What is Pi? An Introduction to the Cryptocurrency You Can Mine on Your Phone
image pexels, meme PopPopPrego

What is Pi? An Introduction to the Cryptocurrency You Can Mine on Your Phone

By PopPopPrego | The Fascination | 2 May 2021


One of the very first projects I ever played around with when I entered Cryptoworld was Pi. I had really no budget, and whatever budget I had was quite nervously applied to earning interest from stablecoin I deposited with centralized exchanges like BlockFi and Celsius. In addition to zero budget, I had zero clue what made a coin good or bad. But I did know that getting to find out for free sounded a lot better to me than buying a coin for actual money and then finding out if it was crap. 

Free was my mantra, and Pi speaks that language well.

To be honest, I am not sure how I feel about Pi. It is free in a financial sense, but it requires installing an app and trading away some degree of your data. There is a slow but steady quality to the progress that the developers are making, but the team is really small. There is a rapidly growing user base, but it still isn't clear how that will translate into value. And, most importantly, who knows what 1 Pi will be worth when (or if) it launches?

From a practical standpoint, to use Pi, you simply download the app to your phone, connect to someone else's account, and then poke the "mine" button once every 24 hours or so. As I will explain in just a bit, the Pi developers enable a higher mining rate for people who are connected to established miners, which makes Pi one of the currencies where it is firmly an advantage to use a referral. I just happen to have one handy! If you saw the word FREE and have heard enough, go to https://minepi.com/PopPop6 and use my username PopPop6 as your invitation code. Otherwise, read on.

Introducing Pi

Pi's stated mission is to bring an economical, low-energy cryptocurrency to the people (like me!) who are shut out of first generation crypto by economic costs (e.g, the price of a single BTC) or technological advances (e.g., expensive advances in ASIC miners and mining corporations). It is built on a fork of Stellar Consensus Protocol, which, like the development team, has ties to Stanford University. This latter fact comes up quite a bit in supporting material, and while Stanford is an awesome university, ties to Stanford are of course no guarantee of success. 

As with all things crypto, the Stellar Consensus Protocol needs computing power to confirm transactions and maintain the network. Pi users who supply these services create Nodes. Nodes are one of four degrees of participation in the Pi project. The initial level is Pioneer, where you just tap your phone to demonstrate you are not a bot. In essence, through this kind of mining you are demonstrating that you are an active user, which probably is part of the value Pi seeks to offer to investors or markets. The second level is Contributor, where you start convincing your contacts to join, providing an indication that you are creating a security circle of known, trusted users for the network. The third level is Ambassador, which is really what I would be if you used my link because we do not know each other in real life, which limits the degree to which we would trust each other. So Pioneers are the users, Ambassadors grow the user base (and mine at a slightly higher rate than Pioneers), Contributors vouch for the security of other users that can be used to identify more trust-worthy network inputs, and of course there are Nodes who maintain the network and create consensus on transactions.

Pi's whitepaper (https://minepi.com/white-paper) suggests that they can make the Stellar Consensus Protocol more efficient through the use of the kinds of trusted security circles that Contributors build. I suppose there will be many ways you can build or lose trust, but more trusted circles presumably would be more valuable and would receive both more weight in consensus an more Pi for their participation. 

As you probably have figured out, you start as a Pioneer, mining bits of Pi every day. Actually, Pi is not really mined, it is more rewarded. You get Pi because you help support the userbase, not because your phone is rocking any algorithms. Userbase seems to be key. There are plenty of reminders to grow your network, though, so one vibe this project gives off is a little bit of that recruitment mania. It raises the question of whether Pi users are simply a network to market to, or whether we actually are mining a crypto that will have value. The fact that Nodes are not yet a technical reality also seems to push in the direction of recruitment rather than execution. 

What is Pi Worth? 

This is an easy one. Nothing! 

OK Smartass, What Will Pi Be Worth?

Ouch! Well, no one knows. I have seen estimates from fanboys and fanatics of $10 per Pi to $0.16 per Pi. And, if you take a look at how some analysts have approached this project, there are several who seem quite sensitive to the idea that Pi could be a scam or a bait-and-switch, in which case the price of each Pi is negative because you gave them your time and data. And of course your hopes and dreams, but come on, it's 2021, do any of us still have any hopes and dreams left to give? haha! sad...

There are warning signs. In several of the articles I read to get some perspective for this piece, they are very concerned by two big issues. First, the mainnet still has not launched. Now, maybe the team is being very careful, but other than launching a browser, a wallet, and a testnet, there are few signs that Pi will be a "thing" like other cryptocurrencies are a "thing." Without a mainnet, there is no value. Second, there seems to be increasing emphasis on the size of the active user base and the introduction of ads in some markets. This raises the possibility that the team is seeking to persuade investors or partners that they have great targets to sell ads to rather than a cryptocurrency. This reminds me of another free crypto project I signed up for in the early days, Sweatcoin. You earn Sweatcoin for your physical activity steps, or by watching ads. And you can "capture consumer value" from your Sweatcoin by buying discounts or products from their marketplace. Sweatcoin itself is not traded and is worth nothing outside of its own ecosystem. There are concerns that Pi could go the same direction. This idea also is reminiscent of Brave browser and their BAT reward token. Except that BAT can be traded on multiple platforms.

