Is Pi network legit? I have a bad feeling about this

Look, I am not an expert in cryptocurrencies, but I think I am quite the expert in sniffing out scammy behaviors. As I was browsing the Play store searching for social apps to add more pointless backlinks to Borderpolar, I came across Pi Network, which — allegedly — is a network that is planning to create a new cryptocurrency. All you have to do is download the app and press a button, and your phone starts mining for 24 hours. Then you need to repress that button to keep mining. I don't know what there is to mine if there is no cryptocurrency, but maybe that's how all cryptocurrencies “initialize” and turn into existence. However, somehow, I highly doubt it. So I started looking for an answer online, and I came across this post by Cem Dilmegani. So there rest of this post is a quotation of Cem's post. Write quality content, get a backlink in return.
 Update: I've spent some hours studying the Pi Network, and I now have a personal opinion on it. Firstly, I would like to say that I think there is no ill-will behind this app. It has been advertised by Stanford university itself, so if things go south, it would be a massive blow to Stanford's credibility. So, by considering Pi a genuine effort, we have to discuss whether it makes sense.
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We don’t expect anyone except the founders to benefits from PI Network because:

Users are currently putting value in the app without any (except maybe psychological) benefits:

The app does not provide any utility to its users. There is nothing to do in the app. Users hold on to it, hoping that they will sometimes convert their virtual coins to the actual value.

The app works like a Multi-level marketing (MLM) system, promising future rewards to users for bringing in new users. Users put in additional time and effort to attract new users.

 

My take on this: It definitely feels like MLM. The whitepaper specifies the following roles:

  • “Pioneer. The Pi mobile app user is simply confirming that they are not a “robot” daily. This user validates their presence every time they sign in to the app. They can also open the app to request transactions (e.g., make payment in Pi to another Pioneer).”
  • Contributor. A user of the Pi mobile app contributes by providing a list of pioneers they know and trust. In aggregate, Pi contributors will build a global trust graph.” Personally, I don't see any trust guarantees in the invitation model. In fact, I will use the referral code in this post to invite the whole internet to my team of pioneers.
  • Ambassador. A user of the Pi mobile app who is introducing other users into the Pi network.” Same thing as above.

  • Node. A user who is a pioneer, a contributor using the Pi mobile app, and is also running the Pi node software on their desktop or laptop computer. The Pi node software is the software that runs the core SCP algorithm, taking into account the trust graph information provided by the Contributors.” Again, the word trust is overstated without any other guarantees apart from the “I'm not a robot” one. Even this guarantee is no accurate. You can add all sorts of automated tasks to smartphones, and you could have your smartphone or emulator do mining automatically. However, going even further, who does the mining in the Pi network? Running a node is not related to mining, and our smartphones don't do any mining. They don't seem to be exchanging many messages as part of the Stellar Consensus Protocol either. The developers should be much more transparent about how all this works.

The whole point of this referral model aims to make Pi Network popular and at the same time reward members based on longevity. At the same time, they claim that it won't end up like Bitcoin, in which massive mining pools own almost all of the wealth, while Nvidia becomes rich from people buying cards. And yet, there are already people who make 100pi/h.

Overall, what I see here is a form of neo-capitalism. These are minor or major reshuffles in the global economy, but generally speaking, I don't believe cryptocurrencies are the solution in their current form. One more thing I don't know about Pi, though, is how can we sustain making this amount of Pi with so many users if there is actual mining going on. I don't believe there is, not at this scale. I am going to track the network traffic and see where these requests are going.

Cem writes: “Users are putting value into the app. There are hundreds of posts online saying PI Network can not be a scam because you do not put any money into it. Users’ time and data are valuable to those users, and they are spending these on the app. You can see the data collected by the app on its Play Store page.”

My take on this: Cem is right on this one. In 2021 we almost take for granted that we need to give up our privacy to use an app. At the same time, I don't think Pi is a scam, as I already explained. The backlash would be enormous. But I don't have any proof of that. I can actually build an app within a week and do exactly what they are doing – you know, the “press a button, nothing happens” thing and write a white paper claiming that I'm going to change the world. I want more clarity from the creators.

