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Let's Agree to Disagree on Pi Network
Trigger warning: In this essay, I’m going to be diving into Pi’s “global consensus value” and why I think it’s a harmful delusion.
On Sunday July 2nd, the local Pi community held a whole-day conference in Manila. With several hundred attendees, this was no small event — some of their participating exhibitors included real estate conglomerate Ayala Land and web3 startup PlayDex. Like many crypto veterans, I’ve been openly critical of Pi network and although I remain unconvinced that Pi is a viable cryptocurrency, I am impressed by their ability to rally their troops. I’m told that they called me out by name during their closing remarks, as an example of someone who felt threatened by Pi. I’m not offended by this, but I wanted to share some further thoughts about the project and their recent moves.
Let me start with some ground rules: everyone is entitled to their opinion. Full stop. I don’t care if you think the Earth is flat, I believe that you are, and will always be, entitled to your opinion. However, I am also entitled to my opinion, and in the case of Flat-Earthers, I am entitled to explain why I think you’re wrong. Conversely, the Flat-Earthers are also entitled to argue back. In theory, it’s these open debates that lead to better societies, and we should not be resistant just because we’re afraid of hurting each other’s feelings. Which brings me back to Pi.
Pi Network is a very unique kind of cryptocurrency. Unlike OneCoin, Bitconnect, or EthMAX, Pi doesn’t ask its supporters for money. Instead, they ask them to dutifully open up their Pi app every day and “mine” Pi coins through their mobile phones. (Basically, they’re just watching their balances go up, I see no evidence of any actual mining.) They’ve asked their users to upload their personal information and IDs, and most importantly, they’ve encouraged them to spread the word and refer Pi to their friends. As of right now, Pi tokens are still not tradeable on any exchange anywhere in the world. The Pi core team has said that their blockchain’s mainnet will go public once everyone has submitted their KYC. With only 10% of their 35 million users currently complying, this feels like it might never happen. (The Pi network is a copy of Stellar, and they’re currently running it as an “enclosed mainnet,” which sounds like they turned it into a quasi-private blockchain.)
Pi fans have been using their currency within this enclosed mainnet for over a year now, and at their Manila event, there were vendors selling food and merch in exchange for a mix of pesos and Pi coins. On the surface, there is nothing wrong with this. The Pi coins can circulate within their “enclosed” space, and in theory, that should enable basic commerce between Pi users who have access. What I found puzzling however was that they were setting their own fantasy exchange rate for Pi. That rate was $314,159 (!) for 1 Pi token. Popularized by the Chinese Pi community, they refer to this rate as the “Global Consensus Value” or GCV. At the Manila event, vendors referred to the GCV when they were selling, and the audience watched a video encouraging everyone to accept it as the official exchange rate.
I’m going to zoom in on this, because in crypto, the numbers really matter. This GCV is nonsense. It doesn’t hold up even to basic arithmetic. There are 1.9 B Pi tokens in circulation and if we multiply that by their fantasy exchange rate of $314,159, we end up with a $600 trillion market cap for the Pi currency. That number isn’t just big — it’s about 7 times greater than all the money in all the countries on Earth. (The total global money supply is only $83 trillion.) So in order for their GCV to be even close to reality, Pi needs to replace every currency on the planet, and then the global economy also needs to grow by 700%. And let’s not forget that the actual total supply of Pi is 100 billion tokens. Perhaps they are positioning Pi to become the primary currency of the Milky Way as well.
This all brings me back to my opening ground rules: Everyone is entitled to an opinion. This $314K exchange rate is an example of that — it’s an opinion. I’ve already demonstrated above why I think it’s an erroneous opinion, but let’s leave that aside for now. Honestly, my biggest issue with this number is its name. Calling it a “global consensus value” implies that the market has agreed that this rate is the correct one. The Chinese proponents of GCV claim that they have over 1,500 merchants and 20,000 transactions using the $314,159 exchange rate. If that’s true, these merchants will all soon discover that they effectively gave their products away for free, because Pi isn’t — and will likely never be — worth that much in the outside world. Don’t get me wrong: it is completely fine for a private community to establish its own private currency — it happens all the time in cults and prisons. However, as soon as your currency starts interacting with the real world, you will quickly discover that the open market doesn’t care about your hopes and dreams. But hey, if there is someone out there willing to sell their BGC condo for 1 Pi token, I will happily take that trade.
Jokes aside, what bothers me the most about Pi and this GCV is that it creates false hope within its community. Official-sounding labels like “global consensus value” is opium for the uninformed. (We call this “hopium” in the crypto world.) If the Pi community truly cared about empowering real people — as is stated on their website — they should be clarifying that the GCV is an impossible delusion. But the core team has been silent about this, likely because it’s great for their growth. If you do a search for “Pi GCV” on Facebook, you’ll see hundreds of posts and groups pushing support for the GCV. None of them give any additional context or attempt to clarify how outlandish the number is.
What’s a more defensible price target for the Pi token? I’ve thought about this one for a long time, and I’ve flip-flopped on different approaches for estimating this. In the past, I benchmarked it against memecoins like $PEPE, which is currently in the $0.000002 range, but memecoins tend to have an extremely high circulating supply (420T in the case of $PEPE) whereas Pi is not even 1% of that. They have similarly fervent cult followings, but the parallels basically end there.
However, since Pi is just a copy of the Stellar blockchain, we could use $XLM as a comparison. Stellar’s $XLM token currently trades at $0.10 with 27B coins in circulation and its network powers about 2M transactions per day. Pi has about 2B coins in circulation and powers around 200-300k transactions per day. It’d be fair to say that from the lenses of circulating supply and on-chain activity, Pi is about 1/10th of the size of Stellar. A realistic price target for Pi would therefore be in the $0.01 (or 50 centavos) range. Obviously, this is another example of “an opinion,” and I could be completely wrong here. That said, I have a feeling my $0.01 price forecast is much closer to reality than the GCV is.
Stay safe out there, cryptofam!