Initiative Q – a Ponzi scheme for the social media age

Over the last few weeks I’ve had more and more people ask me about Initiative Q – always with their accompanying referral link.

If you’ve not been told about Initiative Q yet by one of its “evangelists” (yes, that’s really what its users are called) here’s a rundown.

Initiative Q is a new payment system set up by a guy who sold his fraud detection software to PayPal back in the day and an economics professor in Virginia.

Their idea is to create a new, private currency that will have $5 trillion of transactions every year.

Should they achieve this goal, they assure us each Q will be worth $1. Based on said economics professor’s calculations.

Why should you care? Because if you give them your email address RIGHT NOW they will send (sorry “allocate”) you $27,015 of Q.

Wow! $27,000 for my email address. That’s amazing!

Well, no. you’re only “allocated” the full amount when you can rope five more people into joining – using your affiliate link, of course.

They then must get five more people each to join using their affiliate links and you’ll get a kick back from each of these 125 new Q evangelists.

Only now are you “allocated” your full $27,000 amount.

But hey, even if you can’t annoy any of your friends and family into joining, you’ll still get 10%. So that’s currently $2,700.

The sooner you sign up, the more you’ll get. The dollar ticker on Initiative Q’s site is continually ticking down. Back in June, it was around $140,000.

I’m sorry for not writing about this back then. Had I done so you could be looking at enough money to buy a house (anywhere outside of London) for merely giving these guys your email address and roping in some friends.

But then, that’s the thing with a pyramid scheme, isn’t it. The sooner you get in, the more you make. That’s what you’re always sold on.

Initiative Q takes this one step further, however and adds the element of urgency.

Remember, you only have 96 hours to get those five new members. Better get posting your affiliate link everywhere you can think of.

I’m sure by now you can tell I’m not overly impressed by Initiative Q or the shameless and cult-like way it is promoting its product.

Your email address and profile as a “sucker” is worth far more to these people than your money

On its website, it assures you that it isn’t, in fact, a pyramid scheme.

“We don’t want your money! We want you to Join!” flashes the text on its slick video, before showing “James” has a Q balance of $150,000 – just for signing up.

How can it possibly be a pyramid scheme if it’s giving you money? Isn’t that the opposite of how a pyramid scheme works?

Well, no. Not in the age of big tech.

Here’s where we get into what you’re really giving away, and how Initiative Q will really make its money.

What you are giving Initiative Q is your email address, list of connections and – most importantly – the information that you’re motivated by “free money” messages.

Initiative Q has collected a database of millions of people who all respond to promises of free money and are willing to plug any company offering them it.

This kind of list is worth incredible amounts to advertisers.

The site itself has ad trackers from Facebook and Google Tag Manager. So just by visiting the page you’re showing advertisers you’re the type who goes for “get rich quick” schemes.

You’re tagged as a sucker and will see more and more get rich quick ads targeted at you.

But wait. What about your $27,000 of Qs? Who cares about targeted ads if you’re getting free money?

Well, the thing about those Qs is, you aren’t getting any for a very long time – if ever.

Notice how I said these Qs are “allocated” not sent to you?

Well, Initiative Q plans on beginning to release these Qs in “late 2021”. And it won’t be releasing them all at once. It will be in batches.

From Initiative Q:

The reward Qs reserved for you will be released gradually. Distributing all the Qs at the same time would flood the market and devalue the currency. Therefore, once the system goes live and begins to grow, only a set proportion of one’s reserved Qs will be available for spending.

But wait. It gets better…

Here is Initiative Q’s biggest red flag

The network may not launch at all. It states as much on its website, down near the bottom of the FAQ:

Initiative Q needs many committed users to ensure a meaningful network of buyers and sellers. If a critical mass is not reached, the project may not go forward. Because the rewards are only valuable once the system is functional, it is in everyone’s interest to get others to join.

Are you starting to see what’s going on here yet?

Let’s lay it out.

Initiative Q is using a classic pyramid scheme structure to get as many signups as possible in as little time as possible.

Only, instead of money, its participants are giving away their personal data and links to their five most gullible friends.

Initiative Q very quickly collets a database of people who are liable to participate in “get rich quick” schemes and rope their friends into doing the same.

