Nov
26
Fans of the TV series “Seinfeld” will recall an episode in which Jason Alexander’s character, George Castanza, tries to interest Jerry in selling NBC on “a show about nothing.”
Seinfeld: So, we go in to NBC, we tell them we got an idea for a show about nothing.
Castanza: Exactly.
Seinfeld: They say what’s your show about, I say nothing?
Castanza: There you go.
Seinfeld: I think you may have something here.
That’s what came to mind as I looked into Initiative Q, which these days is showing up in an increasing number of headlines. Were I to parody its selling proposition, the result might be something like this:
You: Why should I sign up?
Initiative Q: Because you don’t want to miss out.
You: On what?
Initiative Q: We haven’t decided.
You: Sounds good to me.
I don’t think the parody is entirely unfair. Notwithstanding, as of early this month over four million people have signed up for Initiative Q. And the folks behind Initiative Q aren’t exactly banking naïfs. According to its “About” page, Initiative Q is …
… the brainchild of Saar Wilf, a serial entrepreneur who started his first payments start-up in 1997, and later founded Fraud Sciences, which redefined the payment security space and was acquired by PayPal in 2008.
Featuring prominently on Wilf’s team is George Mason University American economics professor Lawrence H. White, who per Wikipedia “… is considered an authority on the history and theory of free banking.”
Initiative Q’s introductory video claims:
Today’s payment systems were designed decades ago. They’re vulnerable, slow, complex, and expensive.
I suppose that’s true, provided you’re not up on what’s happening in the payments industry. Most consumers aren’t, which could go a long way toward explaining the four million and counting. Anyway, it’s Initiative Q to the rescue. From its FAQ page:
Initiative Q is building the payment system of the future. The Q payment network will integrate the best technological improvements that have been made in the payment industry over the last few decades to create a flexible, easy-to-use and inexpensive payment network.
Yeah. No one is doing that. Right?
Trouble is, Initiative Q explains, a new payment system can only launch if lots of merchants and lots of consumers participate, and lots of merchants won’t accept a new payment system that doesn’t have lots of subscribers, and lots of subscribers won’t accept a system that lots of merchants don’t already accept. A “classic chicken and egg” problem, the website calls it. But if that’s so, it raises questions as to how already existing, widespread payment systems ever started. Perhaps Apple Pay, Google Wallet, RFID, Visa, MasterCard, mag stripes, chips et al are figments of our collective imagination.
Initiative Q’s website explains that it …
… solves the adoption problem by associating the payment network with a new global currency, and distributing this currency to early adopters for free.
Exactly what form Initiative Q’s global currency will take is officially TBD. About the only thing we know is that a “Q”—Initiative Q’s monetary unit—isn’t a cryptocurrency. In fact, it isn’t anything. In a recent piece for Mashable Stan Schroeder wrote:
… There’s no product or service yet … there’s nothing solid there—no beta to sign up for, no test environment to try, no technical document that explains how the product works.
And Initiative Q confirmed this, flat out.
“Q is trying to gather a large user base of people who want it to succeed and then building the payment network itself — a network that is not limited by backward-compatibility requirements. Thus, the system itself has not been developed yet, nor is there a test environment.”
This is disarming in an odd way. With no product being developed yet, there’s nothing to try out, review, praise, or criticize. The stakes are both incredibly high (“trillions” of dollars, remember) and extremely low.
Not a few commentators liken Initiative Q’s marketing approach to a pyramid scheme, a characterization Initiative Q parries in an explanatory video. Yet the comparison is not unwarranted, provided we’re not talking about an illegal pyramid. Early enrollees are promised a larger return than later enrollees, and they can increase that return by recruiting more enrollees after them. These are hallmarks of pyramid schemes. But illegal pyramid schemes have one more hallmark: enrollment requires goods or cash, which Initiative Q doesn’t do. They make that clear right off the bat in the above-referenced introductory video:
Before we begin, two important points. First, we don’t want your money. We just want you to join. Second, there’s a real chance joining today will entitle you to receive a significant sum in the future.
It would be to Initiative Q’s credit that the voiceover doesn’t suggest a specific “significant sum” if the accompanying visual didn’t show a participant gleefully watching a line graph go from zero to $150,000 in under five seconds. Which the accompanying visual indeed shows.
True to its word, Initiative Q doesn’t ask for money. Signing up requires your name and email address, period. (Signup is by invitation. See their FAQ, “How can I get myself invited?”)
Exactly what Initiative Q will do with its four-million-and-counting database remains unclear. Wilf promises not to market the data and to destroy it should he throw in the towel. Meanwhile, critics worry that a database comprising millions of people inclined to embrace get-rich-quick schemes based on scant information dangles an attractive target before hackers.
I lean toward the many who view Initiative Q with a skeptical eye. But who knows. If a decade ago you’d said texting would overtake voice calls, I’d have viewed that with a skeptical eye, too.