Bitcoin and all the other cryptocurrencies have been a boon for speculators. But bitcoin was intended to be a currency: both a store of value and a means of exchange. Whether it proved to be a store of value depends on which stage of the bubble and bust you may have bought it. But there can be little doubt that, as a means of exchange, it has proved useless. It was so volatile it was practically impossible to gauge what you could buy with it. For instance, in January 2017 BTC0.002 would have cost around $1.80 and got you a cup of coffee. By September, the sum would be worth $7; by mid-November around $15; and by mid December $35. Now we're back to around $8.
The cryptocurrency world's answer to this volatility is the "stablecoin": a cryptocurrency whose value is backed by a concrete fixed-value asset. In many cases the value of one coin is fixed at one US dollar. Stablecoins represent "the best of both worlds" says Hannah Murphy in the Financial Times: "the low volatility of fiat currencies together with the advantages of digital currencies", including transparency and speed of payment, but with none of the wild price swings. Many hope stablecoins will be "the stepping stone that enables the wider adoption of cryptocurrencies as a medium of exchange", says Murphy.
The best known stablecoin to date has been Tether, which claimed to be tied (tethered) to the value of the dollar one tether should always equal one dollar. The trouble with Tether has been that it recently hasn't appeared to be as closely tied to the dollar as it liked to claim, stoking concern that it doesn't have enough dollars to spend to keep its price stable in the face of selling pressure. Late last year the currency started to slide against the greenback, dipping as low as $0.90, though it is currently trading at $1.01. Another less-than-stable stablecoin to have hit the market is the "Gemini dollar" created by the Winklevoss twins. It is currently at around $1.03 after hitting a high of $1.19 last October.
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Stablecoins got a boost recentlywhen JP Morgan said it had created its own (called JPM Coin) whose valueshould always equal one US dollar.The idea behind it is that it will be used to transfer money between customers' JP Morgan accounts using blockchain technology. "When one client sendsmoney to another," says the bank,"JPM Coins are transferred and instantaneously redeemed for the equivalent amount of US dollars."
Bank of England mulls creating its own
If central banks do enter the market a corollary of the general shift away from cash it could well finish off cryptocurrencies altogether. Stablecoins will become redundant and bitcoin and other volatile digital currencies will be left to the speculators or to those with ideological objections to using government-issued money.
Oil trading embraces the blockchain
Using blockchain means it can create a secure, immutable ledger available to all parties that can do away with paper contracts, invoices and other time-consuming paperwork. The platform went live in November with its original investors, including Shell, BP and Statoil, and will now open to the wider industry, having recently been joined by Chevron and Total. This is an area that blockchain advocates have long touted as particularly suitable for the technology. Vakt's platform could prove a crucial test for operation in the real world, and success could see much wider adoption.
Starling, the app-based challenger bank, has been awarded £100m from the givernment's £775m Capability and Innovation Fund (CIF), which it will use to invest in opening up its accounts to small- and medium-sized enterprises. It plans to improve its IT and build up its customers' support team, creating nearly 400 jobs in the process. The CIF was created to increase competition in the banking sector, mandated by the EU after the government bailed out RBS. Other grants include £120m to Metro Bank, which plans to open branches in the north of England; and £60m to Clear Bank, which became the UK's first new clearing bank for 250 years when it opened in 2017. Clear Bank will work with business banking app Tide to grow its market share.
Apple is to launch a credit card in collaboration with Goldman Sachs, says The Times. The card, which will run on the Mastercard network, will be integrated with Apple's Wallet app and allow users to pay for goods and services via their phone. Customers will be offered additional features such as setting spending goals and managing their account; these services are similar to those offered by challenger banks such as Monzo, Revolut and Starling. Apple needs to increase revenue from services as hardware sales slow, and Goldman hopes to eploit a younger, more tech-savvy audience. According to The Wall Street Journal, users will earn 2% cashback; possibly more if they buy Apple products and services.
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Should you invest in UK equities?The FTSE 100 hit a record high this week, but UK equities remain unloved and undervalued compared to their global and US peers. Should you snap them up at a discount?
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State pension errors: DWP urged to check for mistakes among divorced peopleFormer pensions minister Steve Webb says there are a high number of divorced women on low state pensions. Now MPs want the DWP to check if there were any errors in “potentially underpaying men and women who are divorced”.
