If you’re wondering is PI Network a scam, we have compiled an extensive evidence-based review on this new cryptocurrency. We answer a lot of frequently asked questions, and give you an overall understanding of the platfrom and whether it is worth investing in.
PI Network Review Summary
PI Network is a cryptocurrency being developed by a team of Stanford University PhDs to give ordinary people greater access to cryptocurrencies. A lot of people are getting into it hoping to cash in on the cryptocurrency boom, much like earlier investors did with Bitcoin.
PI Network looks like a genuine effort from the developers, but it lacks the visible robustness of Bitcoin, whose code was publicly available and those who cared to investigate it had free access to the information that explains how it works.
If you are technically astute and understand and believe in PI Network’s underlying offering, you can investing. But if you are simply hoping to make money without really understanding the system, it would be advisable to look elsewhere as hopes for cashing in simply by mining or investing passively are not likely to wind up successful.
What is PI Network
Pi Network is a new cryptocurrency by and for ordinary people that you can “mine” (or earn) from your mobile phone. Cryptocurrencies are a new form of digital money that is held and secured by the community, rather than by governments or banks. Today, you can mine (or earn) Pi by helping to secure the coin and growing the Pi trust network. While most cryptocurrencies (like Bitcoin) have been very difficult for ordinary people to use and access, Pi puts the power of cryptocurrency in the palm of your hand.
Pi Network is currently in BETA. The project is a work in progress, which means that there are bugs and some details of the project continue to flow. When many crypto projects start with pure theory, Pi Network seeks the theoretical balance focused on a human design (or by testing with real people to meet their needs). We explain the details of how it all works in this PI Network Review.
How does this app work?
This app allows you to earn Pi by making simple contributions to the Pi community. The more you contribute, the more Pi you earn. To start earning Pi, log in every 24 hours and press the lightning bolt icon to start mining. Once you’re mining, you can increase your hourly speed by inviting trusted friends and family to join the community. After 3 days of mining, you can further increase your earnings by building your Circle of Security, which contributes to the overall security of the network. Remember that members who entered the network earlier will be able to mine at a higher rate than those who came after them.
Is Pi Networks different from other cryptocurrency?
Some of the key differences between Pi Network and other blockchains are the fact that rewards are paid out daily. They are not paid out per block, and they are also spread across the entire network so as long as you interact with the network, you will receive a payout at the end of the day. The white paper discusses the availability of free transactions depending on network congestion. Once the network becomes heavily congested, then miners will be able to sort through transactions based on a fee system with higher fees being dealt with first and everybody else having to wait based on the amount of fee they want to pay.
At present, there is no fixed supply and the total supply is unknown. Once the project officially launches, the total supply will be worked out. The tokens that people are earning right now are acting as a faucet and are a visual representation of tokens that will be created in the Genesis block when the main net launches.
Pi network is rapidly expanding and as of right now it has more than 800k engaged users. It could be the next big thing for all we know. It is free to join so no one stands anything to lose by downloading the app.
So how can I mine a cryptocurrency without draining battery and data?
Rather than burn off energy as proof of work like the cryptocurrency Bitcoin does, Pi secures its accounting when members endorse each other as trustworthy. In this way, a network of interconnected “Circles of Security” is formed, which determines who can execute transactions. This novel approach allows crypto mining from your phone taking advantage of existing social connections, without financial cost, without battery drain and with the lightest fingerprint on the planet. Read the technical section of our “White Paper “for more precise and detailed information.
Why do members who entered earlier mine faster?
Members who joined earlier mine at a higher rate to reward network contributions when needed.
The aspirations of Pi is to be the most used and distributed cryptocurrency on a global basis. To achieve the goal, Pi incentivizes members who entered earlier by making contributions, which is what will ensure success (example: securing and growing the network). To reflect the importance of early contributions, the speed of mining decreases as more people join the network. So based on the fact that every time the active number of users increases, it is halved by factors of 10 (halving). This rate could drop to 0 when the network reaches a certain number of users (example: 10 million or 100 million). At this point, just like Bitcoin, miners can continue to be rewarded through transaction fees and not through mining of new coins.
What is the role of the Ambassador? How does team winning work? As an Ambassador, you will earn up to 25% bonus on their base speed for every person you invite into the network. You will be an Ambassador when new members join your team (Earning Team) using your invitation code that was configured by yourself when you signed up for Pi Network. Each member of your team gives you a 25% increase to your earnings when they are actively mining. A new member can only be added to one team (Earning Team) because each member can only join Pi with a single invitation code. In other words, unlike the “Circle of Safety” where members can be added multiple in trust-based circles, Earning Team is set based on who invited whom. Each guest in the world can only be requested by one invitee. This is much like the multi-level marketing model, which is already controversial why you might ask is PI Network a scam.
What is the role of the Contributor?
