Pi Network: Where the "Mining" Never Stops - and Looks Like It Never Will!

Pi Network: Where the "Mining" Never Stops - and Looks Like It Never Will!

Created 1mo ago, last updated 1mo ago

CoinMarketCap Alexandria takes a deep dive into Pi Network, a dubious crypto project promising to be the future of crypto.

Pi Network: Where the "Mining" Never Stops - and Looks Like It Never Will!

Table of Contents

Pi Network (PI) is an unreleased cryptocurrency resembling a multi-level marketing scheme. Officially, Pi Network enables users to mine its (unreleased) cryptocurrency on their phones. According to Pi Network, this allows the community to build the “world’s most inclusive peer-to-peer marketplace, fueled by the world’s most widely used cryptocurrency.”

Pi Network pitches its scheme as a solution to all the buzzwords plaguing the crypto industry:

The network claims to offer a solution by allowing “everyday people to mine.” Users can join the Pi Network but not without an invite by another user and a valid phone number. They can then “mine” PI on the network’s mobile app at the click of a button, although the accumulated balance does not reflect any real-world value.

Pi claims to have aggregated 33 million users (called ‘pioneers’) on its app since the project’s inception in 2019. Even though the network has built an impressive user base, several red flags indicate that Pi Network may be dubious at best and a Ponzi scheme at worst.

How Does Pi Network Work?

Pi Network claims to utilize the Stellar Consensus Protocol (SCP) and its Federated Byzantine Agreement (FBA) algorithm for mining its (still unreleased) cryptocurrency. This is a legitimate consensus mechanism used by Stellar, a payments-focused project. Pi Network stresses the “green” aspect of this consensus mechanism and how SCP does not “have energy waste,” juxtaposing it with the oh-so-wasteful proof-of-work blockchains.

Pi applies several “adaptations” to the SCP, officially to enable mining by individuals. It introduces four roles to the network:

  • Pioneer: A user of the Pi mobile app that needs to log in daily and restart their “mining” process. The app functions as the project’s main hub and offers a chat function, access to the project’s info material, and referral codes to funnel new users to Pi.
  • Contributor: A user that verifies other users to “build a global trust graph.”
  • Ambassador: A user that has referred at least seven new users.
  • Node: A user who is a pioneer and a contributor using the Pi mobile app. They also run the Pi node software on their desktop or laptop computer.
Pi also promises utility and a two-phased governance model that is an improvement over existing models of governance by other blockchains. Its promised utility is called the Pi Stack which strings together a few pleasant-sounding buzzwords without any real insight into its execution.

For instance, Pi Network claims to “facilitate transactions between strangers that would not have otherwise been possible” with its “trust graph” but offers zero perspectives of how this will look like in practice.

Its “Attention Marketplace” is a rehashed version of obvious truths about the value of attention, with the promise that “in Pi’s attention marketplace, companies seeking to reach Pioneers will have to compensate their audience in Pi.” The same goes for its “Barter Marketplace” and “Decentralized App Store” that make vague promises without any realistic execution plan.

Pi’s two-phased governance model is a thinly-veiled version of centralized decision-making by the team that is supported by a “committee” proposing and soliciting suggestions past a user base of five million (currently 33M). Presumably, this committee can influence Pi’s three-part roadmap, which currently sees Pi in Phase 3 - mainnet launch. According to the official “Pi White Paper,” this is how the mainnet launch is decided on:

“When the community feels the software is ready for production, and it has been thoroughly tested on the testnet, the official mainnet of the Pi network will be launched.”

To launch the mainnet, users have to pass comprehensive KYC, which is completely contradictory to the core tenets of decentralization and permissionless usage of public blockchains. This is but one of several reasons why Pi is almost certainly a Ponzi-like scheme.

Unique Features of Pi Network (Why Pi Network Is a Scam?)

Although many projects in the blockchain space do not adhere to the best business ethics, Pi Network has all the hallmarks of a project that is working on a major Ponzi scheme.

Low-quality Whitepaper And Website

The Pi Network whitepaper is of abysmal quality and riddled with typos and spelling mistakes. Worst of all, it is a mashup of popular blockchain buzzwords like energy-efficient mining, user-friendly application of blockchains, and other obvious truths about cryptocurrencies. It offers no specific plan for executing any of its promises, let alone explaining the network’s presumable real-world utility. Moreover, the website has a cheap look and regurgitates talking points like:
  • Mining crypto is hard.
  • Investing in crypto is risky.
  • Too many of us are left out of the cryptocurrency revolution.

This is insofar puzzling, as Pi is supposedly run by a team of Stanford alumni. The misalignment of alleged expertise by the team and the lack of quality communication is reason alone to doubt the project’s legitimacy.

A Low-quality App That Requires Private Data

Next is Pi’s mobile app, which is equally cheap in its design and offers no utility besides mining the unreleased PI coin. Furthermore, users have to sign up with a phone number and can use an invitation code from another user, a classic sign of a multi-level marketing scheme. There are several allegations of Pi Network being a scam on public forums like Quora and Medium.

No Pi Coin After Three Years

Pi recently released an excessively long article on its official Medium blog, detailing a process of how users will have to go through KYC to receive their mined coins (some would say hiding their scheme behind a bunch of formulas). In short, PI will have a total supply of 100 billion, 20% of which will be reserved for the team. Following this announcement, some Pi miners on Pi Reddit were not amused:

[...]” have little lest then 10k, just me and few friends ‘mine’ and after finding out that supply is 100bn, feel like shit, because when we hit the market, my 2year mining will be able to buy for few dollars…”

Although most of the Pi Network community is based in developing countries, the massive token supply will likely render user balances virtually worthless. This is further ground for assuming that Pi Network is monetizing the attention and data of its users instead of trying to build a real blockchain project with real utility.


One could argue that Pi Network is not a scam since it does not cost money and only requires the user’s attention. Its supporters argue that Pi Network is just “taking its time” and costs nothing, and scam allegations are just FUD.

However, Pi Network collects private data through its KYC process for the token launch that will presumably happen at some point. Furthermore, it has already collected the phone numbers of all the users signed up for the network. At best, Pi Network engages in misleading and poor-quality marketing with vague promises that it fails to deliver. At worst, Pi Network could turn into a Ponzi scheme similar to Onecoin.

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