spending on Twitter – and the notifications I’ve been getting, I’m about ready to take a detox from it for thirty days. Well see.

Now, to work.

If you would like to try BlockFi, please sign up using my referral code.

BlockFi interest accounts as savings earners

Why leave cash languishing in a savings account when it could be earning six percent in a USD stablecoin account?

My head has been racing with ideas recently. I had trouble falling asleep last night and got woken up by Elder this morning when she crawled into bed with me. Neither of us could fall asleep after that, so here we are, up an hour before our usual wake up time, on the couch, both of us with our laptops open. She’s working on Typing.com, and here I am with you.

Yesterday I opened a BlockFi account. They’re currently offering six percent on BTC and eight percent on Gemini and Coinbase’s USD stablecoins, as well as another Ethereum based USD stablecoin called PAX. The rates seem seems really high until you consider their lending options: over nine percent on BTC-backed loans. (We’ll leave the discussion of that for another day.) So they’re taking a small origination fee and a two or three percent spread. Seems like a decent business model. BlockFi was the first product on the market like this; I remember hearing them on a podcast last year, but more and more competitors are springing up such as Crypto.com and now Blockchain.com

Source: BlockFi. 05/21/2020

BlockFi uses Gemini for custody, which is good, but they’re not FDIC insured, so there’s a risk that customer funds could be lost if they get hacked, but I rate that risk low, since Gemini is focused on providing crypto custody services to the traditional finance industry, and they’ve got good controls. Still, I’m not ready to go all in with my funds quite yet.

I think that earning interest on my long term BTC is a great idea. I’m not ready to hand them over the bulk of my hard wallet, but I’m willing to try a small transfer until I feel more comfortable. The account signup process was pretty quick, I was able to sign up as an individual in a matter of minutes, and only had to provide my address and SSN for KYC.

Compared to the rates that Compound is offering right now, BlockFi is way higher. Since Compound is an Ethereum smart contract platform, they use wrapped BTC (which could cause a taxable event) and there is inherently more of a risk of a block swan like a contract failure or hack. BlockFi is relying on more traditional cold-storage custody solutions.

I didn’t want to break out my hardware wallet yesterday to move funds over to BlockFi, since I’d rather use it as an alternative to a savings account, so I started a small transfer from my bank in order to deposit to a USD stablecoin. That will take several days to clear. In the meantime, I’ll probably be transferring all of my LTC over there, (since it’s basically worthless to me at this point anyways,) and most of my ETH. I haven’t decided what to do about my BTC yet, but will probably be putting a fraction of my funds there at some point.

The advantage to keeping funds in BlockFi compared to traditional banking account is obvious, if one is comfortable with the risk. Missus is not, and curtly said “we’re not keeping our emergency fund in blockchain,” when I raised the subject. I however, am less risk-adverse than her, so I’m looking at it as an option to keep cash available for long term goals while earning considerable interest on it. For example, I’ve been planning on funding my IRA this year, instead of using the money to dollar cost average into Bitcoin, but I didn’t want to actually move the money to my IRA until near the April 15 deadline next year. In the event that I do need the funds for an emergency, I don’t want to deal with the penalty and hassle of withdrawing it. Putting it in BlockFi will allow me to compound it, as well as easily withdraw the entire balance back to my bank account when I’m ready.

If you are sitting on a lot of cash right now, and you should be saving as much as possible during these times, you may want to consider giving BlockFi a try. Please use my referral code.

Mortgage refinancing decision tree

mortgage Scrabble tiles

Increasing your monthly payment could save you more money

I’m feeling like some kind of dad genius this morning. Elder came in my bedroom earlier and told me she did her bathroom and bedroom chores. “Good,” I said, and rolled back over, not ready to get out of bed. She walked off and a minute later I heard her unloading the dishwasher. This kid really wants her extra screen time, man. I told her if she does all her daily chores I would give her an extra hour. And she’s currently two-thirds of the way to her DadPoints goal, so I guess we’re getting a cat next week.

I was really happy with yesterday’s post about my trading performance and figured that a more accurate assessment was needed. I hate to say it, but I think I need to do some more work in Excel, to figure out how to group transactions and join several sheets together. I don’t know if it’ll work or if I’ll need to get more complicated and throw it up in Python (or Google Collab) but at the minimum I want to see what things look like when I remove long term positions like Amazon and NVidia.


