Pi coin, which was denounced as a scam by Li Xiaolai: mobile phone "mining" without a mainnet, using Bitcoin as a pie in the sky

As BTC was rising, news of the wallet internal testing of "π coin" Pi Network came out, attracting the attention of participants.

This project, which was publicly announced to be established in March 2019, calls itself a "modified version of BTC" and focuses on mining without consuming resources. In the past two years, participants can only "mine" through its centralized APP - users download the APP, register an account, log in once a day, and automatically mine Pi coins. The current gameplay is the outdated "mobile phone mining" pseudo-blockchain.

Pi focuses on low threshold and zero-cost, and gives high expectations by benchmarking against Bitcoin. Promoters often use BTC's high returns to increase the value expectations of Pi among the novice crowd.

However, Pi Network cannot see transactions, verify blocks and other information, because this project, which is comparable to BTC, has no open source blockchain network support and has not opened transfer transactions. It can neither conduct decentralized value circulation like BTC, nor has it been put into practical application, and its value is questionable.

Pi's current trend of attracting people to join has continued for a long time, with more and more people participating in it, and an over-the-counter trading market has also emerged. Some people purchase Pi coins by signing contracts, and the price of each coin has been hyped up to 100 yuan.

Li Xiaolai, a big name in the cryptocurrency circle, mentioned Pi in a live broadcast in his early years, and later it was spread by promoters that Li Xiaolai was standing up for Pi. He posted several Weibo posts, blasting Pi as a scam and saying that "people who dream with Pi are pitiful."

Lacking value support and blockchain applications, Pi currently only has concepts and expectations. Rumors of wallet internal testing and transfer opening inevitably lead people to speculate that this project will open up the circulation market. Participants need to carefully evaluate its true value to avoid blind investment or trading that may cause asset losses.

"0-for-nothing" mobile phone mining to earn Bitcoin

After a round of correction, BTC once again tested the $40,000 price line. The call for a bull market is still high, and some outdated concepts have reappeared. Recently, a Pi Network project called "π coin" by participants has made new progress.

On January 11, the news that "Pi Wallet has started internal testing" appeared in some cryptocurrency trading groups. It is rumored that some "pioneers" will be allowed to participate in the testing next, and one of the functions is transfer.

The person who passed the message is suspected to be a promoter of Pi coin. For those who have been "mining" for a long time, this can be regarded as big news in the past two years, because it means that the coins earned "for free" may be able to circulate and be converted into cash.

Pi Network's official website shows that it was launched on March 14, 2019. The project is composed of graduates from Stanford University, and the main founder is Nicolas Kokkalis, a Ph.D. and postdoctoral fellow in computer science at Stanford University.

Pi Network officially claims that Pi is a new cryptocurrency and peer-to-peer network. There is no need to buy mining machines like mining BTC. You can mine coins using only a mobile phone. The number of participants has reached more than 10 million.

If you search for Pi coin on the Chinese Internet, you can see a large number of promotional articles. Some people even set up various promotional websites for "preaching" to introduce how to participate in Pi and its value.

Fengchao Finance learned from a Pi user that to participate in "mining", you only need to download the APP through your mobile phone, register with your mobile phone number, and then you can become a "pioneer". You can log in to the APP and click the button with the lightning logo every day to automatically mine Pi coins. From the page, you can see that the current "pioneer" mining speed is 0.12 Pi per hour.

Pi Network APP page

The above user said that Pi can only be mined now, but cannot be traded, but a large number of people have already participated. He believes that once the main network is launched, the value of Pi "will be immeasurable."

Where does the value of Pi come from?

The official APP describes it this way: Pi is now approximately $0, similar to Bitcoin in 2008. The value of Pi will be supported by the time, attention, goods and services provided by other members of the network.

Judging from the current operation of the official APP, Pi has indeed gained users' time and attention, but the products and services have not appeared in the past year or so. In July 2020, an article introducing Pi on Medium stated that the project will accept paid advertising in the future and is currently entering the testnet part of Phase 2.

Although its value has not yet been reflected in the exchange of goods and services, expectations for Pi’s price appear in many promotional articles. It is often compared with mainstream crypto assets such as BTC, ETH, and XRP, and the word "high return" appears.