A third issue got mentioned in passing, but this is the idea that it is not clear when or if we will be able to access our own wallet keys. As I have heard over and over again, not your keys not your crypto. If we can get our keys, that would be a nice sign that this will be more than an in-game currency or rewards token, like Bing rewards or something.

Recent Developments

Pi has been doing stuff. I don't always understand the stuff it has done, but it looks like there have been three main events. The first is a couple of halvings of mining/reward rates. It is now at a base of .2 Pi per hour and used to be 8. When (if?) Pi launches on a mainnet, it will halve again. The second is the rollout of the browser and wallet. To my eyes, the browser wallet thing just looks like the Pi app but in a different, umm, app? But it could be built out to interface with the rest of the internet world someday. Right now there are the same functions as the app, and Pi's hopes that developers will build apps for the Pi ecosystem seem pretty speculative. Their "brainstorm" section solicits proposals, but only has 2 projects listed, both of which are ways to try to avoid the onerous KYC verification system. I am not a business genius, but I have to imagine the devs were hoping for more than that as it is not clear where the profit is in simply making onboarding of new users easier, without giving users more to do or places to spend or trade Pi. The third is the creation of a testnet for Pi transactions. Hopefully this accelerates us toward Pi launching on a mainnet. 

So Why Is Pi Still Waiting to Be Traded?

Yeah, why is Pi still not on a mainnet? I mean, look at all the crap that is traded on some mainnet somewhere. Is it so hard for Stanford grads to work out? It is possible they really want to work out the kinks before they go to an active cryptocurrency. The Stellar Consensus Protocol is a lot faster than Bitcoin's proof of work consensus mechanisms, but the Pi developers suggest that it is not clear how to scale it to the size of networks that they are aiming at. Ultimately, they want Pi to be a go-to crypto for just about everyone. As the number of users grows, the number of nodes needed to support the network grows, and as they grown, the complexity of the whole system grows. This might be one reason why Pi is still a concept that is not traded or even really used for anything. Pi is around 2 years into their project, and it seems like they are not quite over this scalability problem. 

Let's Sum Up

This is hardly a comprehensive analysis of Pi, but hopefully it gives you a better starting place than the one I had, which started and stopped at FREE!

If Pi is a scam, it is a weird one. I suppose the exit strategy might be to sell our data and then disappear. I don't know. Is that worth a lot? They have 14 million or so active users who at least poke a button every day. Maybe they are getting more data from me than I thought. One site seems pretty upset about the data Pi can scrape but considering they don't even show me an ad on my Pi app, I don't know if I am as angry. It mostly seems geared to personalized ads (https://research.aimultiple.com/is-pi-network-safe/). I don't even know what part of my phone doesn't already try to feed me that crap so to me Pi is like any other app I would download in that regard. I know I am getting screwed somehow but I want to use the app anyway.

It could be a bait and switch deal, though, where we are sold a cryptocurrency but what we get is a multilevel marketing rewards scheme that is worth something only within the ecosystem. Again, I think of Bing Rewards here. That would suck. There is no way to get rich off of discounts on tiny soaps, ugly jewelry, or portfolio tracking programs. 

It also might be that the team, which only appears to be 2 people on the Pi website, is overloaded and not up to launching what they are dreaming of. Sometimes the dream stays out of reach. 

On the plus side, it is a free roll of the dice. Yes, you give up some data, and a few seconds of time poking a button, and yes, it might not work. If that tradeoff seems bad to you, then Pi is pointless. At the same time, they are moving along their roll out plan. The launch of the testnet will provide a way to get data on whether their nodes work and can be scaled. The next step is mainnet launch, so we might be getting closer. Their progress also is not just some words on a page. There really is a new browser product. And they are on Telegram now! Not sure if that is good or bad, but it happened and now you can ask the devs questions. 

My Take, For Now

I will stick with it, I think. I've got some Pi, and we shall see how it goes. They are close to the mainnet launch, if they aren't lying about it, so it feels like something will happen soon. Or not, but either way we should know reasonably soon. I can poke my phone for a couple of seconds every day on that chance.

How about you? You want some Pi?

~~~~~

If you want a bit more of a sure thing, you might be interested to try these faucets. 

"The Hot List" that I am most excited about: CointiplyRollerCoin

"The Maybe! List" that you might enjoy even if the payout is not so great: FreeBitco.inPipeflare.


PopPopPrego
PopPopPrego

Curious explorer of Cryptoworld


The Fascination
The Fascination

In this blog I tackle the crypto world from the view of a true beginner, more used to 401ks and index funds than DeFi, DEX, and DOGE. I share reviews and unexpected complications in pursuit of the fascination.

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