What is Pi Network?
Pi Network was officially launched on March 14, 2019 by Nicolas Kokkalis and Chengdiao Fan. Pi Crypto has been positioned as an attempt to simplify cryptocurrency accessibility and introduce more people to cryptocurrency through a simple cryptocurrency mining and management system.
The most attractive feature of the Pi cryptocurrency at launch is the mobile mining feature. The Pi mobile application allows users to mine Pi coins on their mobile devices. Participation in the mining program was by invitation only.
The Pi mobile application can be installed on Android and iOS devices. After installing and setting up the application, users can mine Pi coins on their devices with a single click. Members of the Pi Network are popularly known as pioneers. Since its launch, the Pi Network has garnered a huge following on social media and has seen incredible growth in participation with a reported 33 million members as of 2022.
Network participants can play a number of roles, including running a node on their PCs, recommending new members, or mining picoins on their mobile devices. These reels are rewarded with pi coins.
Note: Neither Pi-Coins nor tokens related to this project are listed on CoinGecko.
How the Pi network works
For the beta phase of the project, the mobile application simulates the mining system that will start properly when the mainnet is fully operational. Mobile application users participate in block validation and receive rewards in Pi cryptocurrency.
When active, miners connect to one or more nodes in the mobile app. When connected, mobile miners ask if the transaction was recorded in the ledger. You also get the latest block number and hash value of that block.
Rewards for mining the block are distributed to the node owners and the mobile miners.
The Pi Network runs the Stellar Consensus Protocol (SCP). SCP was developed for the Stellar blockchain by David Mazières, Chief Scientist at the Stellar Development Foundation. It uses a novel mechanism called Federated Byzantine Agreements to ensure updates to a distributed ledger are accurate and trustworthy.
The SCP protocol uses a true voting system. Nodes in the network vote on the validity of a block and the next block to be mined. A block will only be mined if a majority of nodes agree that it should be mined next and also confirm its validity. The nodes participating in this consensus are chosen by the creator of the system. The SCP is energy-friendly but has been criticized for its centralization.
Tokenomics and reward system
Pi Coin is the native token of the Pi Network. Users on the Pi Network earn Pi Coins by mining. Holders can use their Pi Coins to pay transaction fees and also conduct transactions on applications and marketplaces built in the Pi ecosystem. The Pi-Coin supply system is governed by activity on the network and distributed solely as a user reward.
There was no official pre-mine, but users who participated in the beta mining program can port their tokens to the mainnet. Unlike many other cryptocurrencies, it does not have a fixed overall supply.
Each user who joins the Pi Network (by creating a Pi Account) is allocated a predetermined number of Pi Coins. This allocated amount is depleted over time. That is, the user can only mine that allocated number of tokens throughout their lifetime. This allocation is only made to the first 100 million users on the Pi network. There is also a reward system for users who refer new members to the Pi cryptocurrency project.
The pi coin mining protocol mints an additional pi coin for each coin minted for a member or referral reward. This extra coin is reserved for rewarding developers on the network. The total Pi-Coin offer is a sum of member, referral and developer reward.
The Pi Network operates a “semi-DAO” governance model. Contrary to the widely known decentralized governance system, the Pi network adopts a governance system where a central team retains responsibility while the community forms a powerful force contributing to the project’s decision-making. The governance model system varies; a two-phase plan that depends on the number of active network users.
When the number of active users on the Pi Network is less than five million, the team directly solicits input from the general community for suggestions. The project team opens conversations with the community through the project’s forum, which is built on top of the mobile mining application and other interaction media. Contributions from the rest of the community will be considered before the final decision is made. The team ultimately decides how to proceed. As the community grows and exceeds five million active participants, the second phase of the governance system is deployed. The team establishes a committee made up of well-known contributors from the community. The committee is responsible for developing proposals and organizing community contributions. The Pi Network forum remains open to community contributions. The committee makes a final decision using input from community members.
