The Pi coin is an altcoin (meaning a late cryptocurrency other than Bitcoin) released on March 14, 2019, and is a virtual asset with the concept of mining coins through idle resources of mobile smartphones.
It is popular because you can easily mine coins on your phone by downloading the Pi Network app and pressing the mining button every 24 hours. Mining does not affect your phone's performance and does not consume any batteries.
It's mined when you turn off your phone, and it's also mined without any data, which means you don't use the network, so it's unclear if this can actually be called mining.
So, let’s take a look at the reasons why PiCoin is suspected of being a scam one by one.
1. Can cryptocurrency minting be considered mining?
Picoin said in its white paper, “Picoin defines mining more broadly than the traditional meaning of running a proof-of-work consensus algorithm as in Bitcoin or Ethereum, and it is also considered mining to receive newly minted coins by users.” In other words, coinage is also considered mining.
Mining refers to the act of creating blocks that record cryptocurrency transaction details and obtain virtual currency in return. In other words, cryptocurrency mining means that new blocks are created as a result of execution according to a proof-of-work procedure. If you look at it this way, indeed, crypto (virtual currency) minting is also a part of mining.
For example, when a new block is hashed for the first time on the Bitcoin network, a new coin minting is triggered. Next, a new coin is minted and created, and this process is carried out through mining through proof-of-work.
Mining and minting of cryptocurrencies are similar in that they aim to achieve the same result - minting coins - but they use different approaches to achieve this goal. Mining operates on Proof-of-Work (PoW) consensus, while minting operates on Proof-of-Stake (PoS) consensus through staking.
Note that in mining, transaction blocks are verified by nodes that perform mathematical calculations. In the case of minting, on the other hand, transaction blocks are verified by validators who stake the blockchain's native cryptocurrency.
If you look at the PiCoin white paper, it says that the system was created based on the ‘Stellar Consensus Protocol (SCP)’. SCP is a data consensus method, and unlike Bitcoin, which uses competitive consensus, it uses a consensus method through voting through messages, so it does not require a lot of power consumption.
To summarize, crypto minting is indeed a part of mining, and the only difference is the coin minting method.
2. List of thieves without the main net release
PiCoin was listed on cryptocurrency exchanges such as XT.com and Huobi on December 29 last year, but controversy arose as it did not support deposit and withdrawal services. The PiCoin Foundation announced its official position that “Pi is a closed main net stage and cannot be traded on external exchanges,” which is adding to investor confusion.
Regarding the news of Huobi's listing of Pi Coin, Pi Network said, "PI has not been approved for listing or trading on exchanges, and there is no scheduled listing schedule. Therefore, all information about PI listing online is not true, and it can cause great loss or damage. “You have to be careful because you can wear it,” he explained. He also added, “We are considering discontinuation of support and additional measures for exchanges that list Pi.”
In this way, when an exchange arbitrarily lists a coin without consultation with the project developer, it is called a ‘thief listing’. The industry sees the controversy over Huobi's stolen listing as a strategy for Huobi to gain fame by creating an issue with PiCoin.
Pi Network's official Twitter
To evaluate PiCoin, it must first advance to the mainnet and be listed on an exchange. In this regard, some PiCoin miners are dissatisfied with the speed of PiCoin's entry into the mainnet. They point out that although PiCoin has secured a large number of Pi users, its advancement speed is slower than that of other cryptocurrencies.
‘Mainnet launch’ is the final third stage of PiCoin’s roadmap, and is the stage where actual Pi can be exchanged for other currencies by connecting to an exchange. In other words, it is time for Pi Coin to be recognized as a coin with true blockchain technology and to provide real compensation to Pi users.
Regarding the issue, Wes Spencer, a world-renowned blockchain security expert, said, “This is the interesting thing about PiCoin. Usually, most companies, especially in the cryptocurrency market, develop mainnet technology first and then enter the market. However, PiCoin “The opposite is happening,” he said.
3. There are constant suspicions that personal information is leaked when mining PiCoin.
Most virtual asset exchanges in Korea verify customer identities through KYC to apply travel rules, but there are no cases other than Picoin where virtual asset applications (apps) directly introduce KYC.
Since KYC verification may require your name, address, ID, and account number, there is a high possibility that if this information is leaked, it will lead to a major crime. In fact, in February of last year, a case of damage was reported that resulted in voice phishing after completing the KYC required by the virtual asset Picoin.
As complaints continued, government intelligence agencies began an internal investigation to determine whether there was any illegal or criminal abuse in signing up and operating PiCoin. It is unusual for an intelligence agency, not the police, to investigate coin crimes. It is presumed that this is not a general coin fraud crime such as pseudo-receipt, but is related to the problem of personal information leakage by overseas criminal organizations and requires cooperation.
An industry official said, “If you hand over personal information through KYC, etc. to a foundation whose identity is unclear, there is a high risk that the information will be leaked or misused in the future.” He added, “Not only voice phishing but also virtual assets held in electronic wallets such as MetaMask are “It could be stolen,” he explained.
Jeong Ji-yeol, Chairman of the Korea Anti-Money Laundering Experts Association, said, “Providing valuable personal information to illegal and undeclared virtual asset business operators is a very dangerous act and is not protected by law.” He added, “Picoin’s KYC is not normal, and the person must be “Because you provided your personal information yourself, you can suffer great damage if you are involved in fraud or other crimes,” he explained.
4. Recruitment of recommenders through a pyramid method
PiCoin currently operates on a referral system. It is a system in which coins are rewarded to miners who invite other people, and the mining speed increases as more referrals are collected. This is a typical multi-level, pyramid marketing method. For this reason, there are many cases where advertisements are posted here and there indiscriminately to elicit recommendations, and it is being criticized as a 'multi-level coin'.
Of course, due to the update in October last year, inputting a recommender was changed from mandatory to optional when signing up for a new membership. However, if you sign up without entering a recommender, you will not be able to increase the mining speed through the recommender.
The fact that mining efficiency increases as the number of recommenders increases is completely similar to the method of a scam coin called Blood Coin, which was delisted in the past.
We have looked at the various reasons why PiCoin is suspected of being a scam. Considering all of these factors, I personally believe there is a 95% chance that it is a scam. In other words, when rounded, it becomes 100%.
Not long ago, the Pi Network announced that it plans to announce the main net launch roadmap at the end of this year. I understand that it has been announcing the main net launch plan in earnest since 2021, but it has been postponed every year. I think we will have to wait a little longer to see if there will be any surprises (normal main net launch) this year.
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<Refer to>
- http://www.hansbiz.co.kr
- https://www.nbntv.kr
- https://dealsite.co.kr
- https://www.etnews.com
- https://namu.wiki
- http://www.bcwnews.com
- CoinEx(https://www.coinex.com)
