“Initiative Q” Is All the Bad Parts of Crypto and None of the Good Ones
11.06.2018

In 2017, Thanksgiving tables across America were buzzing with hype about bitcoin and cryptocurrency. In the wake of Crypto Winter, a new digital-currency project seems determined to generate the same sort of familial holiday hype: Initiative Q.

Initiative Q is a project headed by veteran payments entrepreneur Saar Wilf, who contributed tech to Paypal, and George Mason University economics professor Lawrence H. White. They propose to launch a digital currency—but they’re very vocal about the fact that it’s not a cryptocurrency, no way, no how.

They’re now aggressively recruiting people to “join” Initiative Q and reserve (for free) their future digital currency. To attract signups, Initiative Q is using pyramid-style recruiting, aggressive social marketing, and a pitch adopted from downmarket cryptocurrency projects. And it’s working: Though the project has been public since at least early summer, Google searches for “Initative Q” have exploded since October 14.

Alongside that interest, rightly, is concern that the operation might be a scam. There are certainly a fistful of red flags, but as even inveterate crypto-naysayer David Gerard grants, the folks running the show seem to really believe in what they’re building, and have a track record of achieving big things.

That, however, doesn’t change the fact that Initiative Q is a really bad idea, at several levels. At least as it’s presenting itself right now, Initative Q has adopted some of the worst elements of scammy altcoins, without even the thinnest pretense of technological or ideological innovation. Even if it’s not an out-and-out scam, it’s setting bad precedents, and it’s inherently rife with risks.

1. It’s Premised On Sketchy Hype
The way Initiative Q most resembles a patent-pending crypto scam is its active stoking of FOMO, or Fear of Missing Out. Its own marketing materials compare it to “getting free bitcoin seven years ago,” promoters spin estimates of the currency’s future value out of thin air, and they’ve structure their marketing so that “the earlier you join, the higher your reward.”

Whatever the creators’ intentions, this rhetoric is bound to attract the most credulous audience, and get them caught up in the excitement of shilling Initiative Q on Facebook and to every member of their extended family. It also doesn’t seem like a coincidence that Initiative Q echoes QAnon, a dangerous viral conspiracy theory that has taken over certain corners of social media in the past year-plus.

In short, brace yourself.

Related: For the Love of All That is Holy, Do Not Take Out a Crypto Mortgage on Virtual Land.

2. It’s Totally Centralized
This is where things get weird: Initiative Q is a digital currency that’s not blockchain-based. Instead, it touts itself as a payment network with a smartphone app, instant payments, and better fraud prevention than credit card companies. In fact, it links its fraud prevention specifically to the idea that it’s centralized, saying that by establishing “patterns of appropriate and inappropriate behavior,” Initiative Q will build “more reliable fraud assessment.”

Translation: They’re watching you. Granted, that’s just an enhanced version of what banks and credit cards do, but that’s exactly the problem: Q seems to be promising nothing more than doing “more of the same, but better,” which isn’t an actual innovation.

This structure also seems to make having its own currency entirely pointless. Bitcoin exists as its own currency because the system requires an internal way to incentivize a global swarm of ledger hosts. If the Initiative Q creators really just want to build a centralized payment network with a smartphone app and better fraud detection, there’s no discernible reason to create their own currency—except for the fact that they’re trying to have their cake and eat it too, leveraging crypto hype while shouting that they’re definitely not bitcoin.

More fundamentally, because Q will be a private currency, you won’t truly control the money you receive, either from the company or from anyone who pays you. The network could simply shut down at any point, or the admins could move your money into someone else’s account. There’s also no guarantee the operation would avoid the kind of legal intervention that destroyed earlier centralized digital currencies like E-Gold and Liberty Reserve.

Initiative Q’s loud pronouncements that it’s not a cryptocurrency are obviously a response to Crypto Winter, and retail investors’ disillusionment. But its creators also seem completely blind to why people care about cryptocurrency in the first place.

3. Its Marketing is Shady
Initiative Q’s creators may be on the level, but they’ve presented their plans to the world with all the trappings of a scam. You can only “join” Initiative Q if you’re “recruited,” and each new joiner gets five invites to send out to friends … and recruiting others rewards you with more future “Q” currency. Even without a buy-in price, that’s quite literally a pyramid scheme.

Further, Initiative Q has been aggressive in using barrel-scraping content marketing tactics. Last week, to give just one example, this article showed up on the Forbes contributor network. Though the author of the piece says she wasn’t paid for it by Initiative Q, the sad truth is that anything from Forbes that’s not written by staff and published by the U.S. brand should at this point be regarded as disguised marketing materials, because they seem to exercise zero effective oversight over their global clickbait network.

4. It’s Not Anonymous
Initiative Q quells doubters by pointing out that they’re not selling anything—they’re just asking for your name and email address so they can keep you in the loop when the currency is launched. But as Gerard sagely points out, this trove of names and emails is both a giant honeypot for hackers and, if the operation goes bust, a list of people interested in get-rich-quick schemes that could be extremely lucrative for more overt scammers.

This is another nearly comical way the creators of Initiative Q seem to have missed the core source of the cryptocurrency enthusiasm they’re trying to use to leverage their weird non-crypto. The reality of exchanges and blockchain forensics has complicated the picture, but if there wasn’t at least the possibility of anonymous digital transactions—that is, digital cash—nobody would give a damn about cryptocurrency.

5. It Has No Technology
I’ll wrap up here by again citing David Gerard, who, despite his resistance to the charms of cryptocurrency, does seem to know his way around a payment system. As he points out, Initiative Q “don’t have anything as yet, except the notion of ‘build a payment network and it’ll be awesome.” Second, also per Gerard, many of the things Q is promising to build already exist in the form of Apple Pay, Google Pay, AI fraud prevention, and smartcard systems. In Gerard’s words, “It’s utterly unclear what unsolved problem Q is meant to address.”

In the end, then, the only interesting thing about Initiative Q is its architects’ decision to pitch it as “sort of like a cryptocurrency, but definitely not a cryptocurrency.” There’s an endless well of frustrated greed in the world, and for a time, cryptocurrency was the vehicle and object for that greed. What Initiative Q’s creators seem to have wholly missed is that there’s a whole lot more to it than that.