The Pi Network is a controversial cryptocurrency project that has been making the rounds in the cryptocurrency industry for the past few weeks after the token was listed on some cryptocurrency exchanges, including the popular Huobi trading platform.
Since its inception four years ago, the project has attracted millions around the world, as users can mine and earn their native token, dubbed Pi, by completing simple tasks.
Some experts have raised concerns about the legitimacy of the Pi Network, claiming that the project is nothing more than a classic Ponzi scheme that seeks to defraud investors in the long run. But is this true? We’ll see.
This article unravels everything about the Pi Network, from its inception to its latest controversial listing.
What is the Pi network?
Pi Network is a cryptocurrency project that allows users to mine through their smartphones. The platform was designed to bring anyone into the crypto space, regardless of their familiarity with digital assets.
The Pi Network is the brainchild of Stanford University graduates Nicolas Kokkalis, Chengdiao Fan, Aurélien Schiltz, and Vince McPhillips. The team started developing the project in 2018, but they published the whitepaper and released the app a year later on March 14, 2019.
Pi network miners are rewarded with the Pi coin, which the project creators say will gain value once the protocol is released to the mainnet.
Unlike Bitcoin miners, the people who mine on the Pi network are called pioneers. The project aims to simplify the mining process as pioneers only need to tap a button every 24 hours to perform mining activities via their smartphones. The mining process is done on the Pi Network app, which is available for Android and iOS devices.
The project uses a multi-level marketing (MLM) approach to grow its user base. For clarity, an MLM, similar to a pyramid scheme, is a controversial marketing strategy where existing users are rewarded for inviting new users into the ecosystem. New members, in turn, are tasked with recruiting more people.
In the case of the Pi Network, existing users (recommenders) receive more Pi Coins for inviting new ones (refs) to join the network. When the arbitrator joins the platform and becomes active, the sender gets a specific percentage bonus on their daily mining.
This scheme has greatly facilitated the growth of the project’s customer base. The ecosystem is currently advertised as having over 35 million active global users.
The Pi Network forces users to complete a Know-Your-Customer (KYC) process, unlike other decentralized mining protocols. Here, users will provide personal information about themselves. According to the project, this process helps prevent users from creating multiple accounts.
How does the Pi network work?
The Pi Network claims to use a consensus mechanism called the Stellar Consensus Protocol (SCP). SCP is an algorithm that allows users to receive rewards for contributing to the network. The project claims that SCP is faster, more secure, and more scalable than other consensus mechanisms, such as Proof-of-Work (PoW) and Proof-of-Stake (PoS).
The Pi Network community is made up of four roles:
Pioneers (Miners) Collaborators (Guarantees) Ambassadors (Distributors) Nodes (Validators)
Pioneers are users who are mining on the Pi Network. Users in this category verify that they are human and not robots by clicking a button in the Pi Network App every 24 hours to perform mining activities. Currently, the total number of pioneers in the network is around 35 million, according to reports produced by the project itself.
While the Pi Network claims to run mining operations, the fact remains that no actual mining activities are taking place. How is that? Cryptomining typically involves processing and verifying transactions by solving complex computational math problems. Once the transactions are validated, they are added to a distributed ledger built on the blockchain. Miners are then rewarded with newly minted digital assets for their contributions to the network.
The Pi network, for its part, currently does not have a functional blockchain network. This means that no transactions are taking place on the platform, so the miners have no use in the protocol.
In their effort to launch a blockchain network (mainnet), the developers of the project announced the launch of a closed mainnet at the end of December 2021. This network layer is designed to test and collect data before the future launch of your network. principal. According to the developers, the Pi Network mainnet will be launched when Open Mainnet is ready. Open Mainnet currently does not have a release date.
After actively mining for three days, Pioneers qualify to become Contributors. Contributors are pioneers who belong to a security circle consisting of three to five users. Being a Network Contributor entitles you to higher Pi Coin rewards.
Security Circle is a group of three to five users on the Pi network who trust each other.
It should be noted that a user can be added to multiple security circles.
Users become Ambassadors (resellers) when they invite new people to the Pi Network through their referral code. Ambassadors receive a 25% increase in earnings for each user they invite to join the network. This means that the higher the number of guests, the higher the win rate for the Ambassador.
Unlike the Contributor category, where users can be added to multiple security circles, a guest can only join an Ambassador’s revenue team.
Pioneers can become network validators by running a Pi software node on a desktop or personal computer. By running a node, validators are rewarded with an extra boost to their Pi mining process.
The network currently has over 10,000 active testnet nodes. The creators of the project claim that the nodes will come together to secure the Pi blockchain once the main Open Network goes live.
Controversial Pi Coin Listings: Where Can Pi be Traded?
As of January 18, 2023, there is no fixed date when the Pi coin will be listed for trading. Since its launch in 2019, the project has failed to generate value for the cryptocurrency.
The Pi Network roadmap features three phases. The team has accomplished the first two phases: project design, deployment, trust graph bootstrap, and testnet.
According to the whitepaper, the Pi blockchain will launch when Mainnet Phase 3 is activated.
In December 2022, several cryptocurrency exchanges including Huobi, BitMart, and XT.com listed a synthetic version of the Pi coin with the PI/USDT trading pair. However, it is worth noting that the Pi coin tagged with the digital asset on these exchanges are simply IOU (I owe you) tokens that users can use to speculate on Pi’s price movement. This means that Pi holders cannot deposit or sell their accumulated tokens on these exchanges.
In a frenzy sparked by the alleged launch of the long-awaited Pi coin, the developers of the project announced that they do not endorse any Pi listings made by any exchange. The team added that users should not “engage with any of these exchanges or external actors, as their actions are not affiliated with the Pi Network.”
Is Pi Coin a scam?
Since the Pi Network began to gain traction, experts have raised concerns about the project’s legitimacy, security, and potential for fraud. However, it is difficult to label Pi Network as an outright scam since the project does not require users to pay to access the platform’s services.
However, it is worth noting that users could be robbed of their time as the activities they perform on the platform may not generate profit in the long run.
In short, Pi Network is a cryptographic project that allows users to mine through their smartphones and earn rewards in the form of Pi Coin, the native cryptocurrency of the network. A group of Stanford University graduates created the platform to make it easy for anyone to get involved in the cryptoverse.
While the project has attracted many users around the world, some experts have questioned the legitimacy of the platform and whether or not it is a Ponzi scheme. The recent listing of a synthetic version of the Pi coin on some popular exchanges has also made the project controversial because Pi developers have warned users to desist from trading the token on such platforms.
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