Pi Network: analysis of the project between innovation and controversy

Pi represents one of the most polarizing projects in the current cryptocurrency landscape. Created in 2019 by a group of researchers from Stanford University, this token positions itself as a unique experiment combining blockchain technology, mobile application, and a referral-based growth model. While the project boasts millions of global users, it also raises legitimate doubts about its true nature and the promises it has kept.

How does Pi actually work?

Unlike Bitcoin and other traditional cryptocurrencies that require specialized hardware and high energy consumption, Pi’s acquisition system was designed to be accessible via smartphones. Members generate new Pi tokens by tapping a (“Lightning”) button in the app once every 24 hours, without needing to keep it open.

The project’s native cryptocurrency is the Pi token, which users accumulate directly within the app. Although millions have started collecting these tokens, their actual value and practical utility remain uncertain. The project is still under development, and despite developers promising concrete applications for the token, considerable skepticism persists regarding the achievement of these goals.

The participation and referral system

To get started, an invitation code from an existing community member is required. This referral mechanism allows participants to increase their earnings based on the number of new users who use their code. The logic is straightforward: the more people you invite, the higher your accumulation rewards.

Four levels of contribution

Participants can assume different roles, even simultaneously, to maximize accumulation:

• Pioneer: the basic role where you generate Pi by pressing the “Lightning” button daily
• Collaborator: increased generation speed by completing daily mining sessions and creating a “Security Circle” with verified pioneers
• Ambassador: invite new users and receive bonuses up to 25% on their mining transactions
• Node: run the Pi node software on your computer to act as a network validator (currently in experimental phase)

The hourly accumulation rate varies depending on the initial registration time. Longer-standing members benefit from more favorable conditions compared to new registrants.

Underlying blockchain technology

Pi Network uses the Stellar Consensus Protocol as the basis for its consensus algorithm. This approach was chosen to enable participation via mobile devices, making the process more energy-efficient. Nodes coordinate through network messages to reach consensus on transactions.

However, there is an important distinction: what is called “mining” in Pi is not traditional Proof of Work mining like in Bitcoin. It is rather a system where users receive Pi vouchers as recognition for daily app usage and demonstrating they are not automated bots. As of September 2024, no actual computational mining has been performed. Users contribute by building the “Security Circle,” a trust network that will serve to verify transactions when Pi’s open mainnet is finally launched.

The current state of your accumulated Pi

Currently, Pi tokens remain locked within the mobile app. As of September 2024, it is not yet possible to transfer, sell, or trade Pi for other cryptocurrencies. According to the project’s roadmap, these features are expected to be enabled in the third phase of the open mainnet launch, but no confirmed date exists yet.

Legitimacy: open questions and concrete concerns

Whether Pi Network is a legitimate project or a problematic scheme remains controversial. Several elements fuel the debate:

Limited transparency: many criticize the lack of a detailed technical whitepaper or comprehensive documentation on how the network functions. Without these fundamental documents, it is difficult to truly understand how the system operates and how resources are allocated.

Multi-level model resemblance: the referral system, where users earn by inviting others, resembles pyramid schemes. This has raised red flags regarding the sustainability of the model.

No official listing: as of September 2024, Pi is not listed on any major cryptocurrency exchanges, preventing holders from liquidating or trading their tokens. This creates a closed ecosystem where the value remains purely speculative.

Uncertainty about funding: the lack of transparency on how Pi Network funds development raises fears that it could be a “pump and dump” operation, where the value is artificially inflated before an eventual collapse.

Counterpoint from supporters

Supporters highlight the innovative approach to mobile mining and the significant global community. They justify the prolonged development times as a deliberate strategy of caution, aiming for sustainable growth in the long term.

Security and data protection

Pi Network is generally considered safe from an app perspective, but it lacks independent third-party security audits. The absence of external code and system verifications raises questions about the platform’s actual robustness.

The app takes a conservative approach by requiring only a Facebook account or an email address for registration, avoiding the submission of sensitive identity documents. Nevertheless, it is always prudent to carefully consider what personal information is shared on any online platform.

Final assessment: reliable or risky?

When determining whether Pi Network is trustworthy, it is essential to consider the project’s current stage. On one hand, the project has achieved significant milestones: millions of active users, implementation of KYC (Know Your Customer) verification, sustained ecosystem growth. On the other hand, critical steps remain incomplete, such as the true launch of the open mainnet and the creation of concrete use cases for the token.

To answer directly: currently, Pi Network has not been officially classified as a scam, but its future value and long-term viability remain largely unknown. Investors and participants should approach with cautious realism, carefully evaluating their personal risks before dedicating significant time to the platform.