Today I want to talk about something that I wanted to mention yesterday, but took out cause of time constraints: refinancing our mortgage. Missus and I were discussing it as part of our FIRE plan, so I reached out to our mortgage agent to see if it was worth it. The short answer is no, and it’s likely that, for most people who are looking to pay off their mortgage and pay less interest, simply paying more on the collateral is a better play.

We’ve been in our house for five years, put ten percent down and have a twenty five year fixed rate mortgage on the house. Our payment includes escrow for taxes, as well as mortgage, flood and property insurance. After the first year, the escrow estimate went down, and we’ve been paying the difference into the principal each month. The city assessment on our home has gone up more than ten percent as well.

You can take a look at the this refinance calculator to see your own options, but our results weren’t very encouraging, only about $35 a month, or $420 a year. Considering that we would pay 1-2% on closing costs, we’d have to stay in the house for another seven years just to start recouping the money. And the total savings would only be about $8400 over the life of the loan. No sir. Instead, have a look at the savings we’ve gotten from throwing that extra $60 capital in each month. First, here’s a payoff calculator with a five year old mortgage with an original value of $200,000:

And here’s the result with an extra $60/month thrown on top of it.

Almost thirteen thousand in savings. That’s the value of compound interest, right there, folks.

Since we’re now under the 80% loan to value (LTV) on our home and are no longer required to carry mortgage insurance, I emailed our loan adviser and had him run the numbers for me, just to make sure I knew what I was talking about. They gave me several options, including a 20 year fixed with almost a whole percentage point lower rate. The savings? Sixty dollars a month. Now, while that does change the original estimate, we’re still talking about thousands in closing costs, which would take at least five years to recoup. And we can save three-quarters of what we would with a refi just by doing what we’re doing now.

So for now, we’ll just take the PMI payment and roll it back in to our principal every month, shaving over four years off of our original maturity date.

Before we bought this house, I had no idea how much I would hate the payment summary on my mortgage statement every month. The interest portion of the bill alone was enough more than I paid for my first apartment! It’s crazy. Thankfully Missus and I are on the same page, and focused on getting debt free and FIRE as quickly as we can.

Six Figure FIRE Update: Day 6

Job search, investing performance, and BTC reFIREment plan

So here I am writing at night again today, as getting up early just hasn’t been my thing lately. The girls are enjoying the quarantine bubble that we’ve formed with the family down the street, and they spent most of the day outside playing today. It was the most productive day I’ve had in a long while.

I applied to two jobs the past two nights, one, a fast-growing firm that provides AI-enabled insights for customer data, Outlier.AI, and a startup trying to “cancel the endless cycles of extractive capitalism,” Good Money.

Outlier is a rather large firm that has an office nearby and meets my salary requirements; Good Money is an unknown, but it’s a startup and the culture looks so awesome. I’ll keep applying to my dream list over the next few days: Square, GitLab, Stripe, Twilio. I’m also continuing my consulting gigs, but I don’t know that I can grow that fast enough to reach my goal. We shall see.


Other good news today is that the retirement account hit a new all time high. I was finally able to figure out my actual account performance by looking at my cost basis gains.

SecurityOpen dateClose dateGain(%)
APPLE INC (AAPL)12/26/201310/5/2018170.64
AMBARELLA, INC. (AMBA)12/26/20139/19/201819.05
AMBARELLA, INC. (AMBA)9/3/20159/19/2018(55.98)
AMBARELLA, INC. (AMBA)11/4/20159/19/2018(40.97)
AMAZON COM INC (AMZN)12/26/20139/6/2018383.27
AMAZON COM INC (AMZN)2/20/20149/6/2018457.70
ACTIVISION BLIZZARD INC (ATVI)12/1/201410/10/2018248.63
BAUSCH HEALTH COMPANIES INC (BHC)12/26/20139/13/2018(80.58)
8POINT3 ENERGY PARTNERS LP (CAFD)8/5/20156/21/2018(20.48)
8POINT3 ENERGY PARTNERS LP (CAFD)8/3/20166/21/2018(25.19)
3D SYSTEMS CORP (DDD)2/20/20149/5/2018(75.12)
3D SYSTEMS CORP (DDD)2/18/20159/5/2018(38.07)
FORTINET INC (FTNT)5/4/20179/5/2018112.83
NVIDIA CORPORATION (NVDA)2/10/201610/8/2018917.65
OCEANEERING INTL INC (OII)12/26/20139/18/2018(68.84)
Total:93.58
2018 Realized Gain/Loss