Now. One of two things may happen at this point.

Either:

“Critical mass” is reached in some unspecified amount of time and Initiative Q begins to actually build its currency.

Or, “critical mass” is not reached and Initiative Q is left with a database full with millions of “suckers” email addresses and their connections.

It can then sell its company on to the highest bidder.

Think how much Facebook is worth and then realise that valuation is based on how many ad slots it can sell on to advertisers. And realise that most people on Facebook aren’t even the type to go for get rich quick schemes.

How much do you think a company with a list of tens of millions of email addresses, all of which are known to be enthusiastic responders to advertisers is worth? I don’t know, but I think it’s fair to say an awful lot.

I have even seen posts by people saying this could all be an elaborate phishing scam to get people’s email addresses and commonly used passwords. I don’t think it’s quite that criminal. But it’s definitely worth using a throwaway email address and unique password if you sign up.

Perhaps I’m being too cynical

But maybe I’m jumping to conclusions. Perhaps Initiative Q really does want to create a new, better currency.

Maybe it really does believe its 2 trillion Qs will one day be worth $1 each.

Maybe it realised the best way to get this currency distributed was to employ a pyramid-scheme structure.

But it provides zero information on how this currency will actually work. All it tells us is that it will be faster and more efficient than what we have now and gives us some basic equations about the “velocity of money”.

And that’s before we even get into the fact that its Qs will be centrally controlled by Initiative Q.

It will have the power to delete accounts, reverse transactions, and create more Qs whenever it feels like it.

The problem with our current monetary system isn’t its speed or ease – we’ve had contactless and faster payments for years in the UK.

It’s that it is subject to mass manipulation. But at least manipulation of national currencies is done out in the open and ultimately people can be held to account when things go wrong.

From what I can see, Initiative Q just wants to replicate this, but with itself as the central bank. I can see no benefit to this.

This is the opposite to what bitcoin, for example, proposes.

Bitcoin and cryptocurrencies of its ilk cannot be controlled by a central party. That’s the whole point. Bitcoin takes the power away from a central authority and gives the power back to the users.

Initiative Q is giving that power to a private company – itself – which cannot even be held to account by the public.

And that’s if we take it at its word and don’t just look upon it as an ingenious way to collect a database of “suckers”.

But what about the actual tech, maybe that has something going for it?

I haven’t mentioned Initiative Q’s tech yet because, well, it doesn’t even have any.

It doesn’t even plan to start building anything until it has reached its “critical mass” of signups – whatever that number is.

There is no white paper. There is no technical documentation, there is nothing but a flash website and its endlessly reposted emotionally manipulative spiel:

Initiative Q is an attempt by ex-PayPal guys to create a new payment system instead of credit cards that were designed in the 1950s. The system uses its own currency, the Q, and to get people to start using the system once it’s ready they are allocating Qs for free to people that sign up now (the amount drops as more people join – so better to join early). Signing up is free and they only ask for your name and an email address. There’s nothing to lose but if this payment system becomes a world leading payment method your Qs can be worth a lot. If you missed getting bitcoin seven years ago, you wouldn’t want to miss this.

Although, it’s worth noting that for all Initiative Q’s railing against cryptocurrencies in its FAQ, it has registered 2 trillion Initiative Q tokens on the Ethereum blockchain.

When questioned about this, the founder Saar Wilf said: “We did not yet decide what will the backend settlement platform. So in the meantime we registered the Ethereum tokens.”

Here’s the Twitter exchange:

So, what should you make of Initiative Q?

That’s a good question. Personally, as I’m sure you can see, I’m extremely sceptical. But I know a number of people who take the “Well, I’ve got nothing to lose” approach.

And I suppose they are right. If it really does take off, they might make some money. I highly, highly doubt it, but I’d never rule it out completely.

And if you look at the risk vs potential reward, I suppose it might make sense to sign up.

However, I don’t think I’ll be become an Initiative Q “evangelist” anytime soon.

If you do, I would strongly advise you to use a throwaway email address and a unique password.

That way you really do have nothing to lose. Although, you’ll still be tracked just by visiting the site.

Until next time,

Harry Hamburg
Editor, Exponential Investor

Category: Cryptocurrency

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