The cryptocurrency market is still quite new, and there is a lot of room for improvement and innovation. And because it’s new and it involves large sums of money, the crypto market is kind of a wild west.
Many have tried and failed to recreate a new and improved Bitcoin. Some people came up with new concepts but they didn’t seem to get anywhere nearly the success of Bitcoin and Ethereum.
And truth be told, the more innovative, the more complicated the cryptocurrency matter gets.
Therefore a team of Standford PhDs tackled the challenge of creating PI, a user-friendly inclusive currency that could see worldwide massive adoption. And to do so, they made use of the Stellar Consensus Protocol, another concept born at Stanford University.
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What is Pi?
Well, Pi is 3.14159265359 and is a mathematical constant. But that’s not what we’re here for.
We’re here to talk about the Pi Network. Pi Network is a cryptocurrency project developed by Standford PhDs and graduates — Nicolas Kokkalis, Chengdiao Fan, and Vince McPhillip, designed to run on mobile phones.
The goal is to create a blockchain that works with the Stellar Consensus Protocol (SCP) in order to make it as resource-efficient and user-friendly as possible through employing a “security circles” system.
It all started on March 14th, 2019 (the official Pi day), when the developers launched their mobile app. They marketed it as a free, battery-friendly mobile mining app which you only have to access once a day for it to continue mining for you on its own. The mining rate started at 3.1 Pi/h and halved every time the number of users grew over a certain number.
And to add up to the mining rate, each user could refer to other people in order to get a bonus.
The community grew larger and larger, and by February 2020, the app has already got over 3.5 million engaged members with a 0.4 Pi/h rate.
“3.5 million people making free loads of money in one year? That’s amazing!”
Yes, it is, but that’s not actually what happened. Inside the white paper, we can see that the Pi network project has 3 stages: beta, testnet, and mainnet.
Currently, it is in the beta stage, and the app is only a virtual representation. And, since March 2020, the testnet stage started runing along.
Furthermore, “the mining” is not actually mining as it’s understood in the crypto market. What we commonly understand as mining doesn’t even work in an SCP.
“So is it fake or a scam?”
Neither! It’s a project in a beta state that’s using common terms to hook people in.
After analyzing the white paper and taking a deeper look at this project, we can understand why the Pi Network’s project was designed and advertised as it is.
- The project’s goal is mass adoption and is targeted to a large audience. And because most people heard of Bitcoin, it was essential to compare and point out Bitcoin’s faults and Pi’s advantages.
- Mass adoption has to go hand in hand with wide distribution. Through the app, the Pi token is distributing pre-minted tokens to its user base. It is most likely called “mining” because the term is easier to understand.
- Building a blockchain from the ground is no easy task, and most projects end up hacked because of weak network security. Through SCP, the network’s security improves greatly. However, as Stellar Consensus Protocol is quite a complicated thing to understand (as we’ll see below), they only emphasized the security circles system which is incentivized.
- Pi also states it’s the “first digital currency you can mine on your phone”. But actually, Monero was the first with the Minergate app. And even if there were others before, they did drain the battery and use more data. But as the Pi network’s app simulates a faucet, you don’t even have to be connected to the internet as long as you check in once every 24 hours.
The Pi cryptocurrency
“So far so good, but how much does the Pi cryptocurrency value?”
The answer is simple> ABSOLUTELY NOTHING!
So next time you hear or see someone trying to sell them at any value you should report him as a scammer.
The Pi cryptocurrency will eventually be launched on the mainnet and will gain value. It will be traded on exchanges, used inside the Pi network’s social media environment (advertising & marketplace), eventually used to pay for goods and services outside Pi’s environment.
One thing the developers made clear about Pi’s value is that it should not reach huge values (such as Bitcoin), so people will be more inclined to use it as a unit of exchange than a store of value.
Of course, people will be able to earn Pi even after the project airs by:
- “Mining” a fixed supply minted per person;
- Developers’ rewards.
Stellar Consensus Protocol
Generally, a blockchain works as a decentralized digital ledger sustained through a distributed network of computers. In a distributed system, the participants of a cryptocurrency network need to regularly achieve consensus safely and efficiently.
However, reaching consensus is quite difficult, especially when some of the nodes are likely to fail or act dishonestly. But through the Byzantine Fault Tolerant System, a blockchain can continue operating even when some nodes fail to communicate.
Sidenote. Byzantine Fault Tolerance (BFT) is the property of a system to resist the types of failures that come from nodes failing to communicate or act maliciously and continue to operate as long as there is a majority of nodes in agreement.
Bitcoin’s proof of work system has proven to be one of the most secure implementations of BFT for blockchain. But the complex cryptographic puzzles employed by Bitcoin’ PoW turned the network rather slow and inefficient from an energy consumption point of view.