Obviously Amazon and NVidia were the big dogs here. My portfolio was imbalanced with the sheer amount that I was holding there, and I had a bad feeling about the economy. I wanted cash in hand, so I sold about half my position via a trailing stop. It looks like genius in hindsight.

2019 wasn’t too great from a gains perspective. On paper it’s only about 4%, but realistically it should be more since I was covering positions, covering my initial capital investment while retaining the rest of the position, risk free. I was able to take profits on GBTC, Paypal, RestoreBio, and Yext, but lost most of it in Aurora Cannabis and Cronos Group when weed stocks collapsed. I also got stopped out trying to play a very volatile penny stock involved in Bitcoin mining operations.

2020 hasn’t seen any major sells, my trading is automated now via my value averaging protocols. Very low volume, so to speak, and a modest 4.7 percent realized gains. My unrealized gains, however, are sitting at a whopping 38.54 percent! Most of that is Amazon (2014), NVidia (2016-17), GBTC, (2019-20; about one-third of my total portfolio,) and Netflix (2013). Major losers include Sierra Wireless, Hive Blockchain Technologies, FireEye, Overstock, and 3D Systems Corp. I’m currently holding thirty-one positions in all, seven of which I’m currently value averaging into.

Before I go tooting my own horn too much, though, I’ve got to acknowledge a bit of cherry picking here in the results. Due to my original brokerage being acquired, I don’t have access to my full trade history prior to the last four years. I’m sure it’s ugly. It’s not really fair to cout gains on positions I’ve held since 2013 while tossing out the ones I lost on during that time frame. I also closed out my traditional brokerage account, about one-fifth of my IRA at the time, and put it into bitcoin in 2017, before it broke 10K.


I am obviously putting my money where my mouth is with Bitcoin. Between my hardwallet and GBTC holdings, I have well more than half of my liquid net worth in the big orange coin, and a smaller bit more in Ethereum and other tokens. I’ve done the calculations and am looking at a BTC price target of $67K, at which point I will have more than enough to pay off all mortgage and student loan debt and establish my financial independence. My target date is sometime before the next halving, which I based off of the stock to flow model, which predicts BTC ranging above $100K before then.

There are lot of details to be worked out before we get there though. Obviously taxes is going to be the big one. I assume we’ll be looking at long term capital gains in the case of Bitcoin. GBTC gains in my IRA are untaxed, but withdrawing anything will be subject to income tax plus 10% early withdrawal penalty. So the best strategy right now is to continue to accumulate and hodl. Since I think BTC is going to accumulate price much faster than my four percent loans, it makes more sense for me to continue to accumulate BTC while making the regular payments.

One change I will be making moving forward is that I am going to resume contributions to my IRA, which I suspended in favor of buying bitcoin directly the past few years. I am missing out on the tax savings from my contributions, which is going to be a big factor next April given my expected increase in income. Once we’ve topped that bucket off, I can make a final decision on where my additional savings will go.

The Simple Path To Wealth, by JL Collins

This book has been highly recommended by the FIRE community, and my wife wanted to read it, so I got it for her birthday. I picked it up Sunday morning and read through most of its hundred and fifty or so pages in under two hours, so here’s a bit of what I took away.

A good portion of the book reiterates the benefits of having financial independence, or F-you money, and relates Collins’s personal history getting there. This book, which originated as advice to his daughter, who didn’t want to have to time working about making her money work for her, basically boils down to a few simple pieces of advice: keep your spending low, keep your savings rate high, and throw everything into a low-fee, broad market index fund. The market has always gone up, and always will, he advises, and claims that his strategy is fool-proof over the long run.

And for people that can stick to the plan, it likely is. I’ll not argue against the merits of aiming for financial independence, nor the fact that aggressive savings with no debt will get one there fast.

