Crypto Opinion

Initiative Q – The Next Bitconnect?

If you’re a social media user, you’ve probably come across Initiative Q by now.

The well-marketed pseudo-cryptocurrency has taken social media by storm and shared by millions people around the world with promises of a financial revolution and, better yet, free money. Hmm.

So what is it?

Centralized Digital Currency – Sort of

“Initiative Q is building a new payment network. To get people to adopt it, they’re giving away significant sums of their future currency to early users. They require only name, email and an invite from an existing user.”

Initiative Q claims to be creating a form of payment that some feel may rival Bitcoin, while others denounce it as a scam.

The concept is of electronic money held in a centralized ledger. It doesn’t use a blockchain, and it doesn’t have a limited supply, two things which immediately distinguish it from Bitcoin. Blockchain networks help ensure decentralization, meaning nobody is in charge of the project, and the limited supply means nobody can simply print off more Bitcoin.

Initiative Q already seems to be at quite the disadvantage, but the founders who claim to be “ex-Paypal guys” state that the decision to shun blockchain will help reduce costs (the Bitcoin network is incredibly expensive to run and consumes more electricity than the island of Ireland).

So far, there are a few red flags. With so many new cryptocurrency projects coming out that arguably rival Bitcoin’s application as a digital currency, it’s difficult to see why a project would choose to take like what seems to be a step back in cybersecurity by avoiding blockchain – unless the reason is to achieve total control over the network.

However, if Initiative Q is not a cryptocurrency it may be far easier to use and more accessible to the many people who find using crypto wallets and exchanges too complex and technical, which could explain the huge surge in people signing up (2 million and counting).

Hallmarks of a Pyramid Scheme

One issue is that for a project that the founders insist is not a scam, it certainly meets a lot of the warning signal criteria.

The first is that it offers free money for signing up – at the moment the website banner reads that the next spot is worth $22,942. So that’s how much the next person who signs up receives in Initiative Q funds! Or, rather, that’s how much the funds are estimated to be worth in the future if 1Q = 1USD.

Ah.

This generous estimate is based on the following:

The network is “superior technologically” and will “eventually overtake credit cards.”

Therefore, the total future value of Qs could reach a few trillion dollars. Since there are currently 2 trillion Qs, the goal of one US dollar per Q is achievable.

So the site is already claiming that it will completely eclipse all credit cards in the future and that the founders are now, without even printing off any new Q tokens, sitting on funds worth 2 trillion dollars. That reeks of desperate, disingenuous marketing and is not a good start, but let’s continue all the same.

The second hallmark of a Ponzi scheme is that it relies on users recruiting more users to join them and incentivizes them financially to do this. The more people you recruit, the more Q you eventually earn, so that’s immediately another red flag.

Q is available by invite only and the site attempts to create a false sense of urgency by showing the ticker with the diminishing value of your potential funds as well as allowing a limited number of invites per person.

Finally, the concept is not explained in technical terms at all. The Initiative Q network is simply described as “superior technology,” and that’s it, which could pretty much mean anything.

Saving Grace

However, the video makes one thing clear at the very beginning – the network is not asking users for an investment, simply that they join. At least for the moment, there’s nothing to suggest that people are getting scammed out of money, just that a company with some pretty distasteful marketing practices is pushing for viral adoption through social media.

However, at some point the free Q will be exhausted and presumably, people will need to purchase Q in order to participate in the network. It’s possible that the company is gearing up for yet another exit scam, and given the shady tactics used so far, I wouldn’t be surprised. It’s also possible that the enormous cache of personal information gathered from the 2 million hopeful users will be put to some other nefarious use.

However, it could be that they’re simply trying to create a rival to Bitcoin by capitalizing on the increasing mainstream awareness of cryptocurrency. In fact, the site even lists one of the reasons to join simply as:

Why not?

Think of it as getting free bitcoin seven years ago.

Yeah. Think of it as getting Bitcoin that needs to have a market cap of $2 trillion for one unit to be worth $1, but also the founders can print off unlimited amounts with no transparency or community oversight. I think I’m going to pass on this one.

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Facebook Eases Crypto Advertising Ban….for some companies

Facebook has announced that it is easing its recent ban imposed against cryptocurrency. They will allow pre-vetted crypto companies to advertise on their social network. The news has seemingly fueled rumors that the tech giant is considering buying Coinbase, although at the time they introduced the full ban, they did add the caveat that they would conduct further investigation to determine how best to proceed with crypto advertisements.

Facebook has had a torrid year, having fallen foul of data laws. Founder Mark Zuckerberg has been forced to appear at a congressional hearing to defend the company’s collection and use of personal data, following the controversy surrounding Cambridge Analytica’s use of personal information.

The crypto ban was first launched on January 30, when product management director Rob Leathern announced that ads that “promote financial products and services that are frequently associated with misleading or deceptive promotional practices, such as binary options, initial coin offerings and cryptocurrency.”

This week’s announcement isn’t exactly a full u-turn. At the time of the announcement, Facebook said that they would monitor the situation in the future. The social media giant has said that ICOs and binaries will still be prohibited. However, other crypto companies can now submit an application and, on acceptance, will be allowed to publish ads on the site.

Considering the announcement of the advertising ban saw Bitcoin prices slump, there had been hopes that the reversal would see prices rise again, but there has been no indication of that yet. However, it has further ignited rumors of the company’s intention to buy Coinbase. Following a major management reshuffle last month, they announced a blockchain exploratory team that would be looking into its potential use. The head of the team is David Marcus, who is not only the former head of Messenger but also sits on the board of Coinbase. With Facebook’s 2 billion users, if it introduced its own crypto or acquired another, it could potentially be used by more than any other single currency.

Interested in other cool crypto posts….check out A look at Historical Crypto Corrections and The Top Secret Hedge Fund That Everyone Knows About.

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