Initiative Q: An insight to its economic model

The Bitcoin of currencies have arrived and how. Created by ex Paypal employees, Q, as it is popularly known, aspires to replace the currency that we use. So the future it envisages is that in place of a Doller, a Pound or any other national currency in circulation, Q would be the used as the legal tender. Keeping that in mind, the developers had started to register members with the caveat that early members would be allocated a greater number of the currency. In fact, the website to has a ticker showing the diminishing number of allocations.

But the moot point on every network users mind is how much value would they get vis a via their allocations.

If Initiative Q succeeds in creating a world-leading payment network, it is expected that all Qs reserved today for members will eventually be granted at a value of roughly one US dollar per Q. So let us look at the rationale behind such an estimation.

The value of a currency is dependent on a myriad of factors.

The velocity of currency is one of them. It is defined as the total expenditures or income, in that currency, divided by the money supply (the total amount of currency in circulation).

To put into perspective, the sum total of all economic activity in the world currently stands at $100 trillion and the sum total of money in circulation is anywhere between $40 to $90 trillion dollars.

This gives an average velocity of money, globally, of around 2, which means that each unit of currency changes hands approximately twice a year. In other words, at any given time people hold money balances equal to around half a year’s worth of income.

Now coming to the real worth of Q. It will depend on two broad factors: Volume and Velocity of Money.

The volume ideally indicates the amount of money needed for all activities and the Velocity of money will show how fast the turnover is achieved.

Initiative Q’s unique distribution method solves the adoption problem and opens the gates to many new payment technologies.

Buyers and Sellers will prefer it to payment cards. Q retail volume is thus projected at 5-20 trillion dollars, assuming successful worldwide integration.

As for the velocity factor, Q’s idea of it becoming the primary currency solves that problem. With higher volumes, it hopes to attain a velocity of 12.

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