I had a few quibbles reading the book, which likely stem from my own bias. I realize that my financial situation right now gives me no authority to argue with Collin’s assumptions, and I lack the personal data to prove things otherwise. If I had been more vigilant with record keeping over the years I could compute my own personal returns over the past twenty years. A quick look at my IRA’s total balance from January 2017 to today (up one hundred percent) versus the VTI during that period, up about fourteen, looks good to me, but there’s rollovers and contributions to factor in that make a direct comparison useless. Anyways, the book isn’t intended for someone like me, that likes spending time on financial investing and taking measured risks. It’s target for people that want the simple path.

Index funds, index funds, index funds: Collins says stock picking is a fools errand and recommends buying broad index funds, specifically Vangard’s total market index, the VTI. He spends a good deal of time on this, beating it into the reader over the course of the book. You’re not Warren Buffet, he says, and notes that the reason the Sage of Omaha and people like him are revered is because they’re so rare. He cites statistics on fund manager performance over the year, and shows that the only thing they’re good at doing is earning fees from their clients. He likewise disdains financial advisers, for similar reasons. Like stock picking, Collins thinks market timing is impossible. He notes that doing so successfully requires being right twice.

As noted, I’m heavily biased against following this advice. It may be that I need a good knock on the head, and I might be a bit arrogant from getting lucky with some tech plays when I was younger. It may be that Bitcoin has corrupted my brain. I’m totally willing to examine my cognitive biases and try to prove myself wrong. Granted, I’ve lost money on some foolish trades over the years as well, but I think that I’ve also tempered my panic response, and don’t sell when things go south. That’s what stop limits and trailing stops are for! I didn’t panic sell when the Corona pandemic hit the markets, I had cashed out some of my larger positions when the market fell off a year ago, and started buying when things crashed and started rebounding.

And I’ve been buying bitcoin almost every week for the entire bear market. And I have a plan on when to start selling that, also. But enough about that.

The market always goes up: Collins makes a great point about upside risk here. Since he recommends buying the entire market, it makes a lot of sense. Bankrupt companies stock can only go to zero, but the upside on those that survive is unlimited. It’s a great point that can be adapted to lots of other things as well. Just a few days ago I told my wife that if a take a new job with a traditional firm, my upside is only going to be whatever my salary will be, but if I do some entrepreneurial advising for equity stakes, my upside is unlimited. And Jason Calacanis, like other angel investors, likes to point out that venture investing only requires you to be right three times out of a hundred. Two of them to pay for the other ninety-seven, and the last one to be your unicorn.

Having the discipline to do something like that is an entirely different story, and is neither easy nor simple. And it’s easy to piss on the concept of perpetual growth when it seems like we’re living through the fall of the Roman empire.

Other advice: Collins gets into a lot of tax strategy, and goes over the various savings and retirement account available here in the United States. And the idea of a Roth conversion ladder fascinates me. There’s a lot that I skimmed over quickly, like the section on bonds, and retirement withdrawal suggestions, that just didn’t interest or apply to me.

Do I recommend this book to others? Absolutely, especially if they’re just getting started on the FIRE journey. Will I be practicing it myself? Probably not. I’m too fascinated by cryptocurrency, DeFi, LendingClub and venture/entrepreneurial opportunities to just park my money in an index and let it ride. I may start thinking differently in the future, and I do need to go back and look at the opportunity cost of the investments that I’ve made over the years to know for sure.

For me, my simple path to wealth is via Bitcoin. The next two years will show whether it’s the wrong one or not.

Nothing punny today: Quarantine day 42

So we’ve begun week six. Writing has proved difficult recently, as I’ve been getting up roughly the same time as the girls and have been unable to focus on writing until later in the day, after my day seems to have filled up with tasks. Saturday marked the first real bit of restlessness I’ve felt since we started the lockdown, a bit of ennui and listlessness about what to do.

We’ve rearranged the room over the garage. My wife’s desk is setup and she’s able to telework. I took one of my old workstations and set it up for Elder. I tried using Wine for the first time, but had trouble with some fonts and wound up wiping it an installing Windows 10. I’m hoping she’ll take interest in computer art or music production, but she’s mainly interested in playing Roblox. I gave her a free pass yesterday and asked her what she wanted to learn about. She said “music”, so I threw on a YouTube video lesson for children.

