Even if you don’t buy into Bitcoin maximalism, you have to admit that this “cryptocurrency” market is full of bad ideas and outright scams.  As Bitcoin gains popularity, more and more people want a chance to get a piece of what they missed out on when Bitcoin saw meteoric spikes in price against the USD.  Most of these scams use buzzwords like “crypto” or “blockchain” or “decentralized” to draw in money from people who don’t quite understand what those terms mean.

The latest is a project called Initiative Q.  It’s not a cryptocurrency, but it takes the worst ideas of scammy altcoins and adds a centralized committee to be in charge.  It’s an attempt at non-government fiat.  It is utterly idiotic.

It’s a clear scam and shouldn’t deserve attention, but I’ve seen a lot of people in the libertarian community floating referral links around.  That means they’re getting people to sucked in who are acting as free marketing.

There’s plenty wrong with Initiative Q, but I will only want to focus on what all libertarians should agree on: how awful the USD is.

Why talk about the USD when we’re talking about Initiative Q?  Don’t they have a way to determine their monetary policy and a committee to manage it?  Look at their economic model page:

The money supply must match economic activity to keep purchasing power stable. Therefore, since economic activity has no cap, the amount of Qs should also be uncapped.

However, it is extremely important that the money supply only grows in proportion to the growth in the demand to hold Qs, and not for other reasons. For example, governments that printed money with abandon to fund their budgets (and in doing so transferred wealth from the citizens to government accounts by devaluing the citizens’ currency) created hyperinflation, and eventually made their currency worthless.

Thus, while theoretically unlimited, the Q supply is controlled in practice. This is done solely through monetary instruments that may be used only for the goals of maintaining currency stability, and promoting adoption.

They control the supply of Q “solely through monetary instruments that may be used only for the goals of maintaining currency stability, and promoting adoption.”  They vaguely talk about how this will be done by “human professionals” since this activity is “still beyond the reach of computers.”  But then, they hit you with this:

As an additional means of instilling trust in the long-term purchasing power of Q, the monetary committee will continuously offer to buy Qs in exchange for USD (and other currencies) at the target rate of 1 Q per 1 USD. This will assure sellers they can confidently accept Q as a payment method.⁵

This requires the monetary committee to hold large reserves of USD. The reserve balance will be publically available, assuring members that they can convert to USD at any time, thus supporting Q stability. As Q becomes a global standard, and trust in its long-term value increases, the reserve ratio can decrease.

Well, this is awkward.  Why do they need humans to manage a monetary policy that’s pegged to the USD and then sell the digital product at a fixed rate?  They don’t.  And how will Initiative Q maintain long term purchasing power when the USD is steadily losing purchasing power?  It won’t.

They’re not clear on whether they plan to replace the USD with Q because they don’t say whether they plan to decrease their USD reserves to zero.  But that doesn’t matter since they’re never going to reach that point.  Initiative Q will “collapse” at some point after they sell enough Q for USD to their victims.  They’re also willing to sell you future grants of Q at a discount for an even better chance of losing your money.

Initiative Q is a scam and it’s not even a well-designed scam.  Stay away and resist the urge to get easy money.

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