Can Pi Network crypto be a Ponzi scheme?

4 min read | February 22, 2022 09:41 PM AEDT | By Raza Naqvi

Can Pi Network crypto be a Ponzi scheme? — Image source: © Hisdx15 | Megapixl.com

What is Pi Network?

It is a novel virtual currency and developer platform where users can use their smartphones to mine Pi coins. According to the project's website, Pi Network allows its users to mine the digital coin without draining the battery and reducing environmental impact.

The world's oldest cryptocurrency, Bitcoin, is often criticized for harming the environment as mining requires a lot of energy.

Last year, China had launched a crackdown on crypto mining operations as it was harming the environment. Meanwhile, Tesla chief executive officer Elon Musk had said it wouldn't accept Bitcoin as a form of payment, citing environmental concerns.

As people become aware of climate change and appear to be ready to address environmental issues, even cryptocurrency projects are checking the impact of their operations on the environment.

The Pi Network claims to be environment-friendly, which is one of the major reasons behind getting the attention of crypto enthusiasts.

According to CoinMarketCap, Pi Network had a user base of more than 30 million people as of December 2021.

Can you get rich using Pi Network, or is it a Ponzi scheme?

Currently, the Pi Network app does not have a utility beyond features like in-app messaging. Also, there is no way to find out the value of the Pi coin as users are mining the cryptocurrency in hopes that they will be able to convert the Pi coins to an actual value in the future.

Supporters of Pi Network often comment on social media platforms that it cannot be a Ponzi scheme as it does not ask for money from its users.

Also Read: Why is Bitgert (BRISE) crypto grabbing attention?

We are not suggesting that Pi Network could be a Ponzi scheme. However, it is important to note that users add value to the Pi Network app. The time and data of users are valuable, and its founders may be benefiting from the app.

The app has launched optional video advertisements and that could have helped monetize the active user base, which is massive and in millions.

The Pi Network app comprises a Know Your Customer (KYC) process, including collecting passport information. It appears that a verified audience could increase the ad revenues.

This project is based on expectations that some additional features like coin launch or getting listed on a cryptocurrency exchange would happen in future.

Users can register an account and then log into the application every day to use the app. They are supposed to just click on a button inside the app and mine digital currency.

It is important to note that there is no proof of work and this app encourages users to level up by inviting more people to the platform. By doing so, the app allows the users to gain more Pi coins.

Such models are often followed by multi-level marketing promoters and people running pyramid schemes.

At the moment, it appears that users cannot monetize through Pi crypto as it is not listed on decentralized exchanges. The Pi coin cannot be traded, and it is impossible to buy or sell this cryptocurrency.

Bottom line

As the value of a Pi coin cannot be measured, the biggest question is if it will ever reach exchange, where people could convert it into fiat currencies.

There are endless possibilities in a cryptocurrency market, and holders of the Pi coin can only wait and see if their hopes turn into reality.

Until and unless the cryptocurrency is launched on an exchange, it is impossible to find the real value of the Pi coin.

Also Read: What is Catcoin crypto & why its price is skyrocketing?

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