She’s been accepted by the gifted program and will be going to the city’s gifted center for third grade. Her teacher called me Sunday to ask if I would be interested in letting her be part of a small group in the class that would be doing more advanced math, and of course I said yes. I’ve managed to get her to do piano without too much fuss, but I haven’t pushed too much. I can’t say for sure, but it seems that there’s been fewer tantrums.

We’ve discovered Amazon Music and that it has Trolls and Disney music, so the girls have been playing that a lot.


I’m in the midst of my final exam for my numerical methods class, and have been getting my solvers working. Right now the Gaussian elimination is the only one working, and I’ve got 3 more days to get the others working. The professor wants us to generate surface plots in Excel, of all things, and to turn those in for our answers. Since all the solvers are supposed to return the same results, I could just turn in the answers I’ve generated thus far, but I still need to turn the solvers in for assignment credit. The problem here is that I’ve built a large build and test suite in CLion, and my professor just wants a single CPP file that he can run in CodeBlocks. I’ve painted myself into a corner, but I’m not concerned with grades since I think the professor is going to grade on a massive curve.

One of the graduation requirements is financial aid counseling, and I got the first look at my student aid totals in a long time: over fifty-seven thousand dollars. There seems to be some discrepancies that I’ll need to review, but this is obviously a lot more than I was expecting. I hurt myself by taking cash payouts for personal expenses. These went to pay credit cards, and quite a bit to bitcoin. I’ve already accrued five grand in interest charges. It puts my post-graduation plans in a bit more context. The status quo will not hold.

I’ve got until next year before I’m expected to start paying these loans back, but the interest is well over four percent, so the first thing I’ll be looking to do is refinance.

I’ve decided that I need a proper professional presence online, so I’ve registered a few domains and started setting up a new CV site. This blog will remain separate for now, but I’ve started reposting some articles on Medium, and will be linking to my Github repo on it. I’ll worry about the ramifications of a recruiter seeing my Tweets and blog posts later. For now, the only thing that comes up when you Google my real name is my political work, so I’ve got to work on changing that.

I’ve also started trying to use LinkedIn more. There are a lot of jobs for software developers and engineers lately. About twenty new ones a day. I’m not saying I can take my pick, but there’s been about one or two each time I look that I’d be interested in. Not that I would necessarily be qualified for, but once I get through my exam and independent study requirements, I’ll be finishing up my resume and applying to some. Not that I really have any desire to work for another firm full time, but I doubt I would turn down an eighty thousand dollar a year position right now.

Or would I?

Ternia Blockcard: pre-paid crypto credit card

The Devil’s in the details: fees, murky exchange rates and other issues mar what should be a promising crypto to fiat instrument

This sponsored tweet has been coming up in my feed a lot:

I’ve been very interested in crypto-backed credit cards for some time now, (remember TenX, anyone?) and thought I would take a deeper look at this. And since my wife and I are no longer that interested in hacking frequent flyer miles, I’m very interested in something that advertises six percent back in rewards. So I signed up for a BlockCard account and did some testing with it. Let’s just say there’s a couple hiccups with it.

The Blockcard is basically a pre-paid Visa card. You can deposit funds from 13 different tokens including BTC, ETH, LTC, and others, and while they say you can “stay in crypto” until you need to spend your funds, all deposits are converted to the Ternio utility token, TERN, upon deposit. What is TERN, you ask? That’s what I wondered as well, so I took a look at the whitepaper.

Ternio background

The paper, published sometime prior to the TERN token sale in April of 2018, describes it as “built to transform and ultimately disrupt the $224 billion per year digital advertising approach.” Basically, they’re building a platform to connect advertisers, publishers and users, providing scalability, auditing, and payments. Of course, TERN tokens are used for the payments, and must be front-loaded to participants accounts. According to the whitepaper, Ternio relies on an internal blockchain called Lexicon, a modified version of IBM’s Hyperledger protocol, and the public token, TERN, on the Stellar network. Lexicon purportedly runs over a million transactions a second, and was accepted by Amazon as an AWS Advanced Technology Partner a little over a year ago.

