You may have already got this very enticing WhatsApp or email. It goes like this: “Initiative Q is building a new payment network and giving away significant sums of their future currency to early adopters. It is by invite only and I have a limited number of invites. Click this link to sign up…Initiative Q will succeed only if many people join. The more people invite their friends, the greater the likelihood of reaching the goal of each Q being worth around one US dollar.” You can see the site here: initiativeq.com.
What’s the deal? This start-up aims to replace the current payment systems (currency, credit cards, cash, wire transfers) because they are clunky and costly. There are newer technologies ready to replace them, says the material on the site, but this does not happen because not enough people switch to the new currencies. If a platform was created that enough people in the world on-boarded, then $20 trillion of transactions a year will flow on this new payment system. “Initiative Q is reserving this Q currency for people who join today—the earlier you join, the more Q you can reserve”. And then the killer line: “Think of this as getting free bitcoin seven years ago.”
Why is it so attractive? Because there is no pitch for paying anything right now for a seat at the table to what could be a future Bitcoin. Just your email and name is good enough to register you for this future currency. And the more people you invite, the more Q you get. Your “wealth” increases as your network increases. All people have to do is to sign up. No money that you pay out—at least not right now, just a bit of your digital detail.
What do I think? Several things actually. First, there is no payment system as of now—it seems there are no Qs in the system just yet. The site says the system is being built and the outreach to get people on board looks like network building before the launch. Two, will Qs (as the currency may be called) ever replace regular currency? Currency is when the vegetable vendor accepts it. Or the Delhi Metro allows you to use it to buy a ticket. Or a hot dog seller in Manhattan accepts this currency, as does the noddle seller in Taipei. So either the whole world switches over to this new, yet to be minted, currency, or it does not work. Do you see that happening? I don’t. There is a logic to fiat currencies and a private network can mimic it but cannot replace it. So, no, I don’t believe that Qs will become dollars. Three, cash out is the key and most alternate currencies fail this test. The problems for privately owned and floated currencies comes in a cash-out—or conversion of the currency into things or cash. If you find other people who use this alternate currency and deal with them, you are fine, but the minute the alternate currency does not work, you reach for your regular currency. Four, what if another, better, private currency comes by and people switch from Q to, say, Zed, then what’re you left with?
“But the mail says I will get rich, let the currency fail, but there is an opportunity to make money. It’s just my email. What’s the harm?” Sure, go ahead and share your mail. But I will quote crypto journalist and author David Gerard here. He has this to say: “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.
Any number of disreputable people and companies would throw their hats in the air at getting hold of a database like this. Affinity fraud loves this sort of list of pre-screened suckers…Advertising trackers on the Initiative Q site include Facebook and Google Tag Manager—so these ad networks will also have categorised you as someone susceptible to this sort of pitch. So if you signed up—you’re marked as a prime target for more pitches of this sort in the future.” You can read the full blog here
So, am I signing up? Nope. I don’t think there is a short cut to earning money and getting rich. The very lucky people in their world are the owners of a winning lottery ticket or hit the jackpot on the gambling table. But getting rich by sharing my email is not a road that I will walk on. I find that once you open yourself to such ideas, others will follow. And then you are wiring money to somebody in Nigeria very soon.
Monika Halan is consulting editor at Mint and writes on household finance, policy and regulation