Help! My parents are addicted to Pi Network crypto tapper – Cointelegraph Magazine

Cryptocurrencies can be fun and profitable, but they can also be addictive. They can sometimes consume an investor's life and destroy relationships with friends and family.

YSM, a South Korean college student, spoke to the magazine about defamation, saying his family was struggling with an app called P Network.

While YSM has doubts about the legitimacy of the project, his father, who owns a fried chicken restaurant, is convinced that it is the next Bitcoin.

“Whenever I visit my parents, my dad urges me to install the app and start withdrawing pies using the invite code, which leads to arguments and fights,” YSM told the magazine.

Over the years, the project has faced accusations of fraud and pyramid schemes despite not requiring any financial investment from its users.

Instead, critics scrutinize the network's unusual customer needs and lack of a marketable product, which raises questions about the project's purpose and its founders, Stanford University's Nicholas Kokalis and Chengdiao Fan wrote.

Pi Network has a cryptocurrency called Pi that can be earned through a process currently popularized by the viral Telegram crypto games: tap your screen, watch some videos, invite your friends, and then earn rewards.

Users are My Pi by tapping the “My” button at least once every day on the Pi app. The amount of mining can be increased by inviting others to join the app or by completing certain tasks by downloading it as a separate browser app.

Pi is not currently listed on any centralized or decentralized exchanges, although there are some versions that the Pi network denies as belonging to them.

According to South Korean cryptocurrency analyst Coin Lupine, Pi functions as a simple reward system and does not qualify as a currency.

“Mining is not just about receiving rewards. It's about producing blocks. Pi didn't even have a blockchain when it started,” Coin told Lupin magazine.

Pi Mining was available shortly after the app launched in 2019, even before the network announced the launch of its “closed network” in December 2021.

Pi argues that miners can't cheat because they haven't invested anything.

Pi users aren't your typical crypto enthusiasts, tech-savvy investors, or millennial geeks.

Known as “pioneers,” this group often includes older individuals and boomers. Pi's popularity is particularly strong in Asian countries.

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

“What's interesting is that none of our friends are involved with P, but we do occasionally hear from people outside the industry,” he added.

“We feel like we are two different worlds.”

Pioneers frequently face warnings and criticism about their beloved project, with skeptics like Kos comparing it to fraud.

Pi Network did not respond to a magazine request for comment. It has blocked connections on some social channels like Facebook.

Meanwhile, community members counter these accusations, arguing that they have nothing to lose by not investing. They are logging in every day and touching a button to my Pi.

Every time a pioneer taps the “My” button, they should see an ad.

“The definition of fraud is much broader than financial investment scams,” Sim Dilmegani, chief analyst at AIMultiple, told the magazine.

It is taking up people's time, which is a valuable resource. So far I have not given them anything measurable in return.

It is said that the Core Pi team earns profits from the daily mining activities of their users by collecting advertising revenue.

The app requires users to complete KYC verification to “port” their Pi to the closed network. To do this, users submit passport information and important personal information.

Additionally, pioneers must “protect” their accounts with phone number verifications or Facebook accounts.

According to Dilmegani and AIMultiple research, having a verified KYC ad audience increases ad revenue.

This process is not a common standard for mining or capturing other tokens in the industry.

“KYC is handled by the exchange or wallet, but there is no other issue when the crypto coin company does it itself,” says Coin Lupine.

The Pi Network X account claims 13 million users have passed KYC verification.

They also have a large social media following on various platforms.

At X, P Network has 3.4 million followers, which is associated with the Ethereum Foundation, the non-profit Ethereum and the world's second largest cryptocurrency by market cap, Ether.

Businesses can suffer financial losses for relying on Pi.

While the Pioneers claim that they have not experienced any financial loss from connecting with the app and connecting with the community, YSM disagrees.

His parents own a fried chicken restaurant in South Korea. Since his father started accepting Pi as payment, their income has decreased.

“At night, my father's pioneer friends would come to the shop and eat for hours, drink a lot and then pay in P,” says YSM.

“This has caused a rift between my parents and they often fight because we can't use this P for anything. But my father argues that it will be very useful in the future.”

In fact, YSM's father believes that his interaction with the Pi community has led to a boom in his business as more customers visit the restaurant to pay with Pi.

There are 59 businesses in South Korea that accept Pi for payments listed on the Pi Community site. There is no crypto market trading that determines the price of Pi, so these businesses set their own exchange rates.

One business, a professional photography studio, said it charges 20,000 Korean won ($15) per PI for a magazine.

Most businesses that accept Pi — such as YSM Family Restaurant, which charges 20,000 Korean won for a fried whole chicken — charge 10,000 Korean won per Pi.

“There are many instances where people who believe in the value of Pi trade between them, but in reality it's no different than trading a coin,” Lupine says.

The community verifies one's personal documents

The project allows users to increase their mining by inviting more users to the platform, a common model found in pyramid schemes or multi-level marketing scams, Dilmegani said.

AIMultiple P Network confirmed on its LinkedIn page that it listed 170 employees as of January 2022. This number has increased to 393 as of August 23, 2024.

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

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

Some accounts are listed as “KYC verified”.

This process implies that users who submit their personal data will be reviewed by other members of the Pioneer community, which opens up additional data risks by allowing users to view other people's data.

Pi says it's launching an open mainnet.

Pi does not fit the typical description of a cryptocurrency scam, which typically involves carpet dragging and pump-and-dump schemes. However, the dubious requirements cast doubt on whether the original team is delivering the product to the public.

“They cleverly pretend to be related to the blockchain and constantly quote bitcoin, promoting potential future profits,” says Coin Lupine.

“They remain hidden in the community and urge users to use the Pi app by suggesting that it will soon be listed on an exchange.”

The Pi community is approaching three years for an update to launch the “open” mainnet, which they hope will allow them to start trading their Pi on exchanges.

They have yet to deliver a working open blockchain or tradable currency.

Fingers crossed that YSM, which holds a small portion of Bitcoin as of 2020, will deliver on the P team's promise to deliver a valuable cryptocurrency and solve the family's financial woes.

The P team opened their main net in 2010. It is scheduled to begin in late 2024, he said.

But even if P starts an open chain to challenge his critics, Dilmegani doesn't believe in his abilities.

A collection of coins that follow the same model (ie watch ads to earn money). However, the value of all these coins has fallen,” he said.

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John Yun

Yohan Yun is a multimedia journalist who has been reporting on blockchain since 2017. He has contributed as an editor to crypto media outlet Forkast and covered Asian technology stories as an assistant reporter for Bloomberg BNA and Forbes. He spends his free time cooking and experimenting with new recipes.