Is Initiative Q a pyramid scheme or just a really bad idea?

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If things seem too good to be true, they probably are. That’s a pretty good motto to live by, and one that’s particularly pertinent in the days of fake news and crypto-bubbles. However, it seems like advice many people haven’t heeded with Initiative Q, a new ‘payment system’ developed by the brains behind PayPal technology.

That’s not to say that Initiative Q certainly is too good to be true. But when an organisation appears to be offering almost hundreds of thousands of dollars to users who simply offer an email and then encourage others to offer theirs, caution is essential. If it looks like a pyramid scheme, then do you really want to risk the chance that it might just be a pyramid scheme?

What is Initiative Q?

Initiative Q, is, according to its founders, “tomorrow’s payment network.” On its website it says that current methods of payment, such as credit cards, are outdated. They open up the potential for fraud and other bad business practices, as well as not being particularly efficient.

Initiative Q claims that is it going to develop an alternative to these systems “which aggregate the best ideas, innovations, and technologies developed in recent years.” It isn’t specific about which ideas and technological innovations its referring to, but if you read through the payment model it wants to develop, there are elements that sound a lot like blockchain.


For example, it talks about using more accurate methods of authentication to minimize fraud, and improving customer protection by “creating a network where buyers don’t need to constantly worry about whether they are being scammed” (the extent to which this turns out to be deliciously ironic remains to be seen).

To put it simply, it’s a proposed new payment system that borrows lots of good ideas that still haven’t been shaped into a coherent whole. Compelling, yes, but alarm bells are probably sounding.

Who’s behind Initiative Q?

There are very few details on who is actually involved in Initiative Q. The only names attached to the project are Saar Wilf, an entrepreneur who founded Fraud Sciences, a payment technology that was bought by PayPal in 2008, and Lawrence White, Professor of Monetary Theory and Policy and George Mason University.

The team should grow, however. Once the number of members has grown to a significant level, the Initiative Q team say “we will continue recruiting the world’s top professionals in payment systems, macroeconomics, and Internet technologies.”

How is Initiative Q supposed to work?

Initiative Q explains that for the world to adopt a new payment network is a huge challenge – a fair comment, because after all, for it to work at all, you need actors within that network who believe in it and trust it.

This is why the initial model – which looks and feels a hell of a lot like a pyramid or Ponzi scheme – is, according to Initiative Q, so important. To make this work, you need a critical mass of users.

Initiative Q actually defends itself from accusations that it is a Pyramid scheme by pointing out that there’s no money involved at this stage. All that happens is that when you sign up you receive a specific number of ‘Qs’ (the name of the currency Initiative Q is proposing). These Qs obviously aren’t worth anything at the moment. The idea is that when the project actually does reach critical mass, it will take on actual value.

Isn’t Initiative Q just another cryptocurrency?

Initiative Q is keen to stress that it isn’t a cryptocurrency. That said, on its website the project urges you to “think of it as getting free bitcoin seven years ago.” But the website does go into a little more detail elsewhere, explaining that “cryptocurrencies have failed as currencies” because they “focus on ensuring scarcity” while neglecting to consider how people might actually use them in the real world.”

The implication, then, is that Initiative Q is putting adoption first. Presumably, it’s one of the reasons that it has decided to go with such an odd acquisition strategy. Ultimately though, it’s too early to say whether Initiative Q is or isn’t a cryptocurrency in the strictest (ie. fully de-centralized etc.) sense. There simply isn’t enough detail about how it will work.

Of course, there are reasons why Initiative Q doesn’t want to be seen as a cryptocurrency. From a marketing perspective, it needs to look distinctly different from the crypto-pretenders of the last decade.

Initiative Q: pyramid scheme or harmless vaporware?

Because no money is exchanged at any point, it’s difficult to call Initiative Q a ponzi or pyramid scheme. In fact it’s actually quite hard to know what to call it. As David Gerard wrote in a widely shared post from June, published when Initiative Q had a first viral wave, “the Initiative Q payment network concept is hard to critique — because not only does it not exist, they don’t have anything as yet, except the notion of “build a payment network and it’ll be awesome.”

But while it’s hard to critique, it’s also pretty hard to say that it’s actually fraudulent. In truth, at the moment it’s relatively harmless. However, as David Gerard points out in the same post, if the data of those who signed up is hacked – or even sold (although the organization says it won’t do that) – that’s a pretty neat database of people who’ll offer their details up in return for some empty promises of future riches.