The cryptocurrency market is filled with projects that offer unique products utilizing blockchain technology to benefit its users. In the case of bitcoin, bitcoin miners validate transactions and solve arithmetic problems to mine Bitcoin as a reward. Bitcoin as the leading digital asset has been the face of cryptocurrency, hailed as the digital version of gold. In the feud between gold and bitcoin, there has been a digital asset that is believed by few to trump over all other assets.

The PI Network’s $PI is believed to be a digital currency that is more valuable than bitcoin itself. With an aim to have each $PI to be valued at US$314,159, this has garnered a cult-like following for those with hopes to attain wealth by holding and mining $PI. In this article, we discuss the purpose, impact, and motives of the Pi Network.

What is the Pi Network?

According to the Pi Network’s whitepaper, it is a platform that allows users to mine $PI from the comfort of their phones. Their vision is to build a global peer-to-peer ecosystem that replaces fiat with their token, $PI. To mine $PI, users download the Pi mining mobile app, sign up with KYC requirements, and input an invite code. Once downloaded, users can mine Pi on their phones and receive a “boost” every 24 hours.

Users are able to transact on the Pi Network to transfer $PI which are verified with Pi nodes that run on desktops and laptops. Pi node runners called “Pioneers” require a desktop download that requires no-little technical knowledge on blockchain technology in order to run the node. As users transfer $PI on the enclosed mainnet, a gas fee using $Pi is then spent.

The Pi Network aims to solve issues faced by users of traditional financial institutions such as unfair value capture, obnoxious fees, censorship, privacy, and permission. However, as the goals and vision look glistening to the consumers, there has been a lot of controversy associated with the Pi Network and how it operates.

History of the Pi Network

The Pi Network was created in 2018 by Stanford graduates, Nicolas Kokkalis and Chengdiao Fan. The project's goal is to compete with Bitcoin and other cryptocurrencies used for payments while allowing for more community involvement through smartphone mining. In 2019 they launched a pre-mainnet which allowed users to mine $PI from their smartphones. Then, in December 2021, an enclosed mainnet launched for users to transfer $PI from one wallet to another. After more than 6 years of development, an open mainnet is yet to be launched for users to freely convert their $PI into fiat currency.

With over 55 millions users, they have established a large community that enables them to conduct over-the-counter selling of $PI within themselves. However, the community continues to face both difficulty and blissful ignorance in attaining an illusioned financial freedom through the Pi Network. A few red flags and issues surface as the Pi Network fails to deliver its core purpose to its community since its launch 6  years ago.

The Red Flags of Pi Network

The aim of Pi Network has been simple: mine, transact, and live off $PI as the number one digital asset that trumps Bitcoin. However, the Pi Network has gained notoriety for a reason. With a promise of generational wealth and financial freedom through their network with a simple push of a button, there has been a lot of speculation on how their business model allows such to happen for its users.

The Pi Network community aims to reach a price of US$314,159 for each $PI. This not only places it above the value of Bitcoin, but also above the entire combined value of the world based on its fully diluted market cap. The value of a single $PI would cause its fully diluted market cap to reach $31 quadrillion as its max supply is 100 billion $PI. The tokenomics of $PI would place the founders miles above the richest men and women on earth. With an allocation of 20% belonging to the team, they would have $6 quadrillion to their networth in $PI. A person with more than 3 $PI would qualify as a millionaire by only clicking a button on their phones to mine $PI.

To note, an astrophysicist calculated the entire combined value of the earth to be up to only $5 quadrillion.

Ignoring the irrational economics of the Pi Network, their platform and model also poses a few risks to the users. In order to mine $PI, users will have to go through a KYC and submit an invitation code to access the platform. The Pi KYC is required in order to verify whether the user is indeed human. The information is then verified by a validator which rewards them 1 $PI. However, there is a lack of terms and conditions on how sensitive information is handled and stored. This poses an identity theft risk to those who have filled up for the Pi KYC.

