Oct 04, 2024 04:15
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 problemthose coins arent 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 dont understand the implications, its 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 isnt inherently wrong - Stellar is a legitimate blockchain and there's a lot of upsides to using their technology - but the issue lies in Pis portrayal of their work. Theyve led users to believe they were busy 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' - in other words, you're playing a video game.
There is a way to really mine Pi tokens now, but it requires running their node software - and of course, you'll need a real computer if you want to run it.
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 doesnt align with the reality of only 6 million active wallets. Even more striking is that only 0.16% of these wallets show any activitya 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 dont reflect the current state of user engagement.
Pis Future Value...
Pi fans searching for the token on CoinMarketCap often share their excitement to find a coin labeled Pi priced at $34.45. However, this is 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, speculating as high as $1,000 per token guided by 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. Here's what happened with two recent launches of tap-to-earn tokens:
PIXELVERSE Token ChartHMSTR Token Chart
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.
But really, just use your head. Ask yourself, if millions of people just got something for free, now they're saying you should want this thing too, except you will have to pay them real money for it - would you? There's nothing to motivate people who didn't get free coins, to spend their money to buy them from you.
So, What Are the Pi Owners Up to?
While they haven't sold any Pi tokens, they may have found creative ways to monetize people wanting free ones.
With millions of people reportedly opening the Pi app each week to mine tokens by pressing a button, theyre 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 Networks potential revenue streams. Theres 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 Pis 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 Pis user database a goldmine for data brokers and facial recognition services.
Plus, KYC isnt a legal requirement for projects that arent 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 give Pi Network the title of 'The Least-Evil Scam 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 havent deceived people into losing funds.
Ultimately, while users may waste time pressing buttons, at least they havent 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.
We'll see soon enough. Who knows, maybe I'll be eating words as thousands of new millionaires who earned their fortune pretend-mining Pi coins mock me for being so wrong.
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Author: Ross Davis
Silicon Valley Newsroom
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