Pi Network: what it is, how it works and what is behind it

Mining cryptocurrencies is usually associated with noisy servers, high energy consumption and unreachable hardware. Faced with this reality, Pi Network was born with a different proposal: accumulating cryptocurrencies from the mobile phone without draining the battery nor requiring technical knowledge.

In this way, by simply downloading an app and pressing a button a day, millions of users have accessed the crypto world under a mobile-first and accessible approach.

However, its rapid growth brought with it strong debates. Indeed, aspects such as the use of a referral system, delays in the open network, data collection (KYC) and limitations for trading the token generate doubts about its long-term viability.

• Launch year 2019
• Founders Dr. Nicolas Kokkalis and Dr. Chengdiao Fan
• Token symbol PI
• Architecture Blockchain Layer 1
• Community +50 million registered users (“Pioneers”)

What Pi Network is

In concrete terms, Pi Network is a layer 1 (Layer 1) blockchain platform designed to facilitate the mass adoption of digital assets. Unlike traditional cryptocurrencies based on Proof-of-Work (Proof-of-Work or PoW), such as Bitcoin or Litecoin, Pi replaces the consumption of computing power with a model of social and participatory validation.

For its part, the core of its ecosystem is the Pi coin (PI), the native token created to function as a medium of exchange in a peer-to-peer network (peer-to-peer). The long-term goal of the project is for PI to serve as a usable currency in a decentralized market of goods and services within its own application, instead of being a mere speculative asset.

Origin and founding team

As for its origins, the project was officially launched on March 14, 2019 (coinciding with Pi Day) by a team linked to Stanford University. Its fundamental purpose was to eliminate the technical and economic barriers of traditional mining through the work of its leaders:

• Dr. Nicolas Kokkalis (Technology Leader): Doctor in Computer Engineering from Stanford and specialist in distributed systems and human-computer interaction (HCI). He was a pioneer in teaching blockchain application development at said university.
• Dr. Chengdiao Fan (Product Leader): Doctor in Computational Anthropology from Stanford, focused on the study of human behavior, social computing and how to use technology to mobilize communities on a global scale.
• Vincent McPhillip (Cofounder and former director): He had a key role in the initial stage of the project and in community leadership. His later departure from the team generated various speculations in the sector, although the details of his departure have not been officially addressed in depth.

Together, the active founders conceived Pi Network as a direct response to the centralization of the crypto sector, where traditional mining has remained reserved for large computing farms, thus distancing the average user from participation in distributed networks.

How Pi’s mobile “mining” model works

Why it is not mining like Bitcoin

To understand this concept, it is necessary to remember that when we think of traditional crypto mining, the mind evokes networks based on Proof-of-Work (Proof-of-Work or PoW), such as Bitcoin. In this type of network, thousands of computers compete solving complex mathematical puzzles, which requires specialized high-cost hardware and massive electricity consumption.

In contrast, in Pi Network the term “mining” is used figuratively and intuitively for the user. This is because the mobile application does not put your phone’s processor (CPU or GPU) to work nor does it solve heavy cryptographic calculations; therefore, it does not consume battery or slow down the device. Therefore, instead of providing raw computing power, the user “mines” by demonstrating their active presence and boosting the network of human trust through the application.

Consensus Mechanism and Security Circles

In order to validate transactions without resorting to the energy consumption of PoW, Pi Network uses an adaptation of the Stellar Consensus Protocol (SCP), an algorithm belonging to the family of the Federated Byzantine Agreements (Federated Byzantine Agreement or FBA).

In this sense, the secret of this system lies in replacing computational effort with interconnected trust relationships:

1. Confianza local: Each participant creates a Security Circle, selecting between 3 and 5 people of their complete trust within the application.
2. Superposición de círculos: Imagine a school project where students divide into small work groups. If the members of each team trust each other and several groups share members in common, the entire class can reach an agreement without the need for a central supervisor.
3. Consenso global: By overlapping thousands of Security Circles throughout the world, the network builds a global trust graph. This map allows the nodes of the blockchain to verify who is a legitimate user and which transactions are valid without consuming electricity.