The rest of the whitepaper describes the projected use case for the Ternio netowork, token sale and airdrop and social bounty program. The BlockCard is also described. That said, the Ternio team seems to have dropped their focus on advertising, and now seem to be focused primarily on building a payment network and driving adoption of the BlockCard.

Using the BlockCard

The Fees

I signed up for an account a few days ago and was immediately struck by the fee disclosure. First off there’s a $5 monthly “subscription” fee if you don’t spend at least $750/ month. Deposits, withdrawals, and point of sale (swipe) transactions are free, but using the card as a debit, with a PIN transaction, will cost you, as will any ATM cash transactions, even declined withdrawals. They also charge ten dollars for a physical card, or you can get a metal one for fifty.

Source: BlockCard FAQ page.

To BlockCard’s credit, they claim that theses fees are required by their banking partners.

Conversion confusion

I needed to load at least ten dollars on the card to make it usable, so I sent eleven dollars of BTC over from Ethos wallet when I ran into what seems to be BlockCard’s biggest problem. BlockCard undervalued my deposit. I was surprised when the transaction completed and my card only had a total balance of $9.37. The transaction history actually showed the value at a more reasonable $10.71, but it still showed an inexplicable deposit amount of 1.52 BTC (I wish!) instead of the actual 0.00156. This still left me with sixty cents under the ten dollar threshold, so I went ahead and sent a transaction in ETH. There seemed to be less lost on the conversion, $9.98 sent versus $9.85 deposited.

In total, I deposited $20.99 cents to my account (not including on-chain transaction fees), after which my account showed a $17.99. This was quite concerning, but after a few more minutes the balance updated to show $20.56. Less dramatic, perhaps, but still a problem if one is expected to spend $750 a month on the card. That’s a lot of slippage, likely more than a $5 monthly membership charge. On top of all this, the UI for the website seems to be extremely slow to update the conversion. I noticed several times when I logged in and the balance didn’t update for almost fifteen minutes.

A few days after my initial deposit and my balance flipped back to eighteen. I’m not sure if this is the buggy UI or just fluctuation in the price of TERN. The FAQ indicates that the value of TERN is pegged against the USDD stablecoin and is “tied to TERN on the BlockCard ecosystem”, independent of trading on any other exchanges. “As users deposit on BlockCard, the value of TERN increases. Β As people spend, the value decreases. TERN is never issued at less than $0.008”

This is all very problematic from a transparency standpoint and seems very ripe for abuse, especially since their use agreement allow up to 36 hours for deposits to clear. Without any clear exchange rates as part of the deposit process, users are basically at the mercy of BlockCard to treat them fairly. With no clear indication of the TERN/USDD price, users are left to do the math to make sure they’re not getting ripped off. Even by my own calculations, my current balance is being valued at 0.0069.

17.699 / 2570.33 = 0.006999, an immediate loss of 14% value on deposit.

So does this mean that incoming transactions are converted to TERN at the 0.008 exchange rate, but then immediately lose value upon being credited to a user’s account? If this is accurate, it seems like a very bad deal for users.

Rewards?

The marketing for BlockCard touts the six percent rewards on spending. While on the surface, this seems like a deal, until you find out that these reward levels depend on staking TERN.

Source: BlockCard Rewards Page

At the base rate of $0.008 TERN/USDD, that’s a minimum of $240 worth of TERN for the bottom tier, and almost twelve hundred dollars required for the top. Granted, one might be able to cut that quite a bit if one is able to acquire TERN at a discount on a exchange, but given the hype that BlockCard is putting on the rewards aspect of their card, it’s disingenuous not to mention the staking requirements on their marketing.

The main exchange market for TERN is BitMart, ranked 24th on CoinMarketCap and based out of the Caymans. Source: BitMart, Apr 22, 15:34EST

Conclusion

There’s other issues with BlockCard as well that are worth mentioning. For one, I’ve been unable to use the card since I don’t have the option to complete KYC on my account. I’m guessing I have to request a physical card to do that, but I’m hesitant to do so since it’ll cost me ten dollars. I’ll likely reach out to BlockCard for confirmation on this, and just to be fair I’ll give BlockCard’s CEO Ian Kane a chance to respond to this article and address any inaccuracies.

