I hope you’ve had a good one. It was the week that Spotify announced they’re set to go public, and a nifty Lifetime ISA loophole came to light. We also saw European Union economy growth hit a ten-year high, and scientists searching for extraterrestrial life complained that the cryptocraze has brought about a shortage of computer hardware.
Have a lovely weekend.
1. Cryptojacking: The terrifying cyber threat none of us have heard of
This week, it was revealed that over 4,000 websites, including the NHS, the US government’s court system, Manchester.gov.uk, the Student Loans Company and the Financial Ombudsman Service have all been hijacked by hackers who use them to secretly mine cryptocurrencies.
Hackers exploit a very common plugin, called Browsealoud, which is used by these sites. Then, when visitors come to a website, they involuntary give up their computing power to the hackers.
Events like this will make it even harder to legitimise crypto in the minds of most people. Historically, cryptocurrencies have been, in the main, used by people who can’t access financial services, or who want to avoid using financial systems.
On Monday, to take another unfortunate example, Europol disclosed that £3bn to 4bn of criminal money is being laundered through cryptocurrencies. Because these digital stores of value are not printed, regulated or controlled by governments or central banks, and transactions are effectively made anonymously, it’s a realm that law enforcement cannot really access. Criminals are converting fiat currency into bitcoins, splitting it into smaller amounts and distributing it to “money mules”. Those individuals then convert the bitcoins back into fiat currency, before handing the money back to the criminals.
Is it hard to see how crypto, impervious to central regulation and control, will become globally adopted?
2. A word on ISAs. Could you take advantage of the £1,100 ISA loophole that’ll be closed by 6th April?
A loophole means that money saved before the LISA was launched last year can be moved before the end of the tax year without breaching the product’s limit of £4,000. Savers can move the cash over and claim an additional government bonus. That extra £100 comes from calculations using the best Help to Buy ISA rate currently offered – 2.5 percent with Barclays.
Both ISAs offer a bonus from the government of 25 percent, if the money is used to buy your first home. But the LISA has a couple of tricks up its sleeve: (1) money saved in a LISA can be used as part of a deposit, while the bonus for a Help to Buy ISA is only paid out on completion, and (2) it can also be used for retirement savings, so, if you don’t use it purchase a house, it basically becomes a pension.
The issue, of course, with government schemes designed to give you a leg up onto the housing market and into debt is that they don’t solve the real problem: the housing shortage. Stoking demand with these financial products will just continue to push up prices, while reams of (often utterly pointless) planning laws, poorly-incentivised councils, punitive taxes, a bloated welfare state and political will to keep property a lucrative asset (for those baby boomer votes) stop us building. Hardly a recipe for success.
There’s a good story here which highlights the clumsiness of schemes like the LISA. In short, it’s frequently hijacked by people in their late 30s who may already own property and have a pension, but they’ve got the extra cash to shield from the taxman and are, like everyone in today’s financial environment, looking for yield. Unfortunately, this is not who the product was designed for!
If you’re interested in learning more about and comparing Lifetime ISA’s you can visit the OFF3R LISA channel.
3. Going public but not IPOing. What does Spotify’s market move mean for investors?
It’s expected to be the largest tech public offering of the year, but it’s not really an IPO: Spotify is expected to list on the New York Stock Exchange in March or April, but instead of making shares available to the general public, it’ll just list direct on the exchange – a direct public offering (DPO) – meaning just institutional investors can buy shares, and existing investors can cash out.
A DPO eliminates the need for underwriters. That saves Spotify a lot of money; it also means less cash for Wall Street, for which public offerings are a lucrative business. Although Spotify is generating revenues, it hasn’t yet turned a profit. This listing doesn’t just conserve cash for the firm; it will also prevent existing shareholders from getting diluted, which means employees and early investors will benefit from the listing.
Spotify’s DPO comes at a time when the streaming music industry is booming – revenue from services is expected to exceed $9.7bn by 2022. But, as always, there are a few potential caveats that investors may choose to bear in mind. First, the listing hasn’t yet been formally approved by the regulator. Second, although Spotify is currently the world’s largest music market, Apple Music is now up to 36m paying users, which puts its monthly growth rate at 5 percent next to Spotify’s 2 percent. If that growth continues, the former will outpace the latter this year. And third is the fact that it is still loss-making.
CAUGHT OUR EYE
It’s just an app, but it’s a good idea: Olio helps you get rid of or find unwanted food.
Download Olio and you can either upload what you’ve got and no longer want, or find people in your area looking to rid themselves of a box of tomatoes or a glut of tonic water. It’s peer-to-peer, and relies on people toddling round to each other’s houses, but I imagine it’ll take off well in certain areas, particularly where the desire to be less wasteful is strong.
Presumably, such a tool could also be made accessible to people who struggle to buy food, too, and include commercial entities – like independent cafes and restaurants – as well as individuals. Imagine if someone struggling to feed their family at the end of the month had visibility of free ingredients in their area that would otherwise go in the bin.
When we think about advances in organ transplants, we tend to think about 3D bioprinting, using stem cells and pigs (here’s a piece about the world’s largest pork producer wading into human transplants). While those things are still a little way off, Surgeons: At The Edge of Life on Channel 2 recently featured the OrganOx Metra device.
Essentially, this is a machine that gives a liver a makeover: it revitalises and regenerates a donor organ that, in the past, would have been deemed unsuitable (too fatty, donor middle-aged) for transplantation. It then allows clinicians to test the viability of the organ, before it is transplanted. Between 2013 and 2015, 214 livers were taken from donors but then couldn’t be used. OrganOx, which is based in Oxford, is now signing distribution deals across Europe.
WHAT DO YOU THINK?
Should Unilever be pulling ads from big tech firms who fail to tackle fake news, terror content, racism and sexism? (Which is what it says it will do.) Here’s the story.
Plainly, it’s a private company’s prerogative to make such a move, but how comfortable is this level of moralising from a corporate titan?