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Could the free units of a new digital currency be worth thousands of dollars?
The Q initiative, which is aggressively advertising on social media, wants you to think so. Urges you to subscribe now and also ask your friends to do the same, to maximize the value of your free "Q" currency. This called for comparisons with pyramid schemes and suspicions about its legitimacy.
It is not a scam. It will also not make you fabulously rich. Nonetheless, it's an interesting idea.
I want to use the institutional cryptoeconomy – the study of the basic rules that govern emerging economic systems such as cryptocurrencies – to show you how the initiative Q is an interesting experiment, apart from the criticism of its marketing methods. If you sign up, you could help the world discover a new extraordinary payment system.
Basics on cryptocurrency
Initiative The marketing of Q explicitly attracts comparisons with the best known cryptocurrency: "Think of Bitcoin seven years ago". The implication is that this is the next Big Thing in the internet.
initiativeq.com
However, the Q initiative also states that it is not developing a cryptocurrency.
The basic definition of a cryptocurrency is simply any form of digital currency made up of entries in a cryptographically secure virtual ledger, rather than coins and physical banknotes. In this sense "Q" can he be thought of as a cryptocurrency
However, cryptocurrency is increasingly defined as the use of a decentralized system to manage and protect the virtual ledger that records transactions.
Bitcoin, for example, uses blockchain technology to "distribute" the virtual ledger over a network and "decentralize" the approval process on how to update it.
Blockchain protects a cryptocurrency from manipulation by hackers or governments, but involves costs.
Read more:
Bitcoin is ten years old: this is how everything started and what the future holds
What makes Q different
Initiative Q is not like Bitcoin in many technical aspects.
It will not use blockchain but will centrally check the "true" register. This makes blockchain enthusiasts inconvenient, because it contrasts the crypto-anarchist aversion to any group that holds power over a system. But it will avoid some Bitcoin costs and similar cryptocurrencies.
One is the dreaded environmental cost of energy-intensive work-proof algorithms that demonstrate to the whole network that a blockchain is correctly compiled.
"Q" will prevent the company from deciding what the "true" register is. This also allows the company to fight fraud and resolve disputes by performing "reverse" operations, in which the blockchain can typically do this only with an intensely difficult "fork".
As a result, the Q will not fluctuate wildly in value. The goal is a stable private currency for processing payments rather than a vehicle for speculation. It is clearly designed keeping in mind the current "stablecoin" trend.
Read more:
Four factors that drive the price of Bitcoin
Lawrence White, who contributed to the design of "Q", is known for advocating systems in which money does not float wildly in value. He clearly constructed the Q initiative around the monetarist theory, which states that the money supply should be controlled to keep prices stable.
So the value of "Q" will not fluctuate wildly like many cryptocurrencies.
All of this makes the Q initiative different from Bitcoin, although it creates a private digital currency.
Experiments in institutional technologies
My colleagues at RMIT Blockchain Innovation Hub call criptovalute "institutional technologies". Anyone who wants to use the system must act within the institutions it creates – that is, obey its fundamental rules.
These systems can be privatized. Any private citizen with a laptop can write a protocol that administers large-scale institutional systems such as money, which historically could only be applied by the centralized state.
Read more:
The increase in cryptocurrencies like bitcoins raises a question: what is money?
For example, the creator of Bitcoin, Satoshi Nakamoto, is said to have labeled the source code of cryptocurrency on a laptop at home during his free time. Now millions of people around the world use the system to interact every day.
What's exciting is that this allows people to invent all sorts of different institutional systems to see which works best – fueling a process that my colleagues have called "institutional discovery".
From this perspective, the interesting aspect of the Q initiative is that it creates a new mix of institutions oriented towards simplified payment processing. It should take all the positive things on PayPal and improve them.
Not the new Bitcoin, but still interesting
It can be understood why the marketing strategy of Initiative Q has caused its dismissal as a "pyramid scheme". But like any payment system, it must face "network externalities". He needs a lot of people to use it. The more people do, the more value it has.
If he succeeds, however, he will not make you fabulously rich. You will get something more like a gift card. The value of "Q" is designed to be stable, so you should not expect to become a crypto-billionaire.
If you sign up, you could at least enrich the field of institutional cryptoeconomy. Experiments like this are the way we improve our institutions, through a process very similar to scientific discovery.