The last issue is related to taxes. Sending depositing crypto to your BlockCard account and automatically converting it to TERN qualifies as a taxable event. Spending the funds on the card does as well. Kane said in a tweet that they plan on adding CSV export for transactions, but for now users will have to copy and paste the details manually.

Finally, I want to be clear that this post is not just meant to be a complete dump on the work that Kane and the BlockCard team have done. They’ve done well so far to put together this link between cryptocurrency and traditional payments system. While I’ve yet to use BlockCard for a payment, it does seem to be one of the fastest ways to spend crypto to fiat. My concerns are mainly with the execution of the crypto components of the system. Using TERN as an intermediary currency, without clear indications of how either deposit or balance calculations are converted, is especially troublesome. And the prospects of their so-called rewards system is completely offset by the staking risk, which is again compounded with the lack of transparency in the exchange value.

For now, I’m going to hold off further judgement on BlockCard until they’ve had a chance to respond.

Choose FI: Financial Independence

My wife and I don’t usually read too many of the same books. Beside some sci-fi and fantasy novels, our non-fiction prefreadingerences don’t overlap too much. She likes trashy novels and I stick to political, business ,and technological based non-fiction. She recently discovered the FIRE movement, a group of people trying to build freedom from wage-slavery through financial independence. She picked up ChooseFI a few months ago, and has been listening to the related podcasts regularly. Since being able to redefine work has been of great interest to me, I decided to make a trade with her: I would read this book and she could read one of mine. I’m looking forward to her upcoming review of The Future Is Faster Than You Think — as soon as I finish it.

ChooseFI is an introduction to the financial independence movement. The last two letters of FIRE are for retire early, which the authors acknowledge is a bit of a misnomer, as many who have achieved FIRE continue to work. The general idea behind the system is to lower expenses and save up enough money to be able to fund your lifestyle via the interest earned on these savings. The first step is determining your magic number. By taking one’s annual expenses and multiplying it by twenty-five, you will have the amount needed to be able to maintain that lifestyle off of a four percent rate on those savings. These concepts are given as the rules of twenty five and four percent.

Determining this number and thinking about spending in terms of twenty five times (or three hundred if you’re talking about monthly expenses) can produce a dramatic shift in mindset. A simple example: spending three dollars a day on an energy drink or coffee each workday might cost you fifteen hundred dollars a year just to purchase, but maintaining that level of spending from savings income will require a whopping thirty seven thousand dollars in the bank. Another example: we’ve had a housekeeper come by our home twice a month, at $130 a visit. That’s over three grand a year, in direct expenses, over seventy eight grand to maintain during retirement. Putting these costs in this perspective creates a stark shift in priorities.

Of course the goal of living FIRE isn’t to live life as an an ascetic, it’s about prioritizing the things that one wants out of life. As a self-help book, Choose FI does a good job of laying the ground work toward setting priorities, developing a growth mindset, and mapping out the path to get there. There’s chapters on US tax savings, advice on college, career and networking, and investment tips that focus on real estate and house hacking, investing in index funds, and building a business.

As someone who’s taken a hands-on approach to managing my retirement and stock accounts much of my adult life, I found the chapter on index funds to be the weakest. I understand that for most people, picking a low-fee Vanguard index makes the most sense, but reading the following passage in the days following the worst daily drop in the S&P since the Great Depression struck me as ironic:

Buying an index fund means making a bet that the system continue to grow and prosper. Some will argue that this will not always be the case. After all, societies and economies have collapsed in the past. While this is true, I’m not basing my plan around a worst-case scenario that may never come.

Choose FI, pp. 229

Whoops.

To be fair, the authors have acknowledged the current pandemic and situation in the markets in their recent podcasts. From what I’ve heard, it sounds like they are exercising caution and urging listeners not to jump at the current fire sale prices. This is probably wise advice for most people.

The book is perhaps a bit longer than it needs to be, and I found myself skimming through the book the more I reached through the end. There are lot of personal stories from both the authors and many of the chapters showcase others that the authors have met or interviewed on their podcasts. I suppose it’s to be expected in an introductory book like this. The chapters on tax strategies and real estate investing were of the most interest to me, and the author’s point to other resources where readers can find more comprehensive resources.

