Initiative Q Under Fire for Q Coin: Pyramid Scheme Accusations Linger

Initiative Q Under Fire for Q Coin: Pyramid Scheme Accusations Linger

Embattled project Initiative Q was compelled to Tweet in its defense, “Is Initiative Q a pyramid or MLM scheme? No. Pyramid schemes collect money from new members and distribute it to earlier members. In contrast, joining initiative Q is completely free. So, clearly, there is no money to hand up the ‘pyramid’ to earlier members.” The matter appears hardly settled.

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Initiative Q Invite Links Make the Rounds

“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,” begins a typical chain message complete with invite link. “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).”

Initiative Q Under Fire for Q Coin: Pyramid Scheme Accusations Linger
Mr. Wilf

An invite link appears at the end of a wall of text, while a sense of urgency and fear of missing out (FOMO) is given less than a light touch. “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.”

Guerilla marketing is a tough gig, no doubt about that. Attempting to get a product noticed amidst a crowded space, noise, is not easy. Time honored numbers-games of spamming the known universe and appealing to immediate gratification must yield at least some results, otherwise they’d dry up as a tactic.

FT Column’s Radar Picks Up on Q

The Financial Times of London gets much flack, and deservedly so, for its crypto ignorance. Willing or not, they’ve published downright embarrassing pieces, but as a veritable legacy outlet they’re trying to pivot toward literacy.

Initiative Q Under Fire for Q Coin: Pyramid Scheme Accusations Linger

Their Alphaville column recently found Initiative Q, and the interaction is compelling. “Initiative Q: an elementary pyramid scheme with grandiose ideas,” was written by Jemima Kelly as part of a Someone is Wrong on the Internet series. Setting out to paint the entirety of crypto as classically pyramidal, mistaking in typical FT fashion Q for a cryptographic currency, “early adopters are incentivised to recruit other ‘HODLers’ by telling them a particular cryptocurrency is going ‘to the moon.’ Those others rush to buy, driving the value up and giving the earliest adopters the ability to sell for the heftiest gains.”

Easy money is the culprit, of course, and the column is keen to stress blame on the massive bull run in late 2017. It caused an avalanche of various scam coins and ICOs, and quite a few newer investors lost their shirts. Not fun.

Initiative Q is Different

“Initiative Q is actually different though,” the story continues. Q is a proprietary token derived from a “A regular old centralised database!” the FT cheers. Analyst David Gerard is quoted as affirming, “The Q token is a centralised private currency issued by Initiative Q. It’s presently worthless, and not exchangeable even on Initiative Q’s own servers — but they aspire to it being used in their nonexistent future payment network. At that point, they intend it to be freely exchangeable with dollars….But as far as I can tell, they’re completely sincere! It’s just their ideas that are bad — or don’t actually exist yet,” he explained.

Initiative Q Under Fire for Q Coin: Pyramid Scheme Accusations Linger

Facts seemingly straight from an Onion article include Q founder Saar Wilf as also behind the company Fraud Sciences, “which ended up being acquired by PayPal in 2008.” The report also soberly retells how economist Lawrence White, “a well-known economics professor at George Mason University who favours the idea of free banking and wants to abolish the Federal Reserve System, so… his involvement in this project makes sense. (As we have noted before, the involvement of world-renowned economists doesn’t turn bad ideas on new global currencies into good ones.).” It is unclear if professor White is involved much more than perhaps being an intellectual inspiration, however.

The combination of factors have brought Q within Financial Times‘ orbit. The “last couple of days it appears to have reached some kind of critical mass. Alphaville has been contacted by a handful of people in the past 72 hours — all of them young(ish) men — about the project, and the Twittersphere is abuzz with Q chat.”

Ex-PayPal Guys

Without an actual product, it’s hard to build hype. One way is by artificial exclusivity. As quoted above, folks can become investors only by invitation. And that “combination of a need for recruitment and the riches which flow from it is a classic sign of a pyramidical structure,” FT notes.

Once invited, more details emerge from the mysterious Q, such as the lines, “if millions of people join, Q could become a leading payment network, and, according to well-known economic models, that means the value of the reward would be around $130,000.” The figure was soon deleted from future recruiting emails.

Initiative Q Under Fire for Q Coin: Pyramid Scheme Accusations Linger

David Gerard elaborates on his earlier breakdown of Initiative Q, “The signup list collates the following information: — people who think get-rich-quick schemes can work; — people who will get their friends to sign up for a get-rich-quick scheme; — a full network graph of said people.”

FT quotes Wilf’s reaction to accusations and evidence presented as reading, “Clumping it with the cryptocurrency nonsense completely misses the point – we’re doing something way more interesting. It’s a way for the world to come together and solve economical problems that impact every person on the planet, which until now were unsolvable due to financial structures created centuries ago.” At least it’s not cryptocurrency nonsense.

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