Over the past month, a new project named Initiative Q has been making the rounds all over social media. Hailed as “a modern payment network,” created by “the founders of PayPal,” the hype for Initiative Q is real.
They’ve accomplished this buzz using the greatest advertising tactic ever - free money.
Initiative Q is using the viral marketing strategy of using referral links to drive traffic, and it’s working. I can’t go ten minutes on Twitter without someone spamming me their referral link.
People who sign up on Initiative Q’s website get free tokens, and their token allocation increases if they get their friends to sign up. Everyone and their mom therefore, is shilling this “cool new project.”
Due to all this hype, a lot of people have been asking: is Initiative Q a scam? The answer is...it’s complicated, but in this article I’ll do my best to explain what’s going on.
Airdrop = Scam?
First things first, let’s discuss airdrops.
One of the claims that Initiative Q supporters make is that cryptocurrency airdrops are a great way to fund their trading accounts.
Airdrops have become very common over the past two years in the cryptocurrency space. As ICOs look to avoid regulatory hurdles, many projects are deciding to give away their token for free (in an airdrop) vs. selling it in an offering.
In general, I agree that airdrops can be profitable. If strapped for cash, airdrops provide a great way for cryptocurrency beginners to get into the game. However, here are three big differences between Initiative Q and standard airdrops.
#1 - Initiative Q asks for your personal information (more on that later)
Many legitimate airdrops don’t ask for your information, because they don’t care. Since they aren’t offering a security, it doesn’t matter who’s receiving the tokens, and therefore submitting personal information is unnecessary.
Initiative Q, on the other hand, asks for your name and verified email address. Why?
#2 - There’s no ETH address required
Most airdrops work by collecting Ethereum addresses and mass-sending their token to people who sign up. This accomplishes their goal of getting the token into as many hands as possible, without the difficulties of an ICO or mining launch.
Initiative Q does not ask for an ETH address, so there’s really no way to tell how they’re going to get the tokens to you. It does seem like they’re launching their own chain, but this means that…
#3 - There’s no guaranteed trading liquidity
Getting a cryptocurrency listed on an exchange is not an easy task, especially when the cryptocurrency features a new blockchain structure that the exchanges are unfamiliar with. We saw this first-hand with Nano, whose block-lattice structure caused headaches for exchanges who were trying to add Nano to their platform.
Even if Initiative Q is not a scam, and they have a real functioning product, there’s nothing that assures you’ll be able to sell it. Thanks to network effects, Ethereum tokens can easily be bought and sold on a variety of markets, meaning even the scammiest airdrop can be sold.
With Initiative Q it’s not so clear.
Every ICO investor knows that the first thing you should look at when investigating a token offering is its token metrics, i.e. how the token supply will be split up.
The reason token metrics are important is because they show how much the developer team can influence price. Believe it or not, there are ICOs out there who use their warchest to inflate prices and dump on their community. Could this be the case for Initiative Q? Possibly.
Digging into the data, Initiative Q’s token metrics are not terrible, but there’s still something fishy. They are:
80% - incentives (buyers, sellers, agents, contributors)
10% - Initiative Q payment company (ding ding ding)
10% - Q monetary committee monetary reserves
For all intents & purposes, that’s 20% reserved for the Initiative Q company. That line item should set off the alarm in your head: it’s a company. Companies exist to make profits. What better way to publicize your company than by giving away free money?
It’s possible that Initiative Q is a legitimate company, trying to make a CashApp/Venmo ripoff, and that this token is just their way of doing viral marketing. Since they don’t have a product yet, we can’t tell, so let’s continue by taking a look at their...
The first thing that should set off red flags is the ridiculous claims on their website. Right on their homepage, Initiative Q claims that by signing up for their airdrop, you’ll receive $40,000. For reference, that’s about the average personal income for citizens in the United States.
Do you really think Initiative Q would be giving away an entire year’s salary, just for signing up on their website?
Now, in their defense, they’re not giving away $40,000 worth of cash. They’re giving away
$40,000 in projected future value of their tokens. Which makes me wonder...how did they come up with that outrageous figure?
This is where things get interesting. I decided to read through Initiative Q’s website and tally up how they got to their laughable $40,000 airdrop value. There’s a long description on their website, but here’s the summary of how they got there:
It is realistic to expect that such a network would eventually overtake credit cards, which account for $20 trillion in annual transactions. The total amount of money in the world is roughly half the annual economic activity. The value of all Q currency could thus reach half of Q’s annual volume (i.e. $10 trillion).
OK, so they think their cryptocurrency is going to be worth $10T. Putting aside the fact that this is larger than the implied value of all of the gold on Earth ($7T), let’s see what their supply is:
“Since there are currently 2 trillion Qs, the goal of one US dollar per Q is achievable.”