That said, the authors deserve credit for the community building that they’ve built. I hesitate to use the term ‘media empire’, but I did experience a tinge of jealousy at some points during the some points, reading about how they quit their day jobs to focus on their Choose FI company, or others who were able to retire at thirty five based on their real estate holdings.

My wife and I may have seen the light a bit later in life, but we both understand that our parents path of working a nine-to-five for fifty years is not the way for us. We’ve got a long way to go until we’re in the position where we’ll have the freedom to work when and where we please. If anything ChooseFI has given us a similar perspective and opportunity to discuss and define what that life would look like.

World on FIRE

It seems almost impossible to think about long-term finances in the midst of a global pandemic, however, we have to assume that we’re not headed for complete and utter global collapse. My wife has been obsessed with the FIRE (financial independence, retire early) movement for some time, and while I’ve been with her in spirit, I haven’t been really focusing on it. For one, I’ve considered my finances very tight, and haven’t seen much room for cutting back in my budget. Two, I’m focused more on investments and entrepreneurial opportunity, and this FIRE movement is something a bit new for her. That said, I’ve been anticipating a recessionary event for over a year now, and have been trying to escape what some call “wage slavery” for even longer. So the ideas of the FIRE movement aren’t foreign to me to begin with.

Being home in self-isolation these past two weeks or so has led my wife and I to question everything about our current situation. Our biggest liability right now is our home. We’d already come to the conclusion that we’ve got too much house, and have long term plans to downsize as a way to save money. She still owns her starter home, which she rents through a property management company, and will have fully paid off this month. She’ll be completely debt free. Me, not so much. I’ve got less than ten grand left on a car loan, plus more than twenty in student loans that I’ve accumulated.

We’d been discussing getting rid of my car; her’s is fully paid off. And while I’m currently near break even with regard to the value of the car and the loan, something tells me it’s going to be very hard to unload my car right now. I’m assuming a private sale is going to be damn near impossible, and selling to a dealership will pretty much guarantee me a balance on my loan.

The FIRE community likes to talk about the rule of 25. It states that you need 25 times your annual expenses in order to maintain your current standard of living. It assumes a four percent growth rate of savings to use as income. When you break that down by month, that’s three hundred times. When you think about each dollar of recurring expenses, it really puts things in perspective. So we cut our Hulu and Netflix subscriptions, and cancelled our Amazon Prime subscriptions to cut down on impulse shopping.

We canceled our housekeeper (a sure sign we’ve got too much house!) last week because we were isolating. (We paid her anyways.)They normally come twice a month, at $135 a pop. That’s $6750 of savings we’d need to maintain. Since we were all home last week, we went on a cleaning rampage to straighten up the house. It might have just been cabin fever, but if we can keep it up through this week I may be able to convince my wife to cut that expense.

Besides our mortgage expense, our largest recurring expense is childcare. We’re currently spending over $300 a week on daycare for our two kids, somewhere around eighteen thousand a year. There’s a bit of tax savings from my wife’s TSP and childcare credits, but we’ll leave that aside for the moment. When our state closed the schools, we decided to pull the kids out of daycare for two weeks, anticipating that the pandemic would escalate and they would be forced to close the day cares. Last week was my wife was home with me on leave, but this week it’ll be just me with the girls all day long. It’s going to be tough, but if things work out this week we’ll likely cancel daycare altogether so we can save that money.

There are a lot of risks to this strategy, but I think it’s going to work out. I’ll have more time to spend with the kids, and have more of a direct impact on their studies and behavior. We’ll save lots of money, and it will force me into a complete work from home lifestyle. I just won’t be available for remote service calls, which will force my employer into making some changes to the way we operate, mainly by eliminating my commute times. On the flip side, it could backfire. Getting actual time for deep work like I’ve been accustomed to will prove hard to do with the kids in the house. Of course, if work fails and I’m forced to take a traditional corporate job with a lot of face time, we’ll have lost our holding spot in day care and have to go back on the wait list.

The financial upside is just too great not to try though. If I can manage to maintain my current hours for my day job, which is likely, my wife and I will not only be able to save a lot of money, but I should have more time overall to spend with my kids, and be able to stay home and focus on my side projects. It’s the equivalent of a large raise, and could work out very well if I can hold my day job.