Monday, April 7, 2008

Ernie Premium Bonds

You don't receive any interest with premium bonds. But they offer something far better than the meagre interest rate. When you buy the bonds, you let them sit like in a saving account. Every month, you can try your chance at the lottery. If your bond number is selected, you will have a chance to win 1,000,000 pounds. Every month, they are giving away more than one and a half million cash prizes. The prizes range from 50 to 1,000,000 pounds. If you decide not to participate in the lottery, you can exchange the bonds for cash. This investment has attracted more than a third of the population in Great Britain.

The British system uses ERNIE to produce random numbers which have been keyed in when the bonds are issued. ERNIE has been in use since 1957. It generate the numbers by capturing the noise signal from an array of neon tubes which is equivalent to the size of a mini van. It can produce 2000 numbers per hour. The first hardware was used for 17 years before it was replaced with a newer number generator in 1972.

During the eighties, the computer age emerged. The advent of ERNIE 3 soon replaced the predecessor. It was as big as a personal computer but it is nothing compared to the computer today. ERNIE 3 was able to generate winning numbers in 6 hours. In 2004, ERNIE 4 took over and its speed was 500 times faster than the original model. Unlike the vious models which used noise signal from the neon tubes, ERNIE 4 relied on thermal noise. It can generate more than a million numbers in an hour.

About 100 employees will validate the numbers generated by the machine if they match the original bond numbers. If everything is in order, they will allocate the prizes accordingly.

Every month, they will check the machine for so that it doesn't produce invalid numbers. This also prevent any fraud or scam that may arise from the abuse of the machine. They have to keep the machine run properly because it involves more than one and a half million pounds in cash prizes.

Your investments pay off when you are announced as the winner depending on the order that your bond number is generated.

ERNIE gains some popularity that people send Christmas card to the machine. "Thick as Brick" a song written by Jethro Tull was sung in honour of ERNIE.

The magic of ERNIE, the premium bonds and the excitement of winning the cash prizes are the reasons why many British residents are willing to invest money in this investment program. In addition, the cash prizes if you win can easily beat the low interest rates of the saving accounts.


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