Pi Network's Centralization: A Cause for Concern?

Many cryptocurrency enthusiasts joined the Pi Network, but research indicates severe centralization problems affect its operation. The core team controls 82% of the total Pi Coins

Many cryptocurrency enthusiasts flocked to join Pi Network, but research highlights that severe problems with centralization are affecting the project.

The core team has 82% of the total Pi Coins in its possession, sparking concerns about transparency in governance and decentralization of the network.

In comparison to Bitcoin’s 21,000 nodes and Ethereum’s 6,600 nodes, Pi Network operates with only 43 nodes and three validators.

The small number of validators has broad consent power for transactions and governance, which deviates from blockchain principles by concentrating authority in a few entities.

After updating its privacy policy to include advanced Know Your Customer (KYC) authentication methods with artificial intelligence (AI)-based applications, such as ChatGPT, the project faced backlash from users.

According to the policy history records, this information about personal data handling did not appear in earlier policy versions, thus creating doubt among users.

Appliance of AI-based KYC verification systems sparks concerns among users as it indicates potential risks for data privacy protection, third-party intrusion, and identity verification bias problems.

When these systems are not adequately controlled, they cause incorrect identification processes, data exposure incidents, and outside agents’ unauthorized access to user details.

Many users of Pi Network show increased skepticism regarding the long-term block on their Pi tokens and difficulties encountered by new users in retrieving their tokens after the mainnet upgrade.

Some users chose to sell their accounts completely, and recent data from Google Trends demonstrates that search interest in Pi Network dropped as users showed less and less commitment to the network; thus, their initial peak of 100 points declined to only 12.

Pi Network needs to solve its problems to establish its credibility while maintaining relevance. The fundamental reason blockchain technology exists is decentralization. An unbalanced Pi Coin distribution and validator power concentration would cause the network to lose its integrity.

Users require better information about processing and distributing personal data during ChatGPT-based KYC verification systems. They also require transparent choices about sharing their information with specific features enabled because they need to grasp the entire data usage process.

The essential step is to resolve the token lockout problem. New project users joined with the expectation that their Pi Coins could be accessed soon after joining. Restricted access for these users may damage Pi Network’s reputation and lead to additional user loss for the project.

The fate of Pi Network as a trusted blockchain ecosystem will be determined during the critical period ahead, showing whether it advances beyond the current controversies.

Projects that move forward in the crypto industry with transparent and decentralized principles will become successful, while those that do not adapt will quickly fade into insignificance.