Users are required an invitation code to mine $PI, hinting at a referral system. Although referral incentives are no stranger in the cryptocurrency space, it’s usually tied to airdrop requirements. Users are incentivized to invite other potential users with a reward to be able to mine more $PI per hour based on the amount of users another user has onboarded. This would qualify as an MLM scheme, albeit with the lack of shelling out initial funds.

Lastly, users who mine $PI are unable to sell their tokens via conventional means due to a lack of an open mainnet. The community relies on peer-to-peer transactions without a clear agreement on its value. On crypto information platforms such as Coingecko, they display $PI prices that are actually IOUs and are not indicative of their actual saleable value. $PI owners will only be able to sell their $PI tokens until an open mainnet is launched. No specific date has been announced on the site’s roadmap for an open mainnet despite its 5 years in development.

In theory, if $PI manages to reach the top 100 cryptocurrency list with a $1 billion market cap having all of its supply in circulation, a single $Pi would only be worth a measly 0.01 USD. Considering a smartphone is able to mine at a rate of 0.2 $PI per hour, this would only yield 0.048 USD from the 4.8 $PI per day.

What do experts think of the Pi Network?

Pi Network, having stirred a lot of controversy, has attracted the opinions of experts who are either bullish or bearish on the Pi Network. As mining $PI is as easy as clicking a button on a phone every 24 hours, misinformation quickly spreads to those who are seeking access to easy money. BitDigest decided to reach out to the Head of Crypto of GCash, Luis Buenaventura, for his insights on the Pi Network:

“Pi Network started out the way most crypto projects do, with lofty goals and an airdrop mechanism. Of course, airdrops were not really a popular marketing strategy back in 2019, so instead they called it “mining,” but in reality, it was really just a very extended airdrop campaign.

The reason we know for sure that no mining was actually occurring is simple: the underlying technology that they now use to power their “enclosed” blockchain is a fork of the well-known blockchain Stellar, which we know does not use a proof-of-work consensus algorithm. 

On the surface, there’s nothing wrong with creating a blockchain based on another blockchain, as that is the spirit of open-source code. However, any rational person would have to ask the question: why use Pi when Stellar already exists? 

My issue with the Pi network is that it has been promising a public launch for 5 years. No other project has taken this long, and in more informed sectors of the crypto world, many have forgotten that Pi even exists. It’s only amongst communities of less tech-savvy users that Pi continues to be talked about.

So why do people still wait for Pi? Primarily because hundreds of millions of Pi tokens have already been distributed, and the token holders dream of a future where their vast token holdings have real value. While waiting for Pi to launch, they’ve even attempted to enforce an official price for every Pi token — $314,159. 

It’s not only a laughable amount (the market cap of Pi would exceed $31 quadrillion, more money than the Earth has) but it was clearly presented by people who have no idea how financial markets work. 

This is harmful to Filipinos in the same way that betting on the lottery is harmful, or investing in a sketchy MLM platform. It reinforces the “easy money” narrative that is already prevalent all throughout crypto. Perhaps most damagingly, it emphasizes a faith-based investment strategy, when the whole point of crypto was to create independently verifiable monetary systems.

I do hope that Pi eventually launches its mainnet, so that its holders finally see the truth about this embarrassing project. On the other hand, that’s probably the reason why the launch is taking so long. As long as no real market price has been determined, everyone can continue pretending that the Pi token has real value.``

The Pi Network and its movement to launch a revolutionary digital currency has led its community to a sense of false hope of wealth. The cryptocurrency market, just like any other market, is a cutthroat industry that favors those who are wise with their finances. A project that claims to provide financial freedom from a simple press of a button on their phone for every 24 hours should be met with reasonable and rational skepticism. Though the mission of Pi Network is to provide a truly decentralized mode of payment, its irrational goals has led its community to a delusion of a $PI filled world.