Cem finds it unlikely for the app to create value in the future, unlike its claims:

  • The app creates limited value. Users create no value except for providing their information to the mobile app. The value of such data is unlikely to generate significant wealth for the large user base. My take on this: It seems that some software in a galaxy far, far away is doing some “mining” for us, and since Pi does not follow the Bitcoin “Proof of Work” consensus algorithm, the mining process is done much more efficiently on a distributed system. Still, I don't understand what's going on behind the scenes and why it scales if there is actual mining going on.
  • There is no visibility on its technology or blockchain. Most blockchain companies publish their code as open-source, so it can be validated, which is not the case here. Currently, it is no different than any mobile app in terms of the transparency it provides on its technology. My take on this: Cryptocurrency and lack of transparency are a no-go. I don't know why the developers haven't open-sourced Pi already, even though they claim they will. But they better do it sooner rather than later. I don't particularly appreciate that they are not clear about what's going on with Pi.

Some of its current practices are also practices used in scams:

  • Founders are already benefiting from the app. They launched optional video ads at launch to monetize the active user base. The app also has a KYC process for collecting passport information. Binding this to mobile IDs can be valuable information for the founders.
  • Their marketing emphasizes the academic credentials of their users. Similarly, a blockchain scam without blockchain infrastructure, OneCoin, relied on its founder's McKinsey experience in its marketing.

 

How does PI Network work?

It is an app where users:

  • login every day and click a button to get digital currency. There is no proof of work being performed; they log in and click a button. This currency is not traded yet, so it currently holds no value.
  • Level up by inviting more users to the platform. This makes them gain more digital currency per day. This is a common model in Pyramid Schemes and Multi-level marketing.

Could PI Networks’ currency be valuable in the future?

Of course. We have done an evidence-based analysis here, and there is also evidence that shows that PI Networks is at least attempting to build something of value:

  • They have published a high-level whitepaper outlining their ambitions without providing technical details on how their Pi Stack would work. One of their aims is to have others build apps on the PI network to benefit PI network users’ attention. This reminded us of the pay to surf models of the dot com boom. Companies installed software on user devices and acted as a middleman between users and advertisers without generating substantial benefit to either party.
  • According to their Linkedin page, they have 70 employees as of 2021. However, many of the people that list themselves as working there are app users with titles like “Cryptocurrency Trader.” We haven’t analyzed each profile, but there seems to be a group of people working towards building something there. It could be the next version of the app or the blockchain network that is hard to verify outside the company.
  • Its founders were educated at and worked at Stanford. Though this is certainly a good thing, people rarely notice that Warren Buffet, Jeff Bezos, the writer of this article, and numerous business founders were educated at reputable universities (e.g., Ivy League universities, for these examples). This is because their companies rarely use these facts. Based on our observations, business success is far more important and a better predictor of successful enterprises than academic credentials. And successful companies tend to speak about their business success rather than their founders’ academic credentials.
  • They have had significant growth. They have ±170k reviews and a good rating on Google Play Store. However, MLM models tend to generate fast growth.

So what should you do?

I wouldn’t bother installing the app. You can always make the argument that you only lose time by giving the app a try. However, this belief would lead the believer to follow any dishonest actor who promises future value. There is no scarcity of empty promises globally; we try to spend our time more carefully.

However, if you already have the app, you can wait to see if the founders actually build a cryptocurrency.

Finally, if you came across this because you are looking for ways to become wealthy without putting in significant effort, we recommend looking for other ways. As Buddha said, “Our mere existence is suffering,” and as Karl Marx is claimed to have said, “Life is a struggle.” We don’t see shortcuts, but a consistent effort by flexible and open minds tend to pay off. Instead of such schemes, you could look into learning new skills which tend to pay off better.”

My take: For me, as a computer scientist, the name Stanford means a lot, and I would not take any attempt advertised by Stanford and run by Stanford graduates lightly. I won't advise anyone to use Pi, as I have no proof of what it actually does. As an opportunist and with the power that the Internet gives me, I would say that it would be fun to make posts like this go viral and stress the system and its wealth distribution to the maximum. I don't expect to become a billionaire from Pi, but I would like to have some fun. The referral code is “anantoni” if you want to join my team of potential time-wasters.

Feel free to leave comments with your referral codes. As it turns out, one of Pi's creators is also Greek, so I will try to reach out to him for an interview. It would be great publicity for Borderpolar (from which I expect to become a billionaire).

I will also try to post a full review of the Pi whitepaper, to the extent I understand it since I think it has many flaws in addressing potential questions.

To sum up: I don't want to discourage anyone from investing their time (and only that) in this thing since there are some crazy predictions about the Pi coin value in 2015. At the same, I don't want to encourage anyone to share their personal info and start “mining,” or whatever. So please act of your own volition. To clarify even further, cryptocurrencies are not investments, in my opinion. They are gambles.

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