Is Pi Cryptocurrency Legit or a Scam? What You Need to Know

Published: April 24, 2024 | Last Updated: April 24, 2024

Markos Koemtzopoulos

Markos Koemtzopoulos is the founder and main writer of ElementalCrypto. He has been a lecturer at the University of Nicosia on cryptocurrencies and DeFi and has taught two courses on crypto and blockchain technology.

In this post, I will walk you through Pi cryptocurrency and lay out all the facts about whether it is legit or not. 

What is Pi crypto? 

Pi is a cryptocurrency that was launched in 2018 by Stanford PhDs Nicolas Kokkalis and Chengdiao Fan. What is unique about it is that you can mine Pi tokens just by using your mobile phone. In contrast to Bitcoin which uses an energy-intensive consensus mechanism to verify transactions mining Pi only requires the same energy as the average app on your phone. As a result, you won’t be draining your phone’s battery when mining Pi. 

What mining mechanism does Pi use? 

The Pi Network uses something similar to the Stellar consensus protocol. It’s called a Federated Byzantine Agreement (FBA) and relies on quorums forming trust circles. We don’t need to get into the weeds here but unlike Bitcoin, with Pi, you don’t need energy intensive computers to solve cryptographic puzzles.

Instead, every miner forms part of a “security circle” just by being a part of the network. These circles connect to create a big trust network. So, when you use Pi on your phone, you’re actually helping to secure the ledger by being a part of this trust network.

How do you mine Pi? 

Mining Pi coin requires that you download the Pi app from the Google Play Store or Apple App Store. To mine Pi, you need to verify your identity to prove you are human and not a bot. You do this by sharing personal information such as your phone number, real name, email address, and social media profile such as Facebook. 

Once you do that you can start mining Pi by simply logging in a clicking on the lightning button every 24 hours. This and another form of engagement with the app will reward you with with newly minted Pi. You also get additional Pi for inviting others to download the app on your mobile device. In fact, the app is available on an invite-only basis and you need an invitation code from someone else.

When you download the app and start mining Pi you are labeled as a Pioneer. If you invite friends you become a Contributor. If at least 23 people use your referral code you become an ambassador. 

Pi Tokenomics

Pi has a fixed supply of 100Bn coins and 65% of this is allocated towards mining. 

Where can I get Pi? 

Pi is not listed on cryptocurrency exchanges yet as the token is not tradeable. The project has launched a testnet and an enclosed mainnet which restrict its capabilities. 

How many users does Pi have? 

As of April 2024, Pi has 10Mn KYC’d users which was the minimum they wanted to reach to open up the mainnet. 

Is Pi Cryptocurrency Legit? 

The following are arguments that hint at Pi being a legit cryptocurrency

  1. Doxxed and strong team: The founders are Stanford University engineers and the team of 35 people have backgrounds from Google and the like
  2. White paper: They have launched 2 whitepapers one in March 2019 and an updated version in December 202. These are well put together and outline their goal and plan of action. In addition, the official website is very informative and, unlike other crypto projects, easy to grasp. It also has a detailed FAQ section that I recommend reading. 
  3. User base: More than 55 Million members out of which 10 million have gone through KYC. The mobile app on Android has more than 50 Million downloads. 
  4. Community: Their Twitter page has more than 3 million followers
  5. Active testnet and mainet. The testnet sees 200 transactions per minute and the mainnet sees about 20 per minute which I expect will increase once the mainet gains external connectivity. 
  6. Block Explorer and browser through which you can activate your Pi wallet.

Why are people saying Pi Crypto is a scam?

1. Ponzi scheme

    The main accusation against Pi is that it is a Pyramid scheme or Ponzi scheme. 

    This is a common argument in the crypto space when disgruntled investors don’t see any upside in a digital currency they have invested time or money in. 

    However, Pi is not a Pyramid or Ponzi. Multi-level marketing scams require that revenue from new users funds income for old users which is not the case with Pi. 

    When you refer a user to the Pi network the mining bonus is shared between the referrer and the referre which is a win-win situation. 

    In addition, new members are not required to pay anything to open a Pi account. 

    2. Mainnet delay

    The main reason that people are frustrated with Pi is that it has taken so long for the open mainnet to go live.

