An Introduction to the Pi Network

What is Pi Network?

If you haven't come across it before, I'd like to introduce you to the Pi Network app which you can use on your smartphone to mine for the emerging Pi cryptocurrency. The Pi team describe the technology as a cryptocurrency for everyday people. A Pi is currently not worth anything but then neither was a unit of its better known cousin Bitcoin at this stage of its development and at the time of writing they are worth about £7,400. I'm not suggesting that Pi will reach those heights but nevertheless it seems like a good opportunity. The Pi developers have made the app very lightweight so that it doesn't affect your phone's performance, battery or network data consumption so even if the project doesn't achieve its goals its users won't have lost anything. If you're wondering what i'm talking about, don't worry, the rest of the post will explain more about cryptocurrency and why this is an exciting time to become part of the Pi Network.

Cryptocurrency

To give an idea of what a cryptocurrency is, Wikipedia describes Bitcoin as a decentralized digital currency without a central bank or single administrator. It feels rather alien to think of a purely digital currency. Cash has for so long been one of the fundamentals of life but with the advent of contactless payments, PayPal, Google Pay, etc. we're already moving in that direction. In fact, its probably fair to say that the currencies that we are accustomed to are effectively digital anyway with the notes and coins acting as tokens. In the case of Pound Sterling, the total number of notes and coins in circulation make up a fairly small proportion of the total value of the total currency, more so since the Bank of England used quantitive easing in the last financial crisis.

Trust, Security and Blockchains

The idea of a new currency based on rules defined by its creators also takes a bit of getting used to. When you consider quantitive easing and recent suggestions that the Bank of England might employ negative interest rates, we see that the rules of our conventional currencies are more fluid than most of us imagined 11 years ago. Still, for any new currency to succeed it must be absolutely trusted so the rules that it plays by are important. Both Bitcoin and Pi are based around the concept of a blockchain where a block is a chunk of information about the participants of a transaction which gets added to the end of the chain of previous transactions. For each transaction block, a hash (an encrypted translation of characters) is calculated and stored as part of the block. These encrypted hashes are the crypto of cryptocurrencies. The blocks are stored chronologically within the chain and each computer in the blockchain network stores its own copy of the blockchain. Together, the chronological structure, encryption and the built-in redundancy combine to form a powerful framework for transaction security.

Mine Currency on Your Phone

The feature that sets Pi apart from other cryptocurrencies and makes it so appealling is the way that one mines new 'coins'. To mine a new Bitcoin or similar cryptocurrency coin you need to provide processing power to the network to help it to process the transactions that are being added to the blockchain all the time. Distributing the processing this way is a simple way to provide the decentralised network that characterises crytocurrencies. Hash generation is compute intensive though and before long people realised that they could mine a lot more coins per hour if they used high spec GPUs and that triggered a kind of processing arms race. Competition is fierce so to stay profitable you have to keep updating your hardware and also keep a close eye on your electricity consumption to make sure that you are not burning more than you are earning. Many people are priced out of cryptocurrencies today but Pi Network uses a different method to mine. The nodes in Bitcoin's network work in competition with each other to find a cryptographic solution that validates a transaction. Pi Network builds on its users' social network links so that trust becomes intrinsic and the nodes can efficiently work together to deliver a consensus solution. By using this model they have created a lightweight app that quietly mines new Pi in the background. All you need to do is install the app and click a button to mine once every 24 hours. To activate the app you need an invitation from an active Pi user. The link above is effectively an invitation from me to join the Pi Network. This is part of the process of establishing links between Pi users that builds the trust that the consensus model depends on. The more links you have, the stronger the trust in your circle is which in turn strengthens the wider network. Users are rewarded for strengthening the network with an increase in their rate of Pi mining. If you are happy to accept my invitation by using my username, 'fizzgog' as your activation code when you register then you will be helping me to build my security circle so many thanks to anyone who does so.

Join the Pi Revolution

Cryptocurrencies are gaining acceptance all the time and its interesting to consider the potential of a decentralised currency. Perhaps one day we'll be able to go abroad without changing between currencies for example. Not surprisingly it is becoming a crowded field but the ease of access of Pi gives it a big advantage. Its free to join and uses negligible resources on your phone so it seems to me there is much to gain and not much to lose by joining Pi Network at this stage. At the time of writing there are around 6 million Pioneers and when that total reaches 10 million, the mining rate will be halved so, if you are interested in joining, the sooner, the better. Good luck virtual prospectors!