Thursday, October 23, 2014

Adding A Budget To My To-Do List

I have mentioned ad nauseam that I am a big fan of +Smartsheet and use it to track all of my daily tasks and projects. I have discovered the power of adding a budget column to my tasks sheet. Stuff that relates to me, personally, has one big sheet that gets subdivided into sections and subsections for every aspect of being Shaine Lee Mata. Currently, it's a list with over 900 items. I agree with you that I have way too many items listed.

I imagine that one could either give up on ever getting around to 900 items, or truly put everything into making a dent in the list. Yet, it seems that I am perpetually removing items that are done and adding some back. There are items that never seem to come off the list. They do eventually, but it seems like they never do.

I wondered why some items were lingering more than others. Obviously, it's because I never got around to doing them; but, what was holding me back. So, I went down the list and asked myself what was stopping me from doing each one. Too often, for those particularly recalcitrant to-do items, it turns out that it was lack of money. Often, these items have a cost that I am, have been unwilling to incur at the time.

For example, if I need haircuts for my son and for me, I know it will cost me about $30. But, if I'm a bit tight on cash this week, I would schedule the shearing for the following week after pay day. Or, if I need to buy new tires, upgrades for the computer, a tool, or whatever. It makes sense to cluster these things around when I have money, and when I see the cluster is too big, move it to the next payday.

As it turns out, having a budget cell next to my to-do item helps relieve some of that "guilt" about not getting around to doing it. In fact, I will know I have a damned good reason for not doing it. I can see at a glance that the new SSD for my computer costs $125, and is not as essential as, let's say, $30 in groceries. When I have $125 to spare, then it enters my realm of possibilities. If you have a big spend coming up, it doesn't make sense to put other big spends on the calendar around that time.

But, the budget field doesn't only apply to financial costs. There are also time costs. There are some tasks that do not cost you any cash, in some measurable way. However, those tasks may cost you time, which is also a limited supply. If I know that something will take me 2 hours to do, I may hesitate to schedule it during busy days unless absolutely necessary.

Doing three 15-minute tasks is more feasible than doing one 2 or 3 hour task. Or, let's say that I'm feeling particularly smurfy and decide to take on those 2 hour tasks in the evenings after work. This means that I would only schedule the one item for that evening rather than try to fill every nook and cranny of my evening.

When it comes down to it, adding a budget to your tasks, whether a financial or temporal budget, forces you to make your choices based on priorities. Your priorities may change from day to day, or week to week; but, the budget gives you an objective measure for choosing to do or not do something. And with that, you can rest peacefully with the knowledge that those items remaining on the list are better for you than trying to kick them out ASAP while making you broke or time-starved.


Wednesday, October 15, 2014

Sad To Leave Slack, A Great Product

A few weeks ago, I read an article about Slack, a marvelous business tool that is useful for team communications and project information gathering. Slack has been a hit among knowledge workers, particularly people who manage online services. I signed up for the free trial and was blown away. However, despite my deep respect for the product, I'm going to have to walk away from it.

The issue is not with Slack itself. I think Slack is the victim of the "network effect" to some extent, or the reverse of it, rather. I don't have a network on Slack. Therefore, it is a really cool way to organize project information and data streams. However, I already have invested into +Evernote and +Smartsheet.

While I do not have networks on those products either, they are rather powerful without the network. And so, I find that the ability to create streams of information rather than a giant pile of...email is a great idea. Slack makes sense in so many ways.

I have written in the past that my problem with Evernote is that I do NOT need to remember everything, thus I engage in active deleting of information. Some information is more valuable if it doesn't get in your way. So, I've slowly started to segregate information into archives, working spaces, and stuff that can and should be deleted.

With the help of +IFTTT, I am crudely reproducing some of the great Integrations provided by Slack. RSS feeds and tweets are appended to Evernote notes, which I can periodically delete or archive. Having used Slack for the last few weeks, I have learned a new way to sort information into Evernote that makes it, once again, a great product for managing my everyday needs.

Smartsheet comes into the equation because it is great for organizing work, and then I can dip into Evernote and Google Drive to attach working documents.

Standing back from it all, Evernote catches information and Smartsheet organizes it for action. This way, information doesn't get in the way of doing.

Sunday, October 12, 2014

The Problems I Have With Bitcoin

I have some problems with Bitcoin that cause me some concern for its long-term usage. These concerns are not about the immediate viability of the cryptocurrency. For now, I think Bitcoin is the right innovation for the modern world. However, there are some shortcomings that concern me.

Lost Bitcoins


If you lose your wallet information, let's say your dog ate the paper on which you wrote your keys, or maybe he ate your hard drive, then you have no way of accessing that lost Bitcoin, nor anybody else for that matter. This means that they are stuck on the ledger forever, never to be traded again.

With a few million Bitcoin in circulation, this doesn't sound like a big deal, a few Bitcoin here and there. However, over time, these lost Bitcoins can add up, reducing the overall availability of Bitcoin for use. Things seem to be working more or less OK for the moment, but, if the ultimate goal is to get all 8 Billion people on Earth using Bitcoin for commerce, there already aren't enough. So, we are doomed to deal in smaller and smaller fractions of Bitcoin as they get hoarded and/or lost over time. It's going to get ridiculous when you are paying 0.000005121 for a cup of coffee.

