Why Does Pi Network Cause More Controversy Than Other Digital Currencies?

Lack of transparency about blockchain, limited information about the team behind, while the “fanatical” community is causing controversy for the Pi Network project. After 6 years of waiting, the Pi Network team announced the “network opening”, allowing players to trade Pi coins outside the market. However, since its inception, this project has sparked much controversy, while not being highly regarded in terms of technology. Journey Traveled Pi Network was launched on Pi Day 14/3/2019 by Nicolas Kokkalis, Chengdiao Fan, and Vince McPhillip, with McPhillip leaving the project due to disagreements. The first version of the mobile app allows users, called Pioneers (pioneers), to “mine” Pi directly from their smartphones. One year later, Pi Network started the testnet phase, marking a significant step towards decentralization, allowing the deployment of distributed nodes worldwide, testing blockchain, and creating utilities with Test-Pi. At the end of that year, the project introduced the Pi Node feature to operate network nodes on personal computers. In December 2021, Pi Network deployed a “closed mainnet”, players can trade Pi internally with each other. In the middle of last year, the project scheduled an “open mainnet” and planned to “open the network” on February 20. According to the announcement by Pi Core Team (PCT), the team behind Pi Network, last year, the project had 60 million users. In the latest update, there have been 10.14 million mainnet transfers, exceeding the initial target of 10 million. The project also has over 19 million people who have verified their identities (KYC). On social networks, Pi Network attracts great attention, with 111,000 followers on Reddit, 2.9 million people on Telegram, 3.5 million people on Twitter, and 1.65 million people on YouTube. Not entirely Blockchain Except for those who operate Node, for most Pi players, the only task is to log in to the phone, “activate the lightning” and wait after 24 hours to repeat. They call this action “mining.” “We define ‘mining’ more broadly than the traditional meaning, which is to perform consensus algorithms through proof of work as in Bitcoin or Ethereum,” Pi Network’s whitepaper expresses. However, this term seems to be redefined by Pi Network to serve its own purposes. When it comes to cryptocurrency, mining means verifying transactions and securing the network. For Bitcoin, this involves solving complex mathematical puzzles and receiving rewards through a resource-intensive system of machinery. Pi Network does not meet this requirement. Pi applies Stellar’s Federated Byzantine Agreement consensus mechanism by exchanging computational power among trusted groups based on trust rather than computational effort. When a sufficient number of trusted nodes agree, the transaction is confirmed. This ‘trust’ is controlled by the Stellar Development Foundation. Unlike Bitcoin and many other cryptocurrencies where economic incentives drive miners and validators to act correctly, Stellar relies on the goodwill of participants. Pi Network also lacks transparency by allowing players to invite others to join with minimal oversight. “What would happen if the foundation of trust is compromised?”, CCN poses the question. “Imagine a scenario where bad actors infiltrate the network, guarantee each other, and spread without limits. What consequences do they face? In fact, they do not face any penalties”. In fact, Pi’s blockchain network is not completely decentralized like many other digital currency projects. The mainnet nodes are currently being controlled by the Pi Network. “All active mainnet nodes are exclusively managed by the Pi core team, contrary to the group’s claim of decentralization,” CoinTelegraph quoted a blockchain expert as saying. “Despite the project’s promise of decentralization, its current structure raises doubts about the Pi Core Team’s commitment to this principle”. The lack of a smart contract (smart contract) after 6 years, even when it’s about to ‘go live,’ has raised doubts about the project. Blockchain expert Nguyen Viet Dinh commented on Facebook that Stellar Core has implemented smart contracts from version 20 onwards, but Pi Network is still using version 19.1. ‘They may upgrade to the latest version 22.1 in the near future,’ he predicted. According to experts, the participation of millions of people in Pi Network is a strange case, as the question is: What motivates users to invest their time and resources in a network that is not yet completely decentralized. “Everything boils down to the illusion of mining,” Crypto Potato commented. “By encouraging a daily touch on the screen, Pi Network creates a pretense of participation. However, this action does not authenticate transactions and secure the network, only serving as a