PI Network is a cryptocurrency project that claims to be building a digital currency and platform accessible and fair to everyday people. This novel approach has attracted millions of users, eager to get in early on a cryptocurrency that promises to be the next Bitcoin. However, there are good reasons to be skeptical about whether PI Network can deliver real value to users. In this comprehensive article, we’ll analyze the evidence surrounding PI Network in depth to determine if it exhibits the hallmarks of a scam.
How Does PI Network Work?
PI Network was launched in 2019 by a team of Stanford graduates. It claims to utilize "blockchain technology" and "cryptographic security" to build a cryptocurrency accessible for everyday people. However, the specifics of their technology are extremely vague, as no detailed technical whitepaper has been released.
Here is how the PI mobile app works currently:
- Users download the app, create an account, and receive a starting balance of PI coins.
- Daily, users can click a button labeled “mine PI” to receive more PI currency. The rate of mining slows down as more users join the network.
- Users can boost their mining rate by referring others and completing promotional tasks like watching ads.
- Mined coins remain locked in the app and cannot yet be transferred out or exchanged for government-backed currencies.
Questionable Claims and Marketing Tactics
PI Network boldly claims to be making cryptocurrency accessible for "everyday people" and building the "most inclusive cryptocurrency in the world”. However, many of their marketing claims do not hold up under scrutiny:
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Claim: PI‘s blockchain is "more decentralized than Bitcoin".
Reality: PI Network has not shown any evidence of operating a legitimate blockchain. Their Github contains only an unfinished testnet project that appears abandoned.
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Claim: The coin will gain monetary value after launching on exchanges.
Reality: There is no guarantee of this ever happening. The team fully controls coin distribution and supply.
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Claim: Users are "mining" real cryptocurrency.
Reality: Users merely click a button to receive free coins. This requires no technical proof of work.
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Claim: The project is community-driven.
Reality: The anonymous development team holds significant control over all aspects of the project.
Importantly, PI coins currently cannot be used outside of the app and have no monetary value. The team claims they are still in “Testnet” phase, and a Mainnet launch is required before coins can be traded or sold.
Questionable Monetization Tactics
The way PI Network monetizes its users is ethically questionable:
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KYC data collection – Users feel pressured to submit government IDs and facial photos for "KYC verification”. This provides the developers with marketing data they can potentially sell.
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In-app ads – Video advertisements have been enabled since the initial app launch. Again, this allows the developers to monetize their large user base.
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Arbitrary delays – Vague excuses are given when users ask about exchanging their PI balances for real money. This buys more time to collect data and serve ads.
Lack of Technical Substance
Most legitimate cryptocurrencies have strong technical foundations, detailed in whitepapers and visible in code repositories:
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No whitepaper explaining the protocol, economics model, coin distribution, etc.
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No active code development in over a year based on review of their GitHub.
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No Mainnet launch date provided after years of development. Most blockchain projects require months, not years.
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Node projects claimed to be run by users cannot be independently verified.
PI Network relies entirely on its multi-level marketing and users‘ lack of technical expertise. It provides vague excuses when pressed about the delayed Mainnet launch.
Similarities to Other Crypto Scams
Looking at past crypto scams reveals striking similarities with PI Network:
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OneCoin – One of the biggest Ponzi schemes ever. Used MLM structure and had no real blockchain.
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PlexCoin – Charged with securities fraud. Promised 13x returns but had no product.
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BitConnect – Promised 1%+ daily interest. Relied on referrals. Crashed 99% in value.
Unlikely to Make Users Rich
Despite large account balances displayed in the app, users are unlikely to ever realize actual value from PI Network:
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Supply and distribution controlled entirely by developers.
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No exchange listings to enable trading after years of development
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Mining yields diminish over time as user base expands. Late joiners mine tiny amounts.
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If it ever lists on exchanges, founders hold the lion‘s share of supply.
The account balances tracked in the app are meaningless numbers unless the currency is actively traded on exchanges where supply/demand determines real monetary value.
Final Verdict – Likely a Scam
Given the lack of technical substance, reliance on questionable marketing tactics, delays in providing real utility, arbitrary KYC requirements, and monetization of users, PI Network exhibits many characteristics of a scam operation.
While it‘s possible the founders execute on their promises in the future, they have not provided convincing evidence thus far. As an experienced blockchain data analyst, I believe users should remain highly skeptical of PI Network until it can substantiate its claims with transparency and progress.
Until they release detailed technical documentation, open the blockchain ledger, obtain exchange listings, and let users fully control their coins, there is little reason to trust PI Network.
My professional opinion is that users should avoid wasting time and data on PI Network. The opportunity cost is too high compared to established, legitimate cryptocurrency projects.
However, if you still wish to try PI Network, do so without unrealistic expectations, and never "invest" more than you can afford to lose. Approach it with extreme caution, and always be wary of claims that seem too good to be true.