For example, one article wrote that the XRP issuance price in 2014 was 0.0000007 yuan, "If you bought five yuan at that time and sold it at 3.65 US dollars in January 2018, you could easily make 100 million yuan." The article also mentioned Bitcoin, saying that when BTC was first listed on the exchange, it was 0.0769 US dollars. At that time, 1,000 yuan was used to buy 2,000 coins, and now the value has reached 500 million yuan. Then, Pi was described as "possibly the next BTC."

This article only gives expectations, but does not describe the more common reality for Bitcoin holders - Bitcoin that cannot be held and unpredictable high volatility markets. And more so-called "digital currencies" have gone to zero.

Despite this, Pi has accumulated many participants in the past two years, and the model of people inviting people has continued to this day. Leo, a blockchain industry practitioner, revealed that last year, his mother asked him about Pi coins, saying that a friend recommended "mining" to her and gave her an invitation code. After he told her that "mobile phone mining is a pseudo-concept and unreliable", his mother eventually did not participate because she was not familiar with the operation. "But another relative of mine got on board because 'it doesn't cost money anyway', and I couldn't persuade him, so I could only remind him not to invest money at any time."

Not only the middle-aged and elderly groups, but also many crypto asset investors are playing with Pi. An investor told Fengchao Finance that he has been mining Pi for more than a year, and he sets an alarm every day to go in and see whether it is a joke or really good. "It has been several years, and the project has not collected a penny. With this persistence, there is still some hope, unlike some projects that crowdfunded a large amount of money and did nothing."

Installing an APP for free is the biggest selling point of Pi coin, but where will the attracted users go? Especially the recent rumor of opening a transfer function. "Once the transfer function is opened, there will be a trading and speculation market. Under the temptation of speculation, the elderly who do not understand the principle can be easily fooled." Leo is a little worried about his family mining Pi coins.

No mainnet and no applications are accused of "proof of attracting people"

Pi was known to many cryptocurrency users because of a live broadcast by Bitcoin celebrity Li Xiaolai in his early years. In that live broadcast, Li Xiaolai mentioned Pi in a rather joking manner, and then it was reported that he "stood up for Pi".

After that, Li Xiaolai posted several Weibo posts in response. He said that Pi Network was a "boring scam" and angrily said that "anyone who mentioned Pi on my Weibo will be blocked directly."

Li Xiaolai said on Weibo that Pi is a scam

Li Xiaolai has always been regarded as a "Bitcoin evangelist" in the currency circle. After his criticism, Pi has actually increased its popularity. Some Weibo users even mention Li Xiaolai and Bitcoin when promoting Pi.

So, how does Pi, which is expected to be the "next BTC", work?

Pi's white paper mentions that its consensus mechanism is built based on the Stellar Consensus Protocol (SCP) and the Federated Byzantine Agreement (FBA). Its main feature is that mining does not consume any resources and does not consume electricity or traffic.

As for users, Pi assigns them 4 types of miner roles, starting with the most basic "pioneer", as well as contributors, ambassadors and nodes. "Pioneers" are those who download and register apps and mine with a tap of their phones. When they add others to the "safety circle" to increase the mining rate, they become "contributors". The safety circle refers to a network of small-scale members who guarantee and trust each other. From this description, it is easy to think of micro-businesses under the acquaintance social system.

The upper-level miners are ambassadors, and their KPI is to attract people. Every time you invite one more person to the Pi network, the mining rate will increase by 25%. According to the white paper, to become a "node", you need to be a "pioneer" user running the node software on your computer.

According to the introduction, Pi Network distributes Pi based on contribution. The more people you attract, the faster and more Pi you get. The white paper states that after starting mining, users can invite trusted friends and family to join the community to increase their "hourly wage." In addition, early members of the network mine faster than later members.

"BTC is a computing power competition-style mining under the proof-of-work consensus mechanism," a blockchain industry practitioner described after reading Pi's white paper. Pi's consensus mechanism is more like a proof of pulling in people. "The more you pull, the more you mine, but the coin must be supported by value. It is useless to rely solely on trust and consensus among people." He explained that Bitcoin is not entirely a product of consensus. Its value lies in building a ledger network that stores a large amount of transaction data in a decentralized way. It is open source, secure, tamper-proof, and trustless. It is even a typical application of the first generation of blockchain technology.

"People who buy coins in the secondary market focus on the returns of buying low and selling high. There may not be many people who believe in its value, but they have also invested money. Distributed miners invest in computing power, electricity and other costs to build a secure network. They use computing power to achieve consensus, which is a consensus that costs money. How can you get rich by fleecing the sheep in this world?" The above-mentioned practitioners are not optimistic about Pi's concept of purely human consensus.

