What Is Pi Cryptocurrency & The Pi Network?| SoFi

Pi crypto is a new project that promises to bring users all the benefits of Bitcoin while eliminating all of the drawbacks.

Pi coin has no value, cannot be traded on any exchange, doesn’t yet exist on an actual blockchain, has no wallet, and is mined by users logging into the Pi app and clicking a button.

Given those mysterious attributes, it’s no wonder many interested parties are left wondering “what is Pi cryptocurrency?” We’ll explore this strange new crypto in this guide.

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What Is the Pi Network?

Pi Network is a new crypto network that was purportedly founded on March 14, 2019. Like most cryptocurrencies, Pi Network was created with the intention of decentralizing finance in order to make financial tools available to a wider user base. What makes Pi different is that it was designed to be mined on smartphones.

The idea is that anyone can participate in the network’s activities as long as they have a smartphone and internet connection.

The Pi Network app can be downloaded from either the Google Play or Apple App stores. The network grows through a referral system: mining sessions can’t be completed without a user successfully referring a new user.

As of late November 2021, the Pi Network had reached 29 million users.

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How Does the Pi Network Work?

Mining Pi isn’t really crypto mining at all. There’s no proof-of-work being performed as there would be with Bitcoin mining. Anyone who has studied Bitcoin and blockchain technology will definitely find this aspect of the Pi crypto network puzzling, to say the least.

To “mine” Pi, users simply log in to the app, click a button labeled “mine,” and receive coins.

Keep in mind that there is no Pi Network to speak of at the time of this writing and the Pi Coin cannot be traded on any exchange. Pi network mining isn’t mining. This begs the question — is anything really happening here?

It seems like anyone could create an app like this to make it seem like a new cryptocurrency is being launched, without any evidence of the usual work being done.

The things that make a cryptocurrency a cryptocurrency — like a blockchain network and a tradable token — don’t yet exist for Pi.

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How Does Pi Coin Work?

The short answer is: it doesn’t. The Pi coin is, at this point, just a number on people’s phones.

The coin has no value and cannot be traded. In fact, it can’t even be withdrawn from the app because there’s no such thing as a Pi wallet yet. The app is supposed to turn into a wallet once the mainnet is launched, yet another aspect of Pi that is bizarrely unique.

Crypto wallets usually exist as open-source software that can be accessed by anyone.

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What Is the Value of Pi Cryptocurrency?

The Pi coin is currently worthless. It’s not listed or traded on any exchange, and therefore can’t be said to have any value.

According to the Pi Network’s white paper , the native cryptocurrency won’t be launched until phase 3 of the project, when the Pi Network mainnet launches. No one can say when this might be, as developers haven’t given any direct clues about a timeline.

Some people have speculated that the creators have every incentive to delay the launch of Pi coin. Once the coin is listed, there could be a selling frenzy. If the price drops low enough, people might not find it worthwhile to log in to the app.

On the other hand, while the launch remains elusive, in theory Pi’s value “could” be as high as a user’s imagination believes. As long as people don’t have answers to the question “what is Pi cryptocurrency,” they’re free to believe that it could or could not be the next big thing.

What Is the Security Circle in Pi Network?

Pi doesn’t use a consensus mechanism such as Bitcoin’s proof of work or Cardano’s proof of stake. Instead, the Pi network claims to secure its distributed ledger by having users vouch for one another’s credibility.

The term “security circle” in relation to the Pi network refers to a group of 3-5 users who put faith in one another not to conduct fraudulent transactions. It’s unclear how this trust is established, what it means, or what might happen if someone violates that trust.

Is the Pi Network a Scam?

It’s hard to say whether Pi is a scam, because people haven’t yet put money into it. If this is a crypto scam, it’s unlike most that have come before it.

Over the years, there have been a lot of initial coin offering (ICO) scams, cloud mining scams, decentralized finance (DeFi) rug pulls and hacks, and countless other cryptocurrency scams.

Some crypto enthusiasts believe that most altcoins are, in fact, scams. There have been thousands of promising projects over the years that have come and gone. They tend to go through a cycle of being recognized as a great new idea, attracting large sums of money, then crashing once everyone realizes the idea doesn’t work in practice the way it did in principle. The top 100 coins by market cap change quite often, other than Bitcoin, which has always maintained the #1 spot.

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Reasons Pi Network Might Be a Scam

It’s too early to say for certain whether or not Pi is a scam. But the Pi model is suspicious in that it has a structure similar to a multi-level marketing (MLM) scheme or a pyramid scheme.

In MLM schemes, participants are rewarded for bringing new people into the system. When someone joins, the person who brought them in gets rewarded. The more people someone adds underneath them, the greater their rewards will be.

In the Pi Network, users have to refer other users to be able to perform mining activities on the network. So, in a similar fashion, the network could disproportionately benefit early users while providing little value to others.

There are additional reasons to suspect that Pi might be a scam:

• The app provides no utility to its users.

• Users are putting value into the app by using it and submitting their data, although they get nothing of any tangible value in return.

• The founders have already profited from the app through monetizing video ads.

• The marketing of the network places a heavy emphasis on the academic credentials of its founders, like other scams in the past have done.

• There’s no clear road map as to when the Pi mainnet will launch and the token will be listed.

The Takeaway

Pi cryptocurrency is not technically a cryptocurrency yet. While developers promise to launch a mainnet and a token at some point, no roadmap has been laid out. It’s also not clear how the network might be secured given that there is no blockchain or consensus mechanism, meaning there’s no way for nodes to sync up and agree on which transactions are valid. In fact, it’s not clear if there are nodes in the first place.

There are a lot more questions than answers about the project. And there’s no token to speculate with, so investors will be disappointed.

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Photo credit: iStock/Cn0ra

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