Cryp­tocur­rency ma­nia

The Guardian - - FINANCIAL - Nils Prat­ley

The trou­ble with these cryp­tocur­ren­cies is that ex­pert opin­ion is so di­vided. In the scep­ti­cal camp, you have the likes of Ken­neth Ro­goff, for­mer chief econ­o­mist of the In­ter­na­tional Mone­tary Fund; Jamie Di­mon, chief ex­ec­u­tive of one of the world’s largest banks, JP Mor­gan; and our own Fi­nan­cial Con­duct Au­thor­ity. In the other camp, there’s Harry Red­knapp.

Yes, the foot­ball man­ager who re­cently de­parted Birm­ing­ham City is the lat­est celebrity to join the craze. “Proper ex­cited about Mo­bile Cryp­tocur­rency! I’m in, get in­volved!” tweeted Red­knapp in sup­port of Elec­troneum, which bills it­self as “the first Bri­tish cryp­tocur­rency.”

Red­knapp is free to spec­u­late as he wishes, but the ad­vice here re­mains the same: if you find your­self tempted to have a flut­ter on a cryp­tocur­rency, lie down un­til the feel­ing goes away.

The sec­ond para­graph of Elec­troneum’s an­nounce­ment of its ini­tial coin of­fer­ing, or ICO, pro­vides one rea­son to be cau­tious. Cryp­tocur­ren­cies used to be a mi­nor­ity sport, it ob­serves, but, af­ter the surge in bit­coin’s value, “ev­ery tech-savvy en­tre­pre­neur and cur­rency spec­u­la­tor” wants a piece of the ac­tion.

Quite. The dan­ger is that late ar­rivals will be join­ing a party that is al­ready old, which was the gist of Di­mon’s com­par­i­son of the Bit­coin phe­nom­e­non with the 1630s Dutch tulip ma­nia.

Another ob­ser­va­tion comes from Ro­goff: “It is folly to think bit­coin will ever be al­lowed to sup­plant cen­tral bank-is­sued money.” Gov­ern­ments like to con­trol their fi­nan­cial sys­tems.

It is, of course, pos­si­ble that the craze can be­come wilder still – bit­coin hit an new high yes­ter­day. But last month’s warn­ing by the spoil­sports at the FCA was sober and cor­rect: “be pre­pared to lose your en­tire stake” and re­mem­ber that most ICOs are un­reg­u­lated. So, no post-match grum­bling about the ref­eree, please, be­cause there isn’t one.

Whom will the cap fit?

Con­tain your ex­cite­ment: a full price cap on en­ergy bills is com­ing. But most peo­ple’s en­thu­si­asm will de­pend on whether they’re on a stan­dard vari­able tar­iff or have switched to a cut-price deal. The for­mer group should en­joy a sav­ing, though maybe not the full £100 per house­hold per year ad­ver­tised by Theresa May. Ac­tive switch­ers, on the other hand, may find they will pay more when their cur­rent deals ex­pire.

What should be eas­ier to agree on, how­ever, is that this pol­icy is rid­dled with breezy as­ser­tions and lazy as­sump­tions. The first is the busi­ness sec­re­tary Greg Clark’s dodgy use of the statis­tic from the Com­pe­ti­tion and Mar­kets Au­thor­ity last year that con­sumers were pay­ing £1.4bn more than they would in a truly com­pet­i­tive mar­ket. Clark fails to men­tion the CMA con­cluded a tem­po­rary price cap would be the wrong rem­edy and would prob­a­bly pro­duce “worse out­comes for cus­tomers in the long run”.

The sec­ond sus­pect no­tion is that the reg­u­la­tor Ofgem can set a price cap that si­mul­ta­ne­ously pro­tects cus­tomers, pro­motes com­pe­ti­tion, en­cour­ages switch­ing and in­cen­tivises ef­fi­ciency. Those goals pull in dif­fer­ent di­rec­tions. There may not be a magic num­ber that serves them all.

Third, does any­one se­ri­ously be­lieve the “bro­ken” en­ergy mar­ket will be re­paired by smart me­ters? If the prospect of £200-a-year sav­ings didn’t ex­cite two-thirds of con­sumers, why will ac­cess to a dig­i­tal read­out of us­age?

Fourth, there is the ir­ri­tat­ing pre­tence that Ofgem is still in­de­pen­dent. It won’t be, not by tra­di­tional def­i­ni­tions. Within nar­row pa­ram­e­ters, par­lia­ment will be telling the reg­u­la­tor how to reg­u­late.

For all that, sym­pa­thy for the big six sup­pli­ers is ap­prox­i­mately zero. They’ve had a cou­ple of decades to see they were ask­ing for trou­ble by milk­ing loyal or lazy cus­tomers. They made them­selves an easy tar­get for a gov­ern­ment in des­per­ate need of a pop­u­lar pol­icy.

Strike de­layed in the post

It’s a bit rich for the CWU to ar­gue that Royal Mail’s suc­cess­ful re­quest for an in­junc­tion against the union’s planned strike next week was “a des­per­ate de­lay­ing tac­tic.” The tac­tic was wholly pre­dictable. Royal Mail sought a legally bind­ing five-week pe­riod of me­di­a­tion in a pre-pri­vati­sa­tion agree­ment in 2013. Since the union signed the doc­u­ment, which also of­fered guar­an­tees against out-sourc­ing and so on, it can­not be sur­prised the Royal Mail wanted to en­force the terms. The CWU is on firm ground when it says the in­junc­tion won’t solve the dis­pute and another strike can be called when the me­di­a­tion process is com­pleted. But CWU mem­bers might ap­pre­ci­ate an ex­pla­na­tion of why the lead­er­ship ever ex­pected to win in the high court.

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