The Initiative Q Saga Offers Crypto Important Lessons
Initiative Q is not a cryptocurrency. "No buyer will join a new payment network with no sellers, and no seller will offer a new payment option that no buyer uses."
Initiative Q hasn't even been launched yet, but it already has a reputation. Founded by former PayPal, the online payments giant, employee (and founder of Fraud Sciences Corp., acquired by PayPal in 2008) Saar Wilf, the startup is inviting select individuals to sign up early to its payment network and encouraging them to enlist their friends.
However, despite announcing that two million people from over 180 countries have already signed up to use the network once it launches, Initiative Q's system is not offering a new cryptocurrency or blockchain. Yet even though it clearly states this on its website, it has been flagged as possibly 'the next Bitcoin' by certain members of the press.
Nevertheless, Initiative Q does offer crypto at least two important lessons. Firstly, its proactive marketing methods are arguably something crypto should try to emulate and build upon.
And secondly, the mistaken assumption that Initiative Q might be a 'new Bitcoin' reveals that crypto is still painfully misunderstood, and that it needs to work harder to communicate to the general public that it's more than a 'get-rich-quick' scheme involving digital money.
Chicken, egg and scam
As founder Saar Wilf tells Cryptonews.com, the pre-building of a user base for Initiative Q – even before it has a product – is actually a key component of its payment system.
"The reason we’re not seeing a globally popular modern payment network is the “chicken and egg” barrier — no buyer will join a new payment network with no sellers, and no seller will offer a new payment option that no buyer uses," he says.
As interesting as it sounds, this business strategy – which is also complemented by 'free' access for early signees to the yet-to-be-launched Q currency – has resulted in charges that the system is fraudulent.
For example, an extremely informal poll conducted on Twitter has found, at the time of writing, that 55% of cryptocurrency fans believe Initiative Q is a scam.
Meanwhile, comment pieces in such places as the Financial Times and Mashable have described the system as a pyramid scheme, given that it's based around select people being invited to join and being offered free currency, all in the hope of making money out of the fact that they were early adopters.
However, Initiative Q denies all claims that it's a scam. Earlier this month, it told Mashable that it wasn't a pyramid scheme: "The key differentiator is that the potential future gains are a result of the currency becoming widely adopted, not from newcomers paying to join."
And speaking to Cryptonews.com, founder Saar Wilf explains that its approach to recruiting users is directed at solving a fundamental problem affecting new payment networks, rather than at making money out of 'greater fools.'
"Initiative Q’s ability to recruit a critical mass of buyers and sellers to adopt a new payment system, allows us to simultaneously upgrade the whole infrastructure end-to-end - something that no one was able to achieve so far," he says. "This will make payments far simpler, faster, and cheaper."
Initiative Q is not a cryptocurrency, as Wilf confirms.
"The main attribute of cryptocurrencies is the fact that they are decentralized and “auto-govern”. Q, on the other hand, will be centrally managed by an independent democratically-elected monetary committee separate from the Q company."
Given this big difference, it becomes curious as to why the public and parts of the media have confused Initiative Q with crypto, although Wilf himself has an explanation:
"Since the value of Bitcoin and other cryptocurrencies increased significantly and rapidly about 12-18 months ago, they have received much public attention […] and consequently I think that the terms cryptocurrency and digital currency have erroneously become synonymous. Since Q is offering a new payment network and digital currency, and many hope it could someday have significant value, this comparison by lay people is to be expected."
But as much as this explanation makes sense, it should be troubling for the crypto industry and community. If the public regards 'cryptocurrency' simply as 'electronic money,' then clearly crypto has failed at making its distinguishing virtues – decentralization and immutability – known outside of the industry.
And this is exactly why the whole Initiative Q saga should be a lesson to crypto, not because of suspicions that Q is a pyramid scheme, but because the episode reveals how much more work crypto has left to do to gain widespread adoption.