gimmick to maintain user interest”. Thiếu Minh Bạch According to CCN, Pi Network has attracted attention for introducing users to mine digital money without requiring much energy, technical expertise, or expensive equipment. “But is Pi Network a real opportunity or a cleverly disguised scam?”, the page commented. First, this site questions the announced number of 60 million PCT users. Third-party blockchain explorer like ExplorePi identifies around 10 million wallets on the Pi network by mid-February, while Pi Door records 6.15 million wallets by October 2024. This means that the number of wallets owned by users accounts for less than 15% of the total number of users. Additionally, only about 20,000 wallets show daily activity, indicating a significant gap between reported and actual interaction levels. “To complete the KYC process, players must have a Pi wallet,” CCN reported. “We wonder whether millions of other players are real or fake. Is the project being inflated?”. “In the world of cryptocurrency, differences in user statistics can significantly impact the perceived legitimacy,” OneSafe page expresses a similar view. “Lack of honesty can erode trust, making potential users cautious.”. Regarding the KYC issue, according to CoinTelegraph, the mandatory KYC process of the project raises significant concerns about privacy, as users are required to submit sensitive personal data including a selfie video and government-issued identification documents. The data is processed by regional verification agencies or self-registered players acting as verifiers, increasing the risk of misuse or identity theft. Previously, experts warned that Pi lacks transparency as a blockchain project due to limited information about the team behind it. The smartphone app specifically requires access to users’ contact lists. Moreover, if the money is only stored on a phone or centralized server, the administrator can change and create as much money as they want. “Addictive” In the book Atomic Habits, author James Clear explains that habits are formed through consistent small actions over time. This is reflected in the “check-in” process of Pi Network. The task seems simple: click the “lightning bolt” button and receive a small amount of Pi, almost effortlessly. But gradually, this action becomes a daily habit. For many people, stopping logging into Pi every day is like admitting that all previous efforts were in vain. ‘The app traps users in their own trap,’ according to OneSafe. ‘Pi combines social elements by allowing users to invite friends and build networks, thereby exploiting the basic human need for social confirmation.’ Furthermore, what makes it difficult to leave Pi is the hope that perhaps the token will have ‘real value someday.’ Meanwhile, Pi Network’s player invitation model is considered a multi-level Ponzi scheme, as the more players one invites, the more Pi they receive, urging them to find ways to attract new people. In fact, Pi Network creates a fanatical community. Records on Facebook groups with hundreds of thousands of participants or X accounts suggest that giving conflicting warnings about the project is often immediately criticized. “Pi Network seems to be creating a new ‘cult’ after many years,” commented Le Binh, a crypto market participant for over 6 years. “They are ready to criticize, attack those who do not share the same views, even if those opinions are correct.” Price Debate In the Pi Network community, many people believe that the price of this cryptocurrency will be very high. Many people call for a ‘consensus price’ for each Pi from 500 to 1,000 USD and demand ‘no price breaking.’ There is even a community forming what is called the GCV (Global Consensus Value - the global consensus value) of Pi at 314.159 USD and fiercely defend this viewpoint. However, according to OneSafe, this is an “unimaginable” number. PCT announces that the total maximum supply is 100 billion Pi. Meanwhile, the initial supply was estimated to be about 6 billion Pi released to the market after the mainnet launch. According to CoinTelegraph, as of January, the circulating supply reached 5.56 billion tokens. “If Pi has a price as expected by the community, its market capitalization will be unimaginable, with no real basis or market data to prove it,” said Nam Nguyen, who has 4 years of experience in the cryptocurrency market. According to Mr. Nguyen, the fact that the Pi Network community values Pi itself and protects its “optimism” makes others feel irrational. The controversy began there. “There have been too many strong words about Pi Coin and Pi Network since their launch. This project only exists due to its strength by using the emotions of investors, like Hamster Kombat,” Crypto Times commented. “However, over time, people will check in reality to see if Pi is a long-distance racehorse or not.”.