Since its launch, Pi Network has become one of the most talked about projects in the cryptocurrency space. Launched in 2019, Pi Network presents itself as a unique combination of a cryptocurrency token, mobile app, and multi-level marketing (MLM) program.
Pi Network was created by a group of Stanford University graduates who envisioned Pi as a way to make cryptocurrency more accessible to the masses. Their goal is to develop the most comprehensive network that will become the most widely used peer-to-peer ecosystem in the world.
The project has attracted millions of users globally and while some consider it a promising new project, others doubt the legitimacy of Pi Network and consider it a scam.
What is Pi Network?
In essence, Pi Network is a blockchain project that can be used directly on your smartphone.
Unlike traditional cryptocurrencies like Bitcoin, which require powerful computers and a lot of energy to mine, Pi can be mined easily with just a tap. Members can earn new Pi coins simply by tapping the "Lightning" button in the Pi Network mobile app once every 24 hours without opening the app.
Pi Network's native cryptocurrency is Pi coin, which can be mined within the app. While millions of users have already created Pi coins, the future value of this cryptocurrency is still unknown.
The project is still in beta and while the founders have big plans for the coin, there is skepticism about whether it will ever have any real value or function.
How Pi Network Works
Mining Pi seems easy; however, accessing the app can be a challenge.
To start mining, you need an invitation code from an existing Pi Network member. This referral system allows members to earn more based on the number of people who sign up using their referral code.
The system is simple: The more users you invite, the bigger your reward will be.
The Role of the Pi Network
There are four roles you can take on as part of Pi Network:
Pioneer: This is the main role where you mine Pi by pressing the “Lightning” button every day.
Contributor: This role allows mining at higher speeds by completing three to five “Mining Sessions” — daily logins — and provides a list of trusted pioneers to add to your “Security Circle.”
Ambassador: Invite new users with your code and earn up to 25% mining bonus for each sign up.
Node: This role involves running Pi node software on your computer, which is currently being tested to act as an open source validator for the community.
Users can hold multiple roles at once, maximizing their Pi mining potential. The hourly Pi mining rate depends on when you register with the site. Early joiners enjoy more privileges than later joiners.
Pi Network Consensus Algorithm
Pi Network uses a consensus algorithm based on the Stellar Consensus Protocol. It allows users to participate using their mobile devices, making the mining process more convenient. It is an energy-conscious algorithm where nodes rely on network messages to agree on transactions.
But how can someone mine cryptocurrency by just clicking a button every day?
In Pi Network, “mining” refers to the process of receiving new currency from your contributions instead of the proof-of-work (PoW) mechanism like in Bitcoin.
So technically this is not mining as there is no crypto mining going on since September 2024. Users get PI coin vouchers for using the app once a day and proving that they are not a bot. This way as more users join and build a “Security Circle”, they will contribute to building a trust network that will later be used to verify transactions when the Pi mainnet opens.
Store and move Pi coins
Mined Pi is stored in the app. As of September 2024, Pi Network users cannot transfer, sell, or exchange Pi coins for other cryptocurrencies.
However, as stated in the Pi Network roadmap, these features are expected to be released in phase three of the open Pi mainnet launch, although a specific date has not been set yet.
Is Pi Network legit or a scam?
Over the years of the network’s existence, many have questioned whether Pi Network is a legitimate project or a scam. Here are some of the main concerns about Pi Network:
Lack of transparency: Many people consider the lack of a detailed white paper or technical documentation from Pi Network to be a big red flag. Without these, it's hard to know how the network actually works and how funds are distributed and used.
Pyramid Scheme Accusations: Pi Network has also been accused of operating like a pyramid scheme as it encourages users to invite others, receiving rewards for referring new members.
Unlisted Coin: As of September 2024, Pi coin is not listed on any major cryptocurrency trading platform and users cannot trade Pi.
Funding concerns: Many are concerned that Pi Network is not open about how it funds the project. This raises concerns that the project is a pump and dump scheme.
On the other hand, Pi Network supporters emphasize its innovative mining mode and great community. They justify the slow pace of development by saying that it is a prudent strategy for long-term success.
Is Pi Network safe?
While Pi Network is generally considered a safe application to use, there are no external audits to support this. The lack of extensive reviews of the project’s code and security systems by the Pi community raises concerns about its true safety. Without independent audits, it is difficult to say how safe the application really is.
Pi Network takes a cautious approach to data protection. Users do not have to provide sensitive information such as government IDs. A Facebook account or just an email address is enough to join the network.
It's important to always exercise caution, just like with any other online platform or app. Be mindful of how much personal information you share, even if the app seems safe at the moment.
Should you trust Pi Network?
When deciding whether Pi Network is a scam or not and whether to trust it, it is important to consider the current state of the project.
On the one hand, it has millions of users and has made some solid progress, such as requiring Know Your Customer (KYC) verification and developing apps. On the other hand, major steps like launching an open mainnet and creating clear, practical applications for its digital currency still need to be completed.
So to answer the most frequently asked question, is Pi Network a scam? Currently, Pi Network is not classified as a scam project, but the long-term future and future value of this token is still unknown.