    The Pi team’s original estimates for an open mainnet launch were for March 2022 which has left people wondering why it’s taking so long.

    Pi’s leadership claims the delays are because they want to give enough time to developers to build their apps.

    Some people on Pi forums think that the delay is intentional and that the Pi development Team has no intention of opening the mainnet as they make money from ads as is. 

    3. Collects personal data

    The biggest challenge that Pi has is to ensure there are no fake accounts. If bots were to be able to join the network this would put the whole network at risk. 

    The way to get around this is to ask people to share their personal data but there have been cases where validating personal information has taken up to a year. 

    Asking for KYC data is unusual for a crypto project which usually tends to value anonymity. 

    4. Not listed on exchanges

    Finally, Pi holders are annoyed that they cannot sell their tokens. In the meantime, synthetic tokens called IOUs have emerged and are trading on crypto exchanges. 

    These are supposed to track the value of Pi tokens but they have low liquidity and can’t be moved between exchnages. 

    More importantly, their value is way out of whack with reality. 

    At the time of writing these IOUs are trading at $35 which implies a market cap of 3.5 Trillion dollars which is more than the entire crypto market. So the IOUs are definitely something you want to avoid. 

    However, keep in mind that the IOUs are not authorized by the Pi core team so it’s unfair to blame them for that. 

    Bottom line:

    In my opinion, Pi cryptocurrency is legit. It has an impressive number of users, a large community, and a functional testnet and mainnet. The slow rollout and teething pains in the KYC process explain the frustration that some users may feel and the accusations that it is a scam. The fact that the founding team is making money from ads before launching is bad for marketing but it does not mean users are going to lose money as they haven’t spent any to begin with. The only thing at risk are the time they put in and disappointment if the project never takes off. 

    Criticisms

    While the project is unlikely to be a scam per se there are some reasons to be cautious

    1. The team is already monetizing the highly used app with ads which comes across as a bit unethical
    2. The team page only lists the two founders. They claim to have 35 people but when you visit the LinkedIn page the people working at Pi Network have titles such as Crypto Trader. This makes me wary
    3. It is not clear exactly how Pi Network will create value. What utility will the coin provide? They are encouraging developers to build apps but do not disclose exactly what these apps will do. 
    4. The mainnet is closed and has been for a long time
    5. Getting paid in Pi tokens to watch ads is probably not very attractive to advertisers. They want people who see their ads to buy their product which clashes with the incentive of someone getting paid to watch an ad. 

    As usual, none of this is financial advice so please make sure to do your own research. 

    FAQs

    Will Pi ever be a real crypto?

    The founders of Pi originally planned to open up their mainnet in March 2022. Since then there have been delays but Pi’s most recent tweet indicates that now they have reached 10 million KYC users they might be ready to open up their mainet. This means that Pi would become tradeable on exchanges and be a real crypto coin.

    Does Pi give real money?

    By downloading the Pi mobile application you can mine and earn Pi tokens. Currently, these tokens are not tradeable for other cryptocurrencies or fiat. This is expected to be possible once the mainnet is opened. 

    Is Pi coin real or fake?

    Pi is a legit token issued on a blockchain in a cryptocurrency wallet developed by the Pi core team. It is not yet tradeable on exchanges. 

    Is Pi actually worth money?

    At the time of writing you cannot exchange Pi for fiat money. You can trade sunthetic products called IOUs which are overpriced at the moment. 

    References

    Up Next

    If you are looking for a project that manages the KYC process well and is live check out Everest ID below.

    What is Everest ID and Is It a Good Coin To Buy

    what is everest ID

    In this post, I will walk you through what the Everest ID coin is and how it works. I will then share my research on whether I think this is a good investment or not. Read more.

    Markos Koemtzopoulos is the founder and main writer of ElementalCrypto. He has been a lecturer at the University of Nicosia on cryptocurrencies and DeFi and has taught two courses on crypto and blockchain technology.

    Learn About a New
    Coin Every Week

    Learn About a New
    Coin Every Week

    Master Crypto Basics

    Join over 7,300 subscribers. It’s free.

    elementalcrypto newsletter benefits