There we have it. Initiative Q expects to reach a market cap in the trillions, giving their token a value of bout $1. Does this seem plausible to you?
For comparison, let’s see how this stacks up to existing cryptocurrencies.
Today, the entire cryptocurrency market is worth about $205B. Even at its peak in late 2017, the market was only valued at $834B. Initiative Q is already overvaluing themselves, but let’s see how they compare to individual cryptocurrencies.
Right now, Bitcoin’s market cap is only $111B, and that’s as the number one cryptocurrency in the world. So, in order to reach 1Q = $1, the entire Q network would have to be worth 20x the Bitcoin network.
Today there have been about two thousand competing cryptocurrencies launched, all trying to knock Bitcoin off the top spot. It’s highly unlikely that Initiative Q is able to do what altcoins have been trying to do for years.
It should be clear to by now that Initiative Q’s claims are silly, but why are they doing this?
One reason that Initiative Q could be doing this launch is to collect data.
Prior to becoming a Bitcoin maniac, I used to work in internet advertising. I know for a fact that data is valuable, and advertising companies will gladly pay heaps of money for access to good lists.
The data collected by Initiative Q is some of the best around. Everyone who signs up gives a name, verified email address, and shows that they are willing to put in energy to make money (signing up takes effort).
These emails could easily be used to advertise get-rich-quick schemes, or even worse, scams.
Sure, so does Facebook. That didn’t stop Cambridge Analytica from scraping illicit data and using it to advertise during the 2016 election.
Elon Musk Wannabes
One of the hallmark ways to identify a cryptocurrency scam is to take a look at the team. If there are no public team members, or none that have a track record in technology, it’s possible that the project is a money grab.
Browsing Twitter, you’d think that Initiative Q is from “the creators of PayPal.” Search “Initiative Q Paypal” and you’ll find some surprising claims:
Wow, I didn’t know Peter Thiel & Elon Musk were making a cryptocurrency! Let’s take a look at Initiative Q’s website to verify these claims. There’s no “team” page, so we can’t see who’s coding it, but there is reference to their leader:
Saar Wilf is a real person, with a real LinkedIn page, but as you can see, he’s not the “creator of Paypal.” If you browse his work experience, you will find that he was the Founder & CEO of a company called “Fraud Sciences.”
Putting aside its hilarious name, it seems “Fraud Sciences” was a legitimate company, and that Saar was a director at PayPal from 2008-2010. It’s possibly this position means nothing, as Saar could have been hired only temporarily after the merger to facilitate a smooth transition.
What about the technology?
The nail in the coffin for Initiative Q is that there’s no product. Most ICOs or up-and-coming cryptocurrencies will explain how they plan to build their network. They’ll usually draw up a whitepaper, diving deep into the technical details about the economic revolution they’re about to lead.
What about Initiative Q? Nope. No product, no details, no specifications. There is a roadmap, but you might find this a bit disappointing:
Initiative Q seems to be collecting your data so that they can put you on their network when it launches in three years. Hmm...in the meantime, maybe we can find some information about what they plan to do. There isn’t much, but we do find that Initiative Q claims they’re better than cryptocurrency:
This FAQ section continues to explain why Initiative Q is better than Bitcoin. Their reasons include price volatility, legal controls, irreversible transactions, and energy waste.
Any experienced Bitcoiner knows that these arguments are baseless FUD, but if you’d like to hear them tore apart one by one, Udi Wertheimer does a great job of dismantling these claims in this article.
Based on all the information I’ve seen so far, it seems Initiative Q is just another payment processor. Similar to PayPal, Venmo, CashApp, or even Facebook Payments, that will be a centralized, censorship-friendly payment app.
I could be wrong, but we won’t know for sure until their product launches...in 2021.
To wrap up this takedown, I’d like to address not Initiative Q, but their supporters. Throughout my research of Initiative Q, I had a million conversations with Initiative Q proponents that ended the same way:
“Well….it’s worth a shot!”
Yes, it’s possible that Initiative Q is not a scam. It’s possible that they’re just a company orchestrating a brilliant viral marketing campaign, and there’s nothing wrong with that. PayPal, CashApp, and even Coinbase all offer referral programs (in real money) to attract new users.
My problem with Initiative Q is that it shows where people’s priorities lie. There are a million ways to make money in the world, especially in the cryptocurrency space, and it’s disappointing seeing so many people wasting their time on gambles like this.
Time is precious, and every second used by Initiative Q’s affiliates to promote this possible scam could’ve been used to do something that’s actually profitable. No one got rich playing scratch-offs. True wealth is created by learning skills and building businesses, not waiting for random internet companies to hand deliver you $40,000.
Disclaimer: this article shouldn’t be taken as financial advice and does not represent the views or opinions of CryptoGlobe