The referral system and the mining rate

It is worth noting that the speed at which a user accumulates PI tokens is not fixed, it depends directly on their level of participation and their contribution to the network. To coordinate this effort, Pi Network classifies its participants into four complementary roles (which the same user can exercise simultaneously):

• Pioneer: It is the basic role. The user confirms their activity daily by pressing a button in the app, demonstrating that they are a real person and not a bot.
• Contributor: Increases their mining rate by building their Security Circle with trusted contacts, reinforcing the security of the network.
• Ambassador: Exponentially increases their speed of obtaining tokens by inviting new users through their referral code. Each active member who joins through their link adds a bonus to their hourly mining rate.
• Node: For users with technical knowledge who run Pi software on a desktop computer. These nodes use the trust graph generated by phones to validate blocks of transactions on the blockchain.

Consequently, by integrating the contact network directly into the token reward, Pi combined organic growth through referrals with the very security architecture of its protocol.

KYC and Mainnet: real state of the network

The KYC process in Pi

Within this framework, the Know Your Customer (KYC) or identity verification is a mandatory and unavoidable step in Pi Network. To move the tokens mined in the app to the blockchain, users must provide official documents (ID, passport or license) and a photographic proof (liveness test).

On the one hand, the official objective is to guarantee the “one user, one account” rule and avoid the use of bots. However, on the other hand, the process raises concerns about privacy due to factors such as:

• Community validation: Parts of the process depend on other users who act as validators, which generates doubts about the management of sensitive information.
• Strict deadlines: If verification and migration are not completed within the dates set by the project, the user runs the risk of losing the accumulated tokens.

Current state of the Mainnet

For its part, after years in beta phases and in a closed network (Enclosed Mainnet), the project advanced toward its Open Mainnet (Open Mainnet), eliminating the internal firewall to allow connectivity with external exchanges and free transaction of the token.

• Total supply: Limited to 100 billion PI coins (80% destined for community rewards and ecosystem liquidity, 20% reserved for the founding team).
• Quotation and ecosystem: The opening of the network allowed the arrival of PI to exchanges and the development of real utilities through the Pi Browser (dApps, games and peer-to-peer payments).

The main doubts and risks around Pi Network

Tokenomics and distribution: concentration of supply

Despite promoting itself as a democratic project, Pi Network’s economic model generates structural doubts about the control of its supply due to several factors:

• 20% reserved for the team: Of the maximum limit of 100 billion PI tokens, 20 billion belong directly to the developer team. This reserve gives the founding team a disproportionate weight in governance and a determining power over the market if they decide liquidity.
• Selling pressure from unlocks: As millions of users complete the KYC process and migrate their tokens to the Mainnet, a massive flow of supply accumulated over years is released, which generates high volatility and risk of accelerated depreciation in the quotation.
• Control of initial liquidity: During the previous phase and the transition, the scarcity of real liquidity in regulated markets strongly conditions the value of the token against speculative demand.

Security and third-party scams: the danger of an informal market

Additionally, the enormous user base and the long period of commercial restriction fostered a fertile environment for fraud and external cybercrime:

• Black market and fake buyers: Informal platforms and groups emerged that promise to “buy” or “exchange” PI tokens for fiat money or stablecoins before official trading. These operations without guarantees usually end in the total loss of the transferred coins.
• Fake applications and websites (Phishing): Hackers and malicious actors cloned the official site and created pirate apps to steal the private keys of the wallets or capture users’ personal data.
• Identity impersonation on networks: Unofficial profiles on social networks promise to “speed up KYC” or carry out exclusive airdrops in exchange for prior payments or installation of malicious software.

Keys to evaluate a crypto project before participating

For all of the above, to determine the viability and transparency of any initiative in the crypto ecosystem, use this quick evaluation checklist:

Frequently asked questions about Pi Network

• Is Pi Network a scam? No. It is a free and legitimate project, although it generates doubts due to its slow development and referral system.
• Does mining Pi use battery or data? No. It does not consume processor or data, it only requires pressing a button a day in the app.
• When does Pi come to market? It is already listed. Its Open Mainnet launched on February 20, 2025 on several exchanges.
• What happens if I don’t do KYC? You lose your tokens. Verification is mandatory to transfer your coins to the main network.

Pi Network stands out for its mobile, ecological and accessible mining, but it faces challenges in privacy (KYC), token distribution and real utility in its Open Mainnet.

Therefore, beyond enthusiasm or skepticism, the key is to investigate objectively: analyze the transparency, the tokenomics and the real value of any crypto project before sharing data or dedicating resources.