Becoming a Contributor allows you to earn more Pi by building a Circle of Safety of 3-5 trusted members. The role of being a Contributor will be unlocked for users after completing 3 mining sessions as a Pathfinder. After 3 days of mining, you will see a new Security Circle icon from the main application screen where you can click to begin. To become a Contributor, you will need to add 3-5 trusted people to your Circle of Safety.
What are Circles of Safety?
Security circles are groups of 3-5 trusted people created from each of Pi’s members. Safety circles provide currency security and create a global trust chart that prevents bad actors from executing fraudulent transactions.
While cryptocurrencies like Bitcoin secure their accounting by forcing miners to burn power (Pow – Proof of Work), Pi secures the accounting when members confirm each other as trustworthy. Contributors confirm each other by creating security circles comprised of 3-5 trusted members. Security Circles must be composed of trusted persons who will not execute fraudulent transactions. The security circle network forms a global trust graph that determines who you can trust to execute your Pi ledger transactions.
What is the value of Pi?
Today the value of Pi is 0 Dollars / Euros, etc. similar to Bitcoin in 2008. The value of Pi will be backed over time, attentions, goods and services will be offered by other members of the network. Thus grouping our attention, goods and services around the currency. Pi members seek to capture more of the value that they normally go to banks, tech giants (example: Facebook, Amazon), and other intermediaries. Today, we are establishing an infrastructure for this digital currency and a market through its distribution, creating the community and developing the technology to ensure its safety.
Can I withdraw my Pi?
No, it is not possible to retire Pi yet. You will be able to withdraw Pi or exchange Pi for other currencies in phase 3 of the project, when the transition of Pi becomes part of a fully decentralized blockchain.Pi was launched in its phase 1 of the project on 3/14/2019 (Pi Day). During phase 1, their balances were recorded with a guarantee of being honored when Pi transits the main network (Mainnet Phase 3). Pi transfers are restricted until we reach the mainnet, thus preventing bad actors from accumulating Pi from fake accounts. For example, a bad actor can mine from fake accounts, then transfer to legitimate accounts, thus going through the account verification process despite their illicit earnings. We continue to refine the exact development of the project on the timeline. For more details see the “Roadmap” section in our White Paper.
When will Pi be worth real money?
Holders will be able to convert their Pi into “real” money when they buy goods or services on the Pi market, or exchange Pi for FIAT currency. Cryptocurrency holders have two options to exchange their earnings into “real” money (or “cash out”): 1) Directly buying goods and services with their crypto or 2) Exchanging their crypto for FIAT money (example: Dollars, Euros, etc.) on cryptocurrency exchanges.
1) Buying goods and services directly with your Pi. Pi Network is building a Peer-to-peer marketplace where our members will be able to directly spend their Pi by purchasing goods and services. Our goal is to begin experimenting with in-app transfers as early as Q4 2019.
2) Exchange Pi for fiat currency on (Exchanges) cryptocurrency exchanges. Pi core team does not control how cryptocurrency exchanges (like Binance, Coinbase, Kraken, etc.) decide to list Pi. However, Pi may be commercialized in phase 3 of the project (MainNet). At this point, exchanges will be able to choose to list Pi. Meanwhile, the core Pi team is focused on implementing our technical roadmap (see White Paper above) to reach phase 3.
Can I mine from more than one device?
No, you cannot mine from more than one device. The network has a strict rule of only one account per device. Pi uses a multi-angle strategy to ensure that it is not mined from fake accounts.
First, the network uses version 3 of Google’s captcha to find out if a device is handled by a human or a machine. (This technology is invisible to most users who are real humans, however bots will start to see captchas if they are discovered by the algorithm). Over time, a machine learning algorithm based on the mining behavior of real users will also be developed to detect these bots.
Second, the consensus requirements of Pi’s own algorithm (its Circles of Security) make it easy to detect fake accounts. These fake accounts will not be supported by enough real users from security circles. At best the fake accounts will point to each other with few selections from the rest of the network. This anomaly is easily detectable by computer algorithms.
Finally, when Pi enters the third and final phase of the project (Main Network or MainNet), only accounts validated as belonging to individual real users will be honored. In other words, even if the rest of the detection methods missed some fake accounts, this user validation process will kill them, since their users will not be able to prove that there are real people with real names behind them. Different decentralized identification processes (KYC) that would be minimally intrusive are currently being studied.
Does this application work as a wallet?
Yes, your mobile or cell phones will serve as cryptocurrency wallets that will be linked to your current accounts (phone number / Facebook). As with any other public blockchain, the Pi blockchain will allow you to save and operate your currency in both external wallets and in the application itself, sending transactions directly to the blockchain. This is a feature that is currently scheduled for phase 3 of the project (we are currently in Phase 2 of Testnet, and Phase 3 will start when the main network is up and running). During Phase 3 of the project, there will be the option of obtaining the total disposition of the public-private keys.