It should be noted that Pi's miners and mining activities are completely run on the centralized APP "Pi". In other words, the current Pi is not produced through a decentralized blockchain network. No matter what level of miners, they do not get rewards by packaging or verifying transactions.

Pi currently does not have transfer capabilities available on the APP, and cannot be circulated between users. Pi cannot be exchanged for goods or services, which means that there is no value circulation in the entire system itself. The current operating process is mainly "promotion - attracting people - mining".

Since it only exists in the APP, Pi's relevant data is opaque. Although it claims to have 10 million users, the outside world has no way to verify it. I am afraid that only the operator of the APP knows it. In addition, it is also unknown how much Pi is produced. According to the registration prompt, if the user does not conduct KYC certification, the system may also cancel the account and the mined coins will be lost. This also buries a hidden danger - the user's personal information is left on this APP.

Judging from the current situation, Pi, which wants to become "the next BTC", is not yet a blockchain network, but more like a mobile phone "harvesting vegetables" game disguised as a blockchain.

OTC trading requires vigilance against derivative scams

Since Pi has no blockchain network support and no transfer is available on the APP, how can users cash out the Pi they mined? A promoter also told Fengchao Finance that Pi cannot be traded and cashed out at present, and it will probably be traded after the main network is launched in the third quarter of this year.

Pi Network has officially announced plans to provide wallets, test networks and main networks. Before that, the official did not seem to encourage cashing out. Its official website clearly stated that all sales and pre-sales of Pi are unauthorized and illegal. Do not buy Pi from any third party. If you buy, you will be responsible for the consequences.

It seems that the authorities have discovered the phenomenon of third-party sales. In this regard, when Fengchao Finance asked whether it could be traded over the counter, the above promoter did not recommend selling early, but sent a sample of the "Pi Network Coin Trading Contract". It shows that the buyer and seller can sign a contract and transfer the Pi coins in the APP by transferring the mobile phone number. If KYC certification is required after Pi coins are opened for circulation in the future, the seller must also cooperate with the buyer for certification.

Pi transaction contract template sent by the promoter

"Now one coin is about 20 to 30 yuan," the promoter revealed, saying that someone was collecting Pi coins. He has mined 20,000 to 30,000 Pi coins in the past two years. If he can sell them at 20 yuan, he can make a profit of about 500,000 yuan.

Another investor who participated in Pi sent a photo of a signed contract in a certain community. The contract is called "Pre-collection of Blockchain Mobile Virtual Currency Pi Network Agreement", which shows that the buyer pre-collected 1,500 Pi from the seller at a unit price of 100 yuan and paid a deposit of 30,000 yuan. The contract is marked with the names and ID numbers of Party A (buyer) and Party B (seller), and also has fingerprints.

The authenticity of the agreement remains to be verified, but from the information provided by the promoters and official tips, Pi has an OTC market, and the prices vary, ranging from 20 yuan, 30 yuan to 100 yuan. Considering that Pi mainly improves mining efficiency by attracting people, it is easy to form an OTC trading group among acquaintances.

However, Pi followers need to be alert that the current Pi lacks value support. It can neither achieve decentralized value circulation like Bitcoin, nor provide DApp applications like the Ethereum (ETH) network. Due to the low mining threshold and unknown issuance volume, the actual value of Pi cannot be evaluated.

According to official information, Pi Network will launch wallets, test networks and main networks later, and Pi will generate private keys/public keys at that time. However, the project is not open source at present, and the outside world cannot track its development progress. The development progress of Pi cannot be found on popular open source network channels such as Github.

Compared with other open source projects, Pi has been established for nearly two years, but there is still no blockchain network and application, and even no decentralized wallet system. Even so, on various social platforms, there are still many Pi believers who promote and discuss Pi news every day, and some even shouted the slogan "1 Pi 100 US dollars". Of course, there are also people who question it. Some of them are dismissive of it, while others argue with reason, expecting Pi to bring a considerable fortune.

A blockchain developer told Fengchao Finance that Pi's team can issue coins and list them on the exchange at any time through mapping, but they must take into account the large number of participants in Pi, the opaque issuance volume, and the high expectations of early users. It is not ruled out that there will be hype or even scams in the future. Users need to identify the value of tokens to avoid asset losses due to blind transactions or investments.

Will you participate in Pi?