We don’t normally write about B2C topics but we make an exception in case of topics where we looked for answers and couldn’t easily find them. And this is an investment related topic so this disclaimer is necessary:
All investment strategies and investments involve risk of loss. Nothing contained in this website should be construed as investment advice. Any reference to an investment’s past or potential performance is not, and should not be construed as, a recommendation or as a guarantee of any specific outcome or profit.
We don’t expect anyone except the founders to benefits from PI Network because:
- Users are currently putting value in the app without any (except maybe psychological) benefits:
- The app does not provide any utility to its users. There is nothing to do in the app . Users hold on to it with the hope that they will sometime convert their virtual coins to actual value
- The app works like a Multi level marketing (MLM) system, promising future rewards to users for bringing in new users. Users put in additional time and effort to attract new users.
- Users are putting value into the app. There are hundreds of posts online saying PI Network can not be a scam because you do not put any money it. Users’ time and data are valuable to those users and they are spending these on the app. You can see the data collected by the app on its Play Store page.
- We find it unlikely for the app to create value in the future unlike its claims:
- The app creates limited value. Users create no value except for providing their information to the mobile app. The value of such data is unlikely to generate significant wealth for the large user base.
- There is no visibility on its technology or blockchain. Most blockchain companies publish their code as open source so it can be validated which is not the case here. Currently it is no different than any mobile app in terms of the transparency it provides on its technology.
- Some of its current practices are also practices used in scams:
- Founders are already benefitting from the app. They launched video ads at launch to monetize the active user base. The app also has a KYC process of collecting passport information. Binding this to mobile IDs can be valuable information for the founders
- Their marketing emphasizes the academic credentials of their users. Very similarly, a blockchain scam without blockchain infrastructure, OneCoin, relied on the McKinsey experience of its founder in its marketing.
How does PI Network work?
It is an app where users
- login every day and click a button to get digital currency. There is no proof of work being performed, they just login and click a button. This currency is not traded yet so currently holds no value.
- level up by inviting more users to the platform. This makes them gain more digital currency per day. This is a common model in Pyramid Schemes and Multi level marketing.
So what should you do?
I wouldn’t bother installing the app. You can always make the argument that you only lose time by giving the app a try. However, this belief would lead the believer to follow any dishonest actor who promises future value. There is no scarcity of empty promises in the world, we try to spend our time more carefully.
However, if you already have the app, you can wait to see if the founders actually build a crypto currency.