Pi aims to be as accessible as possible to ordinary people, which is why we are trying to build this integrated interface. We have chosen a phased deployment to make it easy for everyone to use. We are still in our early days and excited for the road ahead.
What value the Pi Network worth?
As Pi can’t yet be traded, it currently holds no value, said Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdowne.
However, the app claims to offers users the ability to boost their mining rate by inviting friends and family to join the project.
Earlier members of the network also mine at a higher rate than those that come after them, according to the project website.
It is difficult to see where the Pi Network value is for the users.
“At present, users are wasting their mobile phone battery life to mine ‘Pi Coin’ which is worthless and can’t be spent at present.
“Users hang on to it in hope that it will one day be worth something.
“The only thing of discernible value is the user data.
“A key risk to people getting involved is the handling of the project’s data collections, permissions and third party software included in the app.”
Could Pi Networks currency be valuable in the future?
Of course. We have done an evidence based analysis here and there are also evidence that show that PI Networks is at least attempting to build something of value:
- They have published a high level whitepaper outlining their ambitions without providing technical details on how their Pi Stack would work. One of their aims is to have others build apps on PI network to benefit from PI network users’ attention. This reminded us of the pay to surf models of the dot com boom where companies installed software on user devices and acted as middleman between users and advertisers without generating substantial benefit to either party.
- They claim to have run a pilot in 2020 for people to exchange goods and services using Pi. Instead of running pilots, they could have listed their coin on an exchange as it has been done by companies like electroneum. Pi users claim that Pi team’s approach of forking the open source Stellar block chain to build their implementation requires significant effort due to various reasons and that this is the reason for the delay. We will not know until we see the mainnet and the criteria for launching the mainnet remains vague in the whitepaper. Mainnet will be launched once the community feels that it is the time and sufficient testing has been completed.
- According to their Linkedin page, they have 70 employees as of 2021. However, many of the people that list themselves as working there are app users with titles like “Cryptocurrency Trader”. We haven’t analyzed each profile but there seems to be a group of people working towards building something there. It could be the next version of the app or the blockchain network that is hard to verify from outside the company. What we can see is
- i. they have launched a test version of their blockchain
- ii. users claim that they have shared some of their code on github
- Its founders were educated at and worked at Stanford. Though this is certainly a good thing, people rarely notice that Warren Buffet, Jeff Bezos, the writer of this article and numerous business founders were educated at reputable universities (e.g. Ivy League universities for these examples). This is because their companies rarely use these facts. Based on our observations, business success is far more important and a better predictor of successful enterprises than academic credentials. And successful companies tend to speak about their business success rather than their founders’ academic credentials.
- They have had significant growth. They have ±250k reviews and a good rating on Google Play Store. However, models similar to MLM tend to generate fast growth. This is also why some wonder if PI Network a scam.
Could Pi Network make you rich?
Unlikely. The question is why they don’t already launch the blockchain and the exchange. These are trivial engineering tasks. There are two theories:
- They may be waiting for the user base to reach enough scale so they can generate value for advertisers. However, we are sceptical that large advertisers will show ads in a network where users login to make money by seeing ads. The concept isn’t new. Such websites existed since the early days of internet. However, none of them reached mass adoption. This is because it is more valuable for advertisers to advertise in websites which are used since they provide some value to users (e.g. information, connecting with friends etc.).
- As some commenters like Jennifer Vanessa Kaiser highlighted, the founding team may be concerned that once the coin is published on an exchange, there would be a selling frenzy. Then, the coin would not be valuable enough for people to keep on logging in to click. Dreams are better motivators than actual value:
In short, your coins can be worth some value but don’t get your hopes up. Other experiments like ETN only make their users a few euros per month.
Is PI Network a scam?
Pi is not a scam. It looks like a genuine effort by a team of Stanford University PhDs to give ordinary people greater access to cryptocurrencies. The Pi Network Core Team is led by two PhDs and one MBA (Master of Business Management), all of which helped build Stanford’s Blockchain community. We cannot guarantee that the project will be successful, however we promise to work hard to make our shared dreams come true, while maintaining the highest standards of integrity. You can get more information about us on the “Core Team” page in the main menu of the application and in the link in this paragraph.
So what should you do?
I wouldn’t bother installing the app. You can always make the argument that you only lose time by giving the app a try. However, this belief would lead the believer to follow any dishonest actor who promises future value. There is no scarcity of empty promises in the world, we try to spend our time more carefully.
However, if you already have the app, you can wait to see if the founders actually build a crypto currency.
Finally, if you came across this because you are looking for ways to become wealthy without putting significant effort, we recommend you to look for other ways. Here is how I make money online.
Pi Network is far from becoming the next Bitcoin. When Bitcoin was first launched, its code was publicly available showcasing how exactly the blockchain is doing the work. Mining was a logical process, and it never required people to recruit each other. Pi Network’s only positive is that it boasts a large active user base, which is definitely benefiting the creators. When further updates happen, we’ll definitely publish another article and talk about market developments.