Fixed Bitcoin Supply


Speaking of hoarding, that's another problem. One of the reasons why we have a Federal Reserve is that there wasn't enough gold to go around. If you have a mortgage on your farm to pay, you need people to buy your crops. If there is not enough cash in circulation, then your customers don't have the cash to pay you. The problem we had with gold was bank runs. There wasn't enough gold at banks to satisfy depositors' claims. Therefore, there wasn't enough money for people to use to pay their debts. It may have been their money on accounting ledgers, but there wasn't enough cash for them to pull from A to put into B. Silver was added to the money supply, but even that was eventually abandoned.

With Bitcoin, we do not have to worry so much about bank runs as there is no bank; but, hoarding can be problematic. Let us say that you somehow end up with 1 million Bitcoin, through savvy trades and good, ethical business practices. That leaves fewer Bitcoin in the pool, which is non-inflationary. Because you control so many coins, the price for Bitcoin goes up because there are fewer around for transactions. So, as the price goes up, your Bitcoin hoarding starts to pay off in higher valuations. You just have to sit on it and watch the value go up. What is your incentive to trade? It warps the value of Bitcoin.

With gold, we had some increase in the supply. Even today, several hundred tons of gold are mined each year throughout the world. So, the present supply of gold is limited, but, does slowly increase over time. With Bitcoin, there is an increase in the supply, up until the the 21 million Bitcoin limit. After that, the only way to provide access to the 21 million bitcoin to all the billions of people on earth is to use fractional reserve banking. Without that, we face deflation.

There are arguments in favor of deflation, but most Economists are trained in inflationary economies and wouldn't know how to deal in a world where deflation is the norm. This is why we have spent trillions of dollars propping up the stock market. Not only are Economists ill-equipped to reimagine the world in a deflationary economy, the public is completely unable to deal with the prospect of decreasing salaries and values for the goods they want to sell, even though they would be just as well served in the long run.

For the moment, we are spared some of the problem with Bitcoin deflation thanks to mining introducing new Bitcoins intothe system.

The Blockchain Size


The Bitcoin blockchain is around 9 GB at this time. This is with a few million geeks occasionally transacting back and forth among themselves. What happens when you scale Bitcoin to 8 billion users making several transactions per day? How large can the blockchain grow? What happens when it reaches 1 TB? 10 TB? Presumably, storage is getting cheaper (deflation) and processing is getting more powerful. But, still, there are practical considerations to keep in mind when pushing and pulling that much data around. Imagine trying to launch a node when the blockchain reaches 1 TB; how long would that take to synchronize?

What do we do with the blockchain in 50 years? 100 years? We are going to require centralized machines to handle transactions because participation will be out of reach for the average user. We are already seeing this with mining pools. You as an individual have little opportunity to successfully mine Bitcoin compared to the big players. Things will only become more competitive as the Bitcoin mining reward gets smaller and smaller and the necessary resources for mining increase in computing demand.

Conclusion


As stated at the opening, I am a fan of Bitcoin. I like what it does. However, I have some reservations about its long-term viability. Specifically, what concerns me is the fixed Bitcoin supply, which is impacted by lost Bitcoins and some of the same problems gold faces as a currency, namely hoarding. However, even gold has some degree of inflation as it continues to be mined.

I think that cryptocurrencies should include some degree of inflation to make up for coin loss and to counter some of the problems with deflation. For this reason, I like NXT and Blackcoin because they employ "minting" to slowly and predictably introduce new currency. I think 1% is too low, because people breed faster than that; but, it's a move in the right direction.

Bitcoin may be a bridge that takes us to the next level of cryptocurrency. I think it is a great start; but, we should be looking for a next generation option.

Saturday, October 11, 2014

The IRS Considers Bitcoin Property, Not Currency: What It Means

Reading through the IRS Guidance on Bitcoin, it states that the IRS considers Bitcoin as personal property. So, if you, for example, buy a car for $1000 and sell it for $3000 after some minor repairs, the value added is considered income by the IRS and is taxable. Similarly, if you buy Bitcoin at $320 and sell it for $340, you pay taxes on the $20 profit.

This is very similar to stocks, with the exception that you buy whole units of stocks, generally. You can take a loss or make a capital gain. The way you track this is by keeping records of how much you paid for the stock and for how much you sold it, typically using a FIFO (First In, First Out) basis. With stocks, you sell whole units as well. Tracking your stocks only gets ornery when you buy a stock on a recurring basis. With stocks, you also add transaction fees and commissions into your cost.

With Bitcoin, accounting is pretty much the same, except that the arithmetic gets complicated because we do not deal with whole units of Bitcoin on the purchase or the sale.

The best way to think of it is that when somebody pays you in Bitcoin, they are paying you with a non-dividend paying stock that you can redeem somewhere else. Between receiving the Bitcoin and paying it out, you may earn money or lose money. I've seen the value of my meager Bitcoin holdings appreciate and depreciate from day to day.

The complication with Bitcoin is that we do not generally receive whole units of bitcoin. They are always fractional units, which complicate the arithmetic. In addition, when we also do not spend whole units of Bitcoin, we spend fractional amounts. Therefore, matching up your incoming coin against several transactions of lesser coin can be tedious.

About the only blessing is that, like FOREX, commission costs are built into the price of your trades.

I'm still not 100% clear on the IRS guidance on Bitcoin because I don't deal with the some of the other conditions mentioned.

Overall, I think you may want to go light on using Bitcoin for day to day transactions, like buying a cup of coffee every morning. The accounting headache might be greater than the coolness factor, at least until software comes along to help you manage these things. In the meantime, your spreadsheet of choice will be the only means of tracking your transactions.