Therefore, many other projects implemented protocols with derived BFT to create improved networks based on voting, that are faster and cheaper. However, they come up with several disadvantages like a higher risk for accidental forks, centralization, and the appearance of powerful whales.
Federated Byzantine Agreement Protocol
In 2015 Professor Mazières from Stanford introduced an alternative to the Byzantine Fault Tolerance called The Federated Byzantine Agreement. The concept is based on quorums that achieve consensus, employing overlapped quorum slices formed by validators.
The Stellar Consensus Protocol is the first general FBA protocol that gives an open membership system. In this system, each validator decides which validators they trust to form a quorum slice. Therefore, there is no need for a central authority to decide on a validator’s list.
In a distributed asynchronous system, a consensus mechanism must prefer two of the following three properties:
- Fault-tolerance – the ability of a system to survive the failure of a validator;
- Liveness – a system’s ability to always close a ledger, even if it causes a fork;
- Safety – the ability of a system to prevent an error from entering its ledger, eventually stopping its progress.
The SCP version of the Federated Byzantine Agreement prefers fault tolerance and safety. Also, there is no mining process. There is only a 3-5 seconds voting process where messages pass around to reach consensus. And because of the safety preference over liveness, there is no risk of a fork to make you wait for a few ledgers, so a transaction is permanent from the first time it reaches consensus.
Concerning the security of the network, Federated Byzantine Agreement is asymptotically secure since applying computing power to sabotage consensus is impossible. And even if there remains the possibility of bad actors to collude, it is virtually impossible for them to form a majority because the network is formed of a complex web of overlapping quorum slices.
What Mining Pi cryptocurrency will actually mean?
When Pi network’s developers proposed an all-inclusive mining system, they actually intend to allow individual devices to contribute to the protocol level and get rewarded. That includes mobile phones, laptops, and computers.
And after understanding how SCP works, we now can say that Pi’s mining system is about trustworthiness more than anything else:
- The Pioneers must confirm on a daily basis that they are not robots;
- The Contributor is confirming a list of pioneers that he knows and trusts;
- The Ambassador adds new users to the network;
- The Node is a user that is running the software on their desktop or laptop computer and runs the core algorithm.
All the above roles are necessary to the network and a user can play one, more, or all of them.
The newly minted Pi cryptocurrency is distributed daily as long as the user participated and contributed during that 24-hour interval.
In what stage is Pi Network?
The Pi network project is in its second phase, the Testnet stage, which runs along with the Beta. The app is still a simulation of a faucet.
In February 2020, the project passed 3.5M users and already started testing the peer-to-peer transfer system as well as a version of a KYC.
The current “mining” rate is at 0.4 Pi/h and it will halve again when it will reach 10M users.
And, as announced by the Pi Core team on the Pi day from March 2020, the Node software was deployed on 31 March.
When will Pi Network air?
Unfortunately, there is no official schedule for Pi. And even though we know that Pi Network starts building its testnet from March 2020, the only official statement about the final phase is that Pi will reach mainnet when it will be ready.
All the white paper says is that “When the community feels the software is ready for production, and it has been thoroughly tested on the testnet, the official mainnet of the Pi network will be launched.”
At that point, all validated accounts will be transferred to the main network and the faucet from the beta test will be shut down.
Also, fake users and duplicated accounts will be discarded from the network.
The first event that is going to throw a tantrum into the Pi Network’s community will be “the purge” that will take place while switching to the mainnet. The Federated Byzantine Agreement concept applied in its consensus protocol will require this transition to be done with maximum diligence.
Inevitably, users that have held multiple accounts will not be happy about it.
Also, Pi’s Attention Marketplace, Barter Marketplace, and Decentralized App Store will redefine the way a cryptocurrency’ community interacts. The network will offer its users a way to barter their attention to advertisers that want to show ads into the community, and a place where they can offer or look for products and services paid in Pi cryptocurrency.
Furthermore, developers will also be able to build Dapps leveraging Pi’s existing infrastructure as well as the shared resources of the community.
- Pi Network is a cryptocurrency project developed by Standford PhDs and graduates Nicolas Kokkalis, Chengdiao Fan, and Vince McPhillip, designed to run on mobile phones.
- The project is currently in the beta phase and the app is only a simulation of a faucet. The Pi token holds no value at the moment, and cannot be traded on exchanges.
- The Pi Network is built on top of the Stellar Consensus Protocol. The SCP is a system that works based on quorums that achieve consensus, employing overlapped quorum slices formed by validators.
- In order to build an inclusive and functional network, every role is built around producing trustworthiness.
- Since March 2020, Pi’s Testnet phase started running along with the Beta phase, officially deploying the Node software on March 31st.
- It’s still unknown when the project will reach the mainnet.