Help! My Parents Are Addicted to Pi Network Crypto Tapper – Cointelegraph Magazine

Cryptocurrencies can be fun and profitable, but they can also be addictive. Sometimes, they can consume an investor’s life and strain relationships with friends and family.

YSM, a Korean college student who spoke to the magazine on condition of anonymity, said his family was having a hard time because of an app called Pi Network.

While YSM is skeptical about the legitimacy of the project, his father, who runs a fried chicken restaurant, is convinced that this is the next Bitcoin.

“Every time I visit my parents, my dad keeps urging me to install the app and start mining Pi using his invite code, which often leads to arguments and fights,” YSM told the magazine.

The project has been accused of being a scam and pyramid scheme over the years, despite not asking users to make any financial investments.

Instead, critics scrutinize the network’s unusual customer verification requirements and lack of publicly traded products, raising questions about the project’s motivations and its founders, Stanford University graduates Nicholas Kokkalis and Chengdiao Fan.

The Pi Network has a cryptocurrency called Pi, which can be earned through the popular Telegram cryptocurrency game. You can earn rewards by tapping the screen, watching videos, and inviting friends.

Users mine Pi by tapping the “Mining” button on the Pi app at least once a day. Mining speeds can be increased by completing certain actions, such as inviting others to the app or downloading a separate browser app.

Pi is not currently listed on any centralized or decentralized exchange, but there are several versions of the Pi network that deny its existence.

According to South Korean cryptocurrency analyst Coin Lupin, Pi operates as a simple reward system and cannot be considered a cryptocurrency.

“Mining isn’t just about getting rewards. It’s about creating blocks. When Pi started, there wasn’t even a blockchain,” Coin Lupin told the magazine.

Pi mining has been available since shortly after the app’s launch in 2019, before the network announced its “closed mainnet” launch in December 2021.

Pi miners claim that they cannot be scammed because they did not invest anything.

Pi users are neither your typical cryptocurrency enthusiasts, nor tech-savvy investors, nor are they millennials.

This group, known as “pioneers,” often includes seniors and baby boomers. Pie’s popularity is particularly strong in Asian countries.

“Pi is very popular in China,” Koss, founder of security firm Slow Mist, told the magazine.

“Interestingly, none of our friends are Pi-related, but we do occasionally hear stories of people outside our industry who are involved with Pi,” he added.

“It’s like we’re in two different worlds.”

Pioneers often face warnings and criticism about the projects they love, which skeptics like Coss like to call fraud.

Pi Network did not respond to Magazine’s request for comment. Some social channels, such as Facebook, have blocked communication.

Meanwhile, community members refute this accusation, claiming that they have nothing to lose since they are not investing any money. They simply log in every day and press a button to mine Pi.

Pioneer will have to watch an ad every time he clicks the ‘mine’ button.

“The implications of fraud are broader than purely financial investment fraud,” Cem Dilmegani, senior analyst at AIMultiple, told the magazine.

“You’re taking people’s time, which is a precious resource, and so far you’ve given them no measurable return.”

The Pi core team is known to profit from advertising revenue from users’ everyday mining activities.

The app requires users to complete KYC verification in order to “transfer” Pi to the accompanying mainnet. To do this, users provide their passport data and valuable personal information.

Additionally, Pioneer requires you to “secure” your account with phone number verification or a Facebook account.

According to research by Dilmegani and AIMultiple, having a verified KYC audience can increase your ad revenue.

This process is not generally required for mining or holding other tokens in the industry.

“KYC is handled by exchanges or wallets, but there are no other cases where the cryptocurrency company itself does it,” Coin Lupin said.

Pi Network’s X account claims that 13 million users have passed KYC verification.

They also have a huge social media following across various platforms.

On X, Pi Network has 3.4 million followers, the same size as Ethereum, the non-profit that develops Ethereum and the world’s second-largest cryptocurrency by market cap.

Companies may suffer financial harm due to their dependence on Pi.

While Pioneers claim they have not suffered any financial loss by interacting with the app and engaging with the community, YSM disagrees.

His parents run a fried chicken restaurant in Korea. Their income has declined since his father started accepting pies as payment.

YSM says, “My father’s pioneer friends would come into the shop at night and spend hours eating, drinking heavily and paying with pie.”

“This has caused tension between my parents, and they fight often because I can’t use this Pi for anything, but my father keeps insisting that the Pi will be invaluable in the future.”

In fact, YSM’s father believes that his business has boomed thanks to his interactions with the Pi community, with more and more customers coming to his restaurant and accepting Pi for payment.

There are 59 businesses in Korea that accept Pi as a payment method registered on the Pi Community site. There is no cryptocurrency market exchange that determines the price of Pi, so these businesses set their own exchange rates.

One professional photography studio told the magazine that it charges 20,000 won ($15) per Pi.

Most businesses that accept Pi (e.g., a whole fried chicken that costs 20,000 won) will receive 10,000 won per piece.

“There are many cases where people who believe in the value of pie trade with each other, but in reality it is no different from trading rocks,” says Coin Lupin.

The community verifies each other’s personal documents.

According to Dilmegani, the project allows users to increase their mining percentage by inviting more users to the platform, a model commonly seen in pyramid schemes or multi-level marketing scams.

AIMultiple found that Pi Network had 170 employees listed on its LinkedIn page as of January 2022. That number had grown to 393 as of August 23, 2024.

A closer look at the accounts associated with the Pi network revealed that Pi contributors are not employed by the company.

Multiple accounts are listed as “Pi Network Ambassadors” or “Pi Miners”.

Some accounts are also registered as “KYC validators”.

This process means that users who submit personal data are evaluated by members of the Pioneer community, which creates additional data risks as users are able to see each other’s information.

Pi claims to launch an open mainnet.

Pi doesn’t fit the typical description of a cryptocurrency scam, which typically involves carpet-pooling and pump-and-dump schemes. However, the questionable claims do raise doubts about whether the core team is truly marketing their product to the community.

“They cleverly disguise themselves as being related to blockchain, constantly mentioning Bitcoin and promoting it as if it has the potential to generate profits in the future,” Coin Lupin said.

“They are hiding within the community, constantly encouraging users to use the Pi app and suggesting that it will be listed on exchanges soon.”

The Pi community is approaching three years since we last received an update on the launch of the “open” mainnet, which will hopefully allow exchanges to start trading Pi.

So far, they have not offered a functioning open blockchain or a tradable cryptocurrency.

Having held a small amount of Bitcoin since 2020, YSM is praying that the Pi team will keep their promise to provide the valuable cryptocurrency and solve his family’s financial difficulties.

The Pi team claims that they plan to launch the open mainnet by the end of 2024.

But even if Pie could start a public chain to silence critics, Dilmegani doesn’t believe in its potential.

“There are already a lot of coins that follow the same model (e.g. watching ads to make money), but all of those coins have plummeted in value,” he says.

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Yoon Yohan

Yohan Yoon is a multimedia journalist covering blockchain since 2017. He has contributed as an editor to Forkast, a cryptocurrency media outlet, and has covered Asian technology stories as an assistant reporter for Bloomberg BNA and Forbes. In his free time, he enjoys cooking and experimenting with new recipes.