PI Network free coin

We don’t normally write about B2C topics but we make an exception in case of topics where we looked for answers and couldn’t easily find them. And this is an investment related topic so please read this claimer.

We don’t expect anyone except the founders to benefits from PI Network in a significant way because:

Users are currently putting value in the app without tangible (except maybe psychological) benefits:
- The app does not provide any utility to its users beyond functionality like in-app messaging. Most users hold on to it with the hope that they will sometime convert their virtual coins to actual value
- The app works like a direct selling or affiliate marketing system, promising future rewards to users for bringing in new users. Some users put in additional time and effort to attract new users, such as numerous users adding their codes as comments to this article. We find it similar to Multi Level Marketing since it includes direct selling and provides increased potential benefits to early users (i.e. earlier users mine at an increased rate), however affiliate or direct selling are possibly better analogies.
- Users are putting value into the app. There are hundreds of posts online saying PI Network can not be a scam because users do not put any money it. Users’ time and data are valuable to those users and they are spending these on the app. For more, you can see our analysis of the app’s privacy policy, its data collections, permissions and the 3rd party software included in the app.
We find 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, viewing ads or messaging other users. The value of these activities is unlikely to generate significant wealth for the large user base.
Some of its current practices are also used in scams:
- Founders are already benefitting from the app. They launched optional video ads at launch to monetize the active user base. The app also has a KYC process of collecting passport information. Having a verified audience through a KYC process would increase advertising revenues. It is claimed by some users that their advertising restarts after being turned off by users. Others claim that this was due to a fixed bug. Regardless of the ability to switch-off advertising, some users are expected to be watching ads and generating value for the team.
- Their marketing emphasizes the academic credentials of their users. Very similarly, a blockchain scam without blockchain infrastructure, OneCoin, relied on the McKinsey experience of its founder in its marketing.

After sharing these with Pi Network enthusiasts, I frequently hear that I do not get cryptos. For clarity, I have been investing in cryptos since 2017 and I am reviewing new developments the crypto space. For example, here are our recommendations on cryptoexchanges.

For more info:

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 just login and click a button. This currency is not traded yet so 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 are also evidence that show 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 PI network to benefit from PI network users’ attention. This reminded us of the pay to surf models of the dot com boom where companies installed software on user devices and acted as middleman between users and advertisers without generating substantial benefit to either party.
They claim to have run a pilot in 2020 for people to exchange goods and services using Pi. Instead of running pilots, they could have listed their coin on an exchange as it has been done by companies like electroneum. Pi users claim that Pi team’s approach of forking the open source Stellar blockchain to build their implementation requires significant effort due to various reasons and that this is the reason for the delay. We will not know until we see the mainnet and the criteria for launching the mainnet remains vague in the whitepaper. Mainnet will be launched once the community feels that it is the time and sufficient testing has been completed.
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 from outside the company. What we can see is
- they have launched a test version of their blockhain
- users claim that they have shared some of their code on github
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 ±250k reviews and a good rating on Google Play Store. However, models similar to MLM tend to generate fast growth.

Could Pi Network make you rich?

Unlikely. For us, the question is why they don’t already launch the blockchain and the exchange. These are trivial engineering tasks. We have two theories:

They may be waiting for the user base to reach enough scale so they can generate value for advertisers. However, we are sceptical that large advertisers will show ads in a network where users login to make money by seeing ads. The concept isn’t new. Such websites existed since the early days of internet. However, none of them reached mass adoption. This is because it is more valuable for advertisers to advertise in websites which are used since they provide some value to users (e.g. information, connecting with friends etc.).
As some commenters like Jennifer Vanessa Kaiser highlighted, the founding team may be concerned that once the coin is published on an exchange, there would be a selling frenzy. Then, the coin would not be valuable enough for people to keep on logging in to click. Dreams are better motivators than actual value:

In short, your coins can be worth some value but don’t get your hopes up. Other experiments like ETN only make their users a few euros per month.

Are there free apps that pay users?

Yes, the Brave browser replaces ads on websites with its own ads and shares the value with its users. There are also other free-to-use apps which provide virtual currency. However, we did not come across any of them that currently provide a tradable coin for free. ETN used to do this.

Bee Network

It is a clone of the Pi Network concept with even less transparency. Just skip it unless you like providing data to anonymous people. For more, feel free to read why we think it is likely to be a dangerous scam.

Electroneum ETN

Pi network as a concept is a clone of ETN without a tradable coin. However, ETN launched its coin on exchanges and has been tradable since 2017. It no longer provides free coins. Feel free to read more about it to see how Pi Network could develop.

We have reviewed a few other similar cryptos using a consistent set of metrics. We also evaluated Bitcoin’s state as of 2010 using the same metrics to give an idea of how we would have evaluated it. Of course hindsight is perfect but we believe that our criteria for crypto evaluation are comprehensive and have a chance of having predictive power.

We got attacked after publishing this

As mentioned before, we are a B2B business and nothing hostile ever happened us, except a few poor attempts at copying our content, which we dealt with successfully.

However, for the first time, someone bought a misleading domain name that looks similar to ours and mirrored our entire website, about a month after we published this article. This was incompetent and unethical.

Now the mirror website is down but you can see a screenshot below. We don’t know who did it but we know that it must have been a reaction to what we wrote here.

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