Getting Your First Bitcoin - First Step Down The Rabbit Hole

OK you are finally convinced that bitcoin is here to stay and you are ready to make your first bitcoin investment. Now how do you get your first bitcoin?

It is actually not so easy. Banks are not too happy integrating with bitcoin businesses making it difficult to exchange between currency and bitcoin.

1) Bitcoin ATM


Bitcoin ATM's Worldwide

At first glance it seems easy but quite often these machines are not working or are in low traffic areas. Good if you can get someone to show you how to use the machine.

2) Local Bitcoin

Local Bitcoins Website

Next to exchanges local bitcoins are the best way to purchase some bitcoins. Find a dealer close to you and make your purchase in person with cash. Rates will be higher than those charged at the exhcanges. Once you have struck up a relationship future purchases would be easier.

3) Bitcoin Exchange

List Of Bitcoin Exchanges Worldwide

It is easy to open up an account with the exchange but difficult to connect your bank account with the exchange. However registering your credit card will be easier. You will often be ask for idenfication and details of residence.

4) Mycelium Wallet

You can download a Mycelium wallet for your phone and use it as your bitcoin wallet. Mycelium wallet has a feature showing you the nearest contacts for people wanting to sell and buy bitcoins.

5) Bitcoin Mining

Bitcoin mining is not for the non technically minded and quite often it is difficult to purchase. Currently only 2 companies are selling direct to the public. Bitmain and Spoondoolies.



At a price of $1585 USD it will take quite some time to get a positive return on capital. However some people look at bitcoin as a long term investment and it's future value being greater than it's current value. Bitcoin mining produces diminishing returns but if the price of bitcoin keep increasing as expected then this may turn out to be a good investment.

6) Cloud Mining.

Surprisingly this may be the easiest way to get a stream of bitcoins. Genesis Mining is the best cloud mining operation. They are very professional and have been around for quite sometime. It is easy to make a purchase a mining contract with your credit card. They offer lifetime contract though how long this will last is unclear.

7) Offer products and services for bitcoin

Open Bazaar will soon launch and they have ambitions of becoming as big as Ebay.

Get A Bitcoin Wallet


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Bitcoin Donation Address

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Fisher without Euler

The Neo-Fisherian proposition is that raising the nominal interest rate (and keeping it elevated) will eventually cause inflation to rise (see Steve Williamson's explanation here.)

The basic idea revolves around the so-called Fisher equation:

R = r + E[p]

where R is the nominal interest rate, r is the real interest rate, and E[p] is the expected rate of inflation. If bond buyers expect inflation to increase then they'll ask for more compensation in the form of a higher nominal interest rate (a lower bond price).

The conventional idea is that monetary and fiscal policies (in particular, the expectation of how these policies will unfold over time) largely determined inflation expectations E[p]. In conventional (modern) macro economic theories, expectations are assumed to be formed "rationally" (i.e., in a manner that is consistent with the stochastic processes that actually govern the economy).

Neo-Fisherians reverse this conventional direction of causality. They argue that increasing R leads people to revise their inflation expectations upward. And because people have rational expectations, for these expectations to be consistent with reality, actual inflation will (somehow) have to increase.

As far as I can tell, this Neo-Fisherian proposition comes in two stripes. The first stripe is of the "cashless economy with Ricardian equivalence" variety--the models that Michael Woodford likes to use. In this class of models, "balance sheets don't matter." And because central bank money and government bonds are just ways of labeling the liabilities of the consolidated government sector, they don't matter for determining (among other things) the price-level. In this class of models, inflation expectations are somehow assumed to adjust to satisfy the Fisher equation. And then the price-setting behavior of firms (who set prices in an abstract unit of account but do not actually accept payment in any monetary object) adjusts in a manner that is consistent with higher expected inflations. Personally, I find this view implausible. Moreover, it's frustrating that no one promoting this view seems willing or able to explain how/why all this is supposed to happen (beyond repeating the phrase "the Fisher equation must hold" or "it's a rational expectations equilibrium").

The second stripe of this proposition, however, seems more plausible (at least, in principle) to me. In this world, balance sheets matter. The supply and composition of the government's assets and liabilities matter. And in particular, the time-path of the total nominal government debt (and its composition) matters for determining the price-level. The idea here is that when the central bank announces a higher R, there is a corresponding passive accommodation of central bank policy on the part of the fiscal policy to increase the rate of growth of total government debt (i.e., cut taxes, or engage in "helicopter drops"). If the fiscal authority behaves "passively" in this sense, then people will rationally expect higher inflation--and the higher inflation will actually transpire not because people expected it, but because the fiscal authority delivered it. I think this is an interpretation that even Nick Rowe agrees with (see here).

