Your going to need:
Permanent markers (lots of different colors)
2 sheets of printer paper (I used 8.5" X 11")
A rubber band
Rubbing alcohol (aka-Isopropanol) (Nail polish remover works too)
Spray bottle (this you can get at the dollar store)
An iron (the kind you use to get wrinkles out of your shirt)
Step 1: Start to Tie the Paper...
Take one of the two sheets of paper and crumple it into a ball.
Yay, we have a tie(ing) form. (this turns out to be a cool and usable sheet of "near" tie dye)
Step 2: Add the Main Sheet...
Then twist on the rubber band just above the ball.
Scrunch up the tuft at the end a little bit.
Step 3: Colors!!!!!!!!
Start on the bottom of the ball end, draw a shape in a color (duh). For the sheets I'm showing in the Instructable I just used a circle pattern but you can do shapes (don't expect clarity in end product but it does change the end pattern) or you could even off set the center point to one side (looks cool at the end too)
Expand your pattern in rings up the length of the ball, then up on to the end above the rubber band, so that most of the exposed paper is colored. Separate the folds in the tail (the end that isn't the ball) and color in them too.
Step 4: Blend the Colors Into Tie-dye Awesomeness
Spray down the entire paper mass with rubbing alcohol (Fingernail polish works too) to a point where it is very damp but does not drip when you pick it up, be sure to spray down into the folds of the tail too.
Let the ball sit on the cardboard while the alcohol evaporates, it took mine about 25 minutes to dry to a point where it was just slightly damp (this is a good thing). But it was cold and humid so yours should dry faster.
Step 5: Unbind the Paper...
Pull the ball from the middle of the main sheet. DO NOT DISSCARD IT!
Flatten both sheets out gently. Iron them untill they are flat. By this time all of the remaining alcohol will have evaporated from the heat of the iron leaving you with two sheets of bueatufly tie-died paper ready for manny uses.
Step 6: Lookie What I Made...
Here is a link the the better of the paper wallets I've seen: