What Is the Pi Network? Is Pi Coin a Scam?

The cryptocurrency industry is no stranger to shady schemes and scams. With each new blockchain and coin launched, investors must consider the risk of being conned. As another project gains popularity, known as the Pi Network, suspicions are arising around its legitimacy.

So, what is the Pi Network, and is it a scam?

What Is the Pi Network?

Founded in 2019 by Stanford University students Nicolas Kokkalis and Chengdiao Fan, the Pi Network comes in the form of an app, a coin, and, controversially, a multi-level marketing (MLM) scheme.

On the official Pi Network website, the service is described as one which makes crypto mining easier by allowing you to mine on your smartphone. It is also claimed on the site that this can be done without taking a large toll on your battery.

If you’re familiar with crypto mining, then you’ll know that it usually requires expensive specialized equipment that eats up energy at an almost exorbitant rate. The sheer cost of crypto mining makes it a no-go for many individuals, but the Pi Network has attracted many because it allows smartphone mining.

You can mine crypto and monitor your metrics on the Pi Network app. This is a free app available for both Android and iOS devices. Let’s look at what this app offers to get a better idea of the Pi Network.

The Pi Network App

When you install the Pi Network app, you’ll need to sign up for an account using either your Facebook account or phone number. You’ll also need to provide your first and last name and create a username and password for your account. Then, you can get started with the app by going through the quick tutorial provided.

There’s no denying that the Pi app is quite basic, as you can see above, but this isn’t to say it’s necessarily poor. You can quickly view your mining profits, read the Pi Network whitepaper, and check out the FAQ section using the app’s menu. To continue mining using the Pi Network app, you’ll need to interact with the app every 24 hours.

You’ll notice as soon as you sign in to the Pi app that invites and referrals are a core part of the network. When you sign up, you’re asked if someone invited you, and when you’re logged in, you can use your invite link or code to refer others to the Pi Network. The emphasis on invites stems from the fact that you can only mine Pi coins if you’ve been referred to the app by someone else. And, if you invite members, you can earn more Pi.

There are various roles you can fill on the Pi Network app. As a Pioneer, you mine Pi daily by tapping the mining button on the app every 24 hours. As a Contributor, you’ll need to invite three to five individuals to a secure circle for an additional 0.2 PI each hour. As an Ambassador, you’ll need to use your referral code to invite new members to the app. Every time you recruit a new member, you get a 25% mining bonus.

Lastly, you can become a Node. This role fits more similarly into the mold of typical cryptocurrency mining, wherein a node will use its computer to validate transactions on a blockchain.

The invites and varying profile levels are where the MLM factor of the Pi Network comes into play (which we’ll discuss a little later).

What Is the Pi Cryptocurrency?

The Pi cryptocurrency is the native coin of the Pi Network blockchain and can be mined via the Pi app. As Pi is a cryptocurrency, it exists on a blockchain. The Pi blockchain uses a consensus mechanism known as the Stellar Consensus Protocol, originally developed for the Stellar (XLM) blockchain.

One Pi coin has a value of around $58 at the time of writing, though it’s important to note that cryptocurrency prices constantly change and always remain exposed to hikes and crashes. What’s more, PI is particularly volatile at the time of writing, with daily fluctuations sometimes exceeding ten dollars, a significant chunk of the asset’s overall value.

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On top of acting as a mining reward, Pi also has utility within the Pi Network as a form of payment for transaction fees.

Pi coins are not currently available on any legitimate exchange, as the network is still in Enclosed Mainnet, which means you cannot trade Pi anywhere. This limits the use of PI significantly, though things may change in the future as the project progresses.

Is the Pi Network Safe? Is Pi Network a Scam?

One of the biggest controversies surrounding the Pi Network is that it is a multi-level marketing scheme (MLM). Multi-level marketing schemes require individuals to contact and recruit new members (or employees) themselves, rather than new recruitment being handled by people employed directly by the company. The offer of more Pi coins in exchange for recruitment stands as the incentive here, but it is also why many people question whether the Pi Network is a pyramid scheme.

Another particularly questionable part of the Pi Network mining scheme is that you cannot withdraw your mining profits (at the moment). This is because the Pi Network is currently in Enclosed Mainnet. While Pi’s developers claim that the network will be updated to Open Mainnet in the future, there is no clear date for when the Pi Network will launch properly.

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The Pi asset is also not listed on any exchanges, which may also make you question the project’s legitimacy. But this is because the Pi Network is currently in Enclosed Mainnet rather than Open Mainnet. The Pi Network issued a warning in late 2022 about certain exchanges listing Pi without having the right to, which you should be wary of if you’re interested in this asset.

The Pi Network also uses KYC (Know Your Customer) parameters to verify the identity of new users. Those who pass the KYC process will allegedly be invited to the Open Mainnet. This seems to be good news on the part of the Pi Network. Still, the aggressive marketing of the Open Mainnet upgrade on social media has aroused further suspicion, as scam crypto projects tend to use constant promotion as a tactic to interest investors.

While the Pi Network’s MLM structure is somewhat concerning, there is currently no financial risk associated with the app itself. You don’t have to provide any payment information or invest any funds to mine Pi. But, as previously mentioned, you do need to provide your phone number or link your Facebook account, which could pose a security risk if the Pi Network is not legitimate.

Questions Surrounding the Pi Network Still Remain

Until the Pi Network launches its Open Mainnet, there’s no knowing whether people will be able to withdraw their mined PI funds and use them on an exchange. The project’s multi-level marketing structure is also a cause for concern. Time will tell whether the Pi Network turns out to be legitimate or ends up being another shady crypto scheme.