Testnet and mainnet system
The Pi network was started as a research project and was already running its beta phase in 2018. The testnet was launched about two years later and allowed developers on the Pi network to test specific features before finally deploying them to the mainnet.
After much anticipation, the Pi network launched its mainnet in the last quarter of 2021. The mainnet provides a platform for pioneers to create a proper wallet and port their mined Pi cryptocurrency to their wallet and conduct peer-to-peer transactions.
Watch this video tutorial to learn how to create a mainnet wallet and transfer your Picoins.
The mainnet migration includes a KYC verification process and a list of tasks that authorize users to own and operate a proper wallet. This mandatory KYC is still a popular topic of discussion and the project has been accused of outright centralization.
Is the Pi Network a Scam?
If you have aroused the slightest interest in the Pi cryptocurrency, there is a high probability that your interest will be nullified by negative statements about the value of Pi coins and the credibility of the project.
This is mainly due to the lag in the mainnet and the listing of the Pi cryptocurrency on exchanges.
Thanks to users’ inability to move their mined Pi coins and the general sentiment towards mobile mining, the Pi Network was branded a “high-level” marketing scheme and it was predicted that it would ultimately end up as a scam. The continued growth of the Pi Network community and the delay in listing the mined cryptocurrencies on exchanges further reinforced these statements.
The Pi crypto team is proving the opposite with their recent developments. The launch of the mainnet is now allowing users to spend their pi cryptocurrency and several marketplaces are rumored to be accepting payments in pi coins.
PCM does not participate in pricing. We also do not intervene in the pricing of the sellers. However, we will monitor the exchange closely. Fraudulent behavior will be punished. You can review the relevant content in the Pi Chain Mall User Agreement. pic.twitter.com/kge0yfLqN1
– PiChain International (@pichainmall) August 25, 2022
That PiChain International is reportedly being developed to allow merchants to open stores and accept payments in pi coins. Social media updates suggest that the marketplace is under active development and nearing its first release, although that remains to be seen.
What is the value of the Pi network?
As of this writing, the original Pi cryptocurrency has yet to be listed on a crypto exchange (although there are other fake Pi tokens minted on other blockchains). However, there have been reports of trading activity between peers. With mined coins now transferrable, several analysts have made predictions for the value of pi coins.
The Pi Network community has also made several predictions and quotes for the Pi cryptocurrency. Digital Coin Price predicts the Pi coin to trade at around $0.007 by the end of 2022. The Pi community calls even higher values for the Pi coins. Ultimately, the real value could differ significantly from these speculations.
This is pure speculation and the true value of the Pi-Network will only unfold after it is listed and trading begins. Since the cryptocurrency is not listed on any exchange, it is currently impossible to measure the value of Pi-Coins.
Investors should endeavor to do their own research while working with these speculations.
The big question remains as to the authenticity of the Pi cryptocurrency and whether it will be valuable.
Despite the plausible technological developments and community the project has built over the past four years, its reputation is still in question.
Given the rigorous computational protocols associated with cryptocurrency mining, the Pi Network provides an accessible way to understand cryptocurrency mining and has been well received by enthusiasts who believe in the idea of mining cryptocurrencies with minimal effort through mobiles to earn mining. However, it remains doubtful whether the Pi network will deliver on its promises.
Skeptical about the legitimacy of this process and the value of the Pi-Network, a majority of the cryptocurrency community still doubts the intentions of the project. Even with the launch of mainnet and some serious development and adoption in the Pi community, those sentiments haven’t changed all that much as the Pi coin remains unlisted on exchanges, making it unsaleable at the time of writing.
As with any other cryptocurrency company, investors are advised to exercise caution. Cryptocurrencies are still high-risk investments and Pi Coin is no exception.
Joel loves discussing cryptocurrency and blockchain technology. He is the founder of CryptocurrencyScripts. Follow the author on Twitter @agboifesinachi