Both versions of the Neo-Fisherian proposition above seem to rely heavily on the notion of rational expectations. In my previous post, I speculated that the proposition might hold even if people had non-rational "adaptive" expectations. The idea I had there was that if a sudden increase in R caused to the price-level to jump up (instead of down, which is the usual presumption), then people with adaptive expectations will revise their inflation expectations upward (not downward).  An initial increase in the price-level might happen if, for example, the higher interest rate led to higher operating expenditures on the part of firms. Following this initial impulse, the actual path of inflation would be determined either by (stripe 1) the nature of learning dynamics or (stripe 2) the manner in which policy accommodates itself to the price shock (e.g., see Christiano and Gust, 1999).

In response to my post, Erzo Luttmer alerted me to his paper Fisher without Euler, in which he claims that the Neo-Fisherian proposition pops out of a model in which people are not forward-looking at all. The argument, as far as I can tell, relies heavily on how the government debt-service cost is financed. Let me try to explain (you can refer to Erzo's paper and short note to see whether I have it right).

Let's start with the government budget constraint,

G(t) - T(t) = q*B(t) - B(t-1)

where T(t) denotes tax revenue, G(t) government purchases, and B(t-1) denotes bonds maturing to cash at date t. Let 0 < q < 1 denote the price of a bond (1/q is the gross nominal interest rate, set by the Fed). For simplicity, I think we can set G(t) = 0 for all t, so that

T(t) = B(t-1) - q*B(t)

This makes it clear how a lower q (higher interest rate) means either  higher taxes and/or higher debt level. Now, let p(t) denote the price-level and define τ = T(t)/p(t). Assume that nominal debt grows at a constant rate, B(t) = μB(t-1). Now use this notation to rewrite the government budget constraint above as

τ = (1 - q*μ)*B(t-1)/p(t)

To close the model, we need a theory of the price-level. The simplest theory I can think of is the Quantity Theory: p(t) = B(t-1)/y(t), where y(t) is real income (and velocity is held constant), so that B(t-1)/p(t) = y(t). If we treat y(t) as exogenous, then it follows immediately that lowering the interest rate (increasing q) necessitates a decline in inflation (μ). So lowering the interest rate lowers the debt-service cost of debt which (for given real spending and taxation levels) means that the supply of nominal debt need not grow as quickly -- as the growth rate in the supply of "money" declines, so does inflation. The Neo-Fisherian result follows even without forward-looking behavior.

Erzo does not use the simple version of the Quantity Theory as I did here. Instead, he assumes that individuals adopt a simple behavioral rule (consumption function):

c(t) = α(y(t) - τ) + βB(t-1)/p(t)

where α is the propensity to consume out of disposable income and β is the propensity to consume out of wealth (here in the form of real bond holdings). If we let g(t) denote real government purchases, then goods-market-clearing requires:

c(t) = y(t) - g(t)

Erzo then combines these latter two equations to determine the price-level p(t), treating y(t) and g(t) as exogenous (as did I).

At the end of the day, it's a simple point. Still, I think it's an important one to keep in mind since I am reading in more than one place that the Neo-Fisherian proposition depends on rational expectations. Evidently, it does not.

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Ny nasjonal finansdatabase!

Ny finansdatabase gjør livet lettere for norske studenter

Frem til nå har miljøene utenfor Norges Handelshøyskole måtte klare seg med dyre og dårlige løsninger på nasjonale finansdata. Mye brukte løsninger slik som Datastream kan koste flere hundre tusen, og da er ikke en gang kursene fra det norske markedet brukbare (Datastream justerer ikke korrekt for utbytter for norske data). Gratis alternativer slik som Yahoo Finance holder svært dårlig kvalitet.

Norske studenter utenfor NHH har derfor til nå måttet kjøpe dyre data og bruke mye tid på å gjøre nødvendige justeringer manuelt i Excel.

Siden de fleste norske studentoppgaver omhandler norske bedrifter, er norsk finansdata ofte helt nødvendig. Den nye databasen TITLON leverer dette til en svært lav kostnad til alle landets undervisningsinstitusjoner som ønsker å være med.

I tillegg til fullt justerte kurser tilbake til 1980, så inneholder databasen tall for indekser, fond, warrants, opsjoner og obligasjoner. Fundamentaldata (regnskapsdata) kommer.

Oslo Børs henviser nå alle studentforespørsler til TITLON. Les mer om databasen her:

http://titlon.uit.no

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Tid for passivt oljefond

Erik Must mener i DN at fondets muligheter for verdiskaping er en viktigere debatt enn at Oljefondet ikke klarer å slå indeksen, justert for risiko.

Must kan ikke har forstått den «akademiske diskusjonen». Dersom Oljefondet ikke klarer å slå den risikojusterte indeksen så skjer det heller ingen verdiskaping, og det er også fasiten. Aksjeforvaltningen alene ser litt bedre ut. Men den lille meravkastning som eventuelt er skapt kom før 2010, da fondet var mye mindre.

