At first glance, the Pi Network seemed promising — a new token backed by Stanford-educated developers, claiming technical superiority and offering free mining through a mobile app. The excitement was palpable, and since its 2019 launch, tens of millions have downloaded the app, accumulating free Pi tokens by simply pressing a button daily.

Now, almost six years after launch, users continue to earn Pi tokens the same way. But there’s a glaring problem—those coins aren’t tradeable, and no exchange supports them. Despite the hype, the only recent development is that Pi now has an actual token on a blockchain, though it remains non-tradeable. Oddly, this blockchain technology has existed for years—raising the question: why the delay?

Years Waiting for What?

As Pi Network prepares for its much-anticipated mainnet launch, supposedly scheduled for December, more details have surfaced. It turns out that Pi will be using the Stellar Consensus Protocol (SCP), a well-established blockchain technology created by the Stellar network.

While most users don’t understand the implications, it’s a significant revelation. Rather than developing their own proprietary technology, Pi is simply leveraging open-source code from the Stellar blockchain, which launched in 2014, five years before Pi.

This isn’t inherently wrong – Stellar is a legitimate blockchain – but the issue lies in Pi’s portrayal of their work. They’ve led users to believe they were developing something new and revolutionary.

Basically – Pi users have waited 5 years for them to launch using someone else’s 10 year old technology.

No, You Didn’t Mine Anything…

While Pi Network calls it mobile mining, the fine print will tell you this has always been and always will be a ‘simulation’ – you’re playing a video game. 

There is a way to really mine Pi tokens now, but it requires running their node software, and you’ll need a real computer.

If millions of phones were actively validating transactions (mining), this wouldn’t be necessary.

Not Adding Up…

Pi Network claims a user base of over 60 million worldwide, but this doesn’t align with the reality of only 6 million active wallets. Even more striking is that only 0.16% of these wallets show any activity—a level of engagement that’s unusually low for a supposedly active blockchain.

If the “60 million” figure is accurate, it likely refers to total signups over time rather than active users. This number may include accounts created years ago, opened once, and subsequently abandoned, leading to inflated statistics that don’t reflect the current state of user engagement.

Pi’s Future Value…

Pi fans searching for the token on CoinMarketCap were excited to find a coin labeled as “Pi” priced at $34.45. However, this is a misleading. The listed coin appears to be a scam, a completely unrelated token using the Pi name and logo. The official Pi team has made it clear, their tokens cannot currently be transferred, and they have no listing on any exchange – so ignore this.

With no trading happening, all users can do is speculate, and the Pi Subreddit is full of this. Pi supporters engage in wildly optimistic price predictions. Most estimates fall somewhere in the range of $10 to $100, which is already insane.  Then there’s the extremes, outliers speculating as high as $1,000 per token based on flawed reasoning like “if Pi becomes half as popular as Bitcoin.” These are guesses out of thin air, based on nothing. 

Pi should be looked at like any other coin that gave away large portion of it’s supply to anyone willing to press a button, aka ‘Tap To Earn’. If you look at what happens when these coins start to be traded, we see a huge number of holders simply unloading their supply as soon as possible, and the value immediately crashing.  Then, there’s still so many free coins still in circulation, any time the coin begins to gain value, there’s a long line of people still waiting to dump theirs, keeping the price down forever.

So, What Are the Pi Owners Up to? 

While they haven’t sold any Pi tokens, they may have found creative ways to profit from people wanting free ones.

With millions of people reportedly opening the Pi app each week to “mine” tokens by pressing a button, they’re also being served ads. This monetization model could be quite lucrative for Pi Network, especially if users are unaware they can disable the ads. On mobile apps, ad revenue can quickly add up when multiplied by millions of daily users.

But advertising may only scratch the surface of the Pi Network’s potential revenue streams. There’s a bigger concern: user data, which brings me to my next point…

Privacy Concerns…

When users sign up for Pi, they are agreeing to share a broad range of personal data. Pi Network collects browsing history, chat messages, comments, likes, location data (including GPS and Wi-Fi information), contact lists, device details, and more. This data can be shared with third parties, affiliates, professional advisors, service providers, and even governments.

With the introduction of Pi’s Know Your Customer (KYC) process, users are now required to submit government-issued IDs and selfies to verify their identity. This level of data collection makes Pi’s user database a goldmine for data brokers and facial recognition services.

Plus, KYC isn’t a legal requirement for projects that aren’t selling tokens via pre-sales, making Pi’s decision to implement it a bit more questionable.

From a legal standpoint, it is no different from points earned in a video game — no one has traded them or purchased them, they have no known value – it’s a strange situation to be requiring full ID verification for. 

The Bright Side?

To be fair -I can confidently say Pi Network is the least-evil scam I’ve seen in crypto. In fact, I don’t think they’ve even broken any laws.

Unlike others, Pi Network has not asked users to invest any real money. While they may be exploiting anticipation for free crypto, collecting valuable data, and serving ads – they haven’t deceived people into losing funds.

Ultimately, while users may waste time pressing buttons, at least they haven’t been tricked into handing over their hard-earned money (which also wastes the time spent earning it). 

While there are some privacy concerns, this unfortunately is so common, in most cases Pi is probably just one of several apps on users phones with privacy policies asking for way too much.

In my research for this story there was fairly large amount of people who have been pressing that button daily for years, accumulating thousands of free Pi tokens, and excited for the official launch where they can sell them for $50 each.  So, the disappointment some will be feeling once the coins become tradeable seems to be the only real consequence.  

What’s Next?

Pi claims this will happen in December, but if I’m correct on how they’re currently profiting, the day the coins become tradeable, and worthless, is the day people stop opening up the app to ‘mine’ them. This means no more ad money for the Pi guys.

If I had to bet on what will happen this December,  I would say that Pi fans will be getting an excuse for them having to delay the launch.

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Author: Ross Davis
Silicon Valley Newsroom
GCP | Breaking Crypto News

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Filed under: News - @ October 3, 2024 3:15 am