I motsetning til hva Must tror, er det vanskeligere, og ikke lettere, å lykkes med aktiv forvaltning for store fond. Forskningen viser det. Når fondet i dag i begrenset målestokk ikke klarer å skape meravkastning, hvorfor skal vi gjøre mer av noe som fondet ikke har lyktes særlig godt med?

Must tror visst også at økt grad av indeksforvaltning gir bobler, men det er det ikke dekning for. Det var ikke brede indeksfond som tapte mest på finanskrisen. Det var bankfond, kredittderivatfond og pengemarkedsfond. Det var heller ikke indeksinvestorene som tapte mest på IT-boblen. Det var IT-investorene.

Oljefondet bør fortsatt drive med litt aktiv forvaltning. Det gir oss viktig informasjon om hva slik forvaltning kan bidra med. Så langt er det ikke mye å snakke om.

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How to handle an xmlrcp wordpress attack on nginx server

I'm not really a system administrator and these steps are just based on my personal experience in securing our own wordpress websites.

Lately there has been a lot of attacks on wordpress sites (since it's a popular framework) specially on windows machine. So we decided to migrate on a linux machine. Obviously got a lot of attacks still, one of the nasty one is a DoS (denial of service), and here's how we handled it:

1. Install akismet plugin.
2. Install wordfence plugin - this one is really good.
3. If you know how to type commands on linux, run tail -f /var/log/nginx/access.log. This will should the most frequent request together with its IP take note of it and under WordFence->Blocked IPs, add it.
4. Install and configure ip tables. 
5. Block the ip in ip tables (INPUT section):

   //add
   sudo iptables -A INPUT -s [IP ADDRESS] -j DROP
   
   //or insert as a first rule
   sudo iptables -I INPUT 1 -s [IP ADDRESS] -j DROP
   
   //check if configured correctly
   sudo iptables -L --line-numbers
   
   //to remove a rule
   iptables -D INPUT [line-number]
   

6. Configure nginx.conf to block xmlrpc request (make sure that you are not using it). Normally you don't. Create nginx.conf in your webroot with the following contents:

   # nginx configuration
   location /xmlrpc.php {
   deny all;
   }
   

   Here's an htaccess to nginx converter, just in case you need: http://winginx.com/en/htaccess.
7. Setup fail2ban. Google on how-to. Here's my favorite: https://www.digitalocean.com/community/tutorials/how-to-protect-an-nginx-server-with-fail2ban-on-ubuntu-14-04.

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How to setup a subdomain in your nginx server

Lately I've created a sub-domain for one of my website. I hope you follow this blog on how to setup your nginx wordpress site. In the same server where I host my maindomain.com, I've added a subdomain.maindomain.com. And here is how:

1. I created a new folder in /var/www/subdomain where I install a new copy of wordpress. Note that /var/www/html contains my maindomain.
2. The duplicate the config site in the blog I mentioned above (my-site), so now I have subdomain ni /etc/nginx/sites-available.
3. Make the following modifications (first 2 lines):

   listen 80;
   listen [::]:80;
   

4. Basically, you can't have 2 virtual configurations with default_server marker.
5. Your sub domain should now be accessible.

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How to setup your wordpress website in nginx server

Long ago I learned of the advantages of nginx over apache, just google it. Planned to migrate our sites but didn't manage to do it until last weekend. So here's what I did to do that:

I'm assuming you already have a functional wordpress with mysql setup and html / php files in /var/www/html (the usual).

First we need to install nginx and php:

sudo apt-get install nginx php5-fpm

Next, configure nginx virtual config, like in apache. Default config file is at /etc/nginx/sites-available/default, copy it and edit like below:

//copy
cp /etc/nginx/sites-available/default /etc/nginx/sites-available/my-site

//modify my-site
server {
        listen 80 default_server;
        listen [::]:80 default_server ipv6only=on;

        root /var/www/html;
        index index.php index.html index.htm;

        server_name your_domain.com;

        location / {
                # try_files $uri $uri/ =404;
                try_files $uri $uri/ /index.php?q=$uri&$args;
        }

        error_page 404 /404.html;

        error_page 500 502 503 504 /50x.html;
        location = /50x.html {
                root /usr/share/nginx/html;
        }

        location ~ \.php$ {
                try_files $uri =404;
                fastcgi_split_path_info ^(.+\.php)(/.+)$;
                fastcgi_pass unix:/var/run/php5-fpm.sock;
                fastcgi_index index.php;
                include fastcgi_params;
        }
}

//remove default enabled site
rm /etc/nginx/sites-enabled/default

//enable my-site
ln -s /etc/nginx/sites-available/my-site /etc/nginx/sites-enabled/

//restart or reload
sudo service nginx restart
sudo service php5-fpm restart

Your website should now be up and running in nginx.

*Keep your eye on missing comma ;.

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