Pi is a new cryptocurrency that can be earned through one’s mobile device. There are as of this writing a little above 300,000 engaged Pi users. It just goes to show that it’s indeed quite a sensation in the ranks of everyday people.
It is said that Pi may not be the first cryptocurrency that could be earned/mined on one’s mobile device. But its “breakthrough tech allows you to mine on your phone without draining your battery.”
We can say that Pi is different, because it will not only make a difference; it will also make up the difference.
Proof of Work
Earlier, cryptocurrencies such as Bitcoin and Etherium were built on the concept Proof of Work.
Proof of Work, also known as PoW, is what others would call a consensus algorithm, the original one within the blockchain.
The algorithm is basically being used to validate transactions and those that are verified as authentic as well as trusted form new blocks on the blockchain.
When it comes to Proof of Work, the miners within the network are really just competing against each other to solve a complicated mathematical equations that can be easily proven. It takes a lot of computational power, requiring high-end performance computer setups to do this faster and more efficiently. The answer to the problem is called a hash.
The hash of each block has the hash of the block before it. This helps form the chain and prevents the ledger from being altered. As this ledger is distributed across the entire network.
How difficult this mathematical puzzle is is determined by the number of users, the amount of power available, and the network’s current load.
Once a miner or mining device solves the puzzle, a new block is generated to which transactions are placed, and the ledger continues to keep building.
It takes about 10 minutes approximately for the source code to be found, and for a new block to form. Once Bitcoin hits 210,000 blocks, it has a halving.
The mining devices have to be highly specialized and powerful. It costs a lot of electricity to run these machines. This will create centralization within the network as large mining pools, and later mining farms were created, as is the history of Bitcoin. The work it takes to solve the mathematical puzzle only offers security to the network. However, it is pretty much useless elsewhere.
The greatest concern with this concept is a 51% attack on the network. To break it down, a few within the network own a majority of the computational power within the network. This allows them to determine what is approved, and what isn’t in regard to transactions. They would also have the power to reverse transactions and the network would then be compromised.
The public has access to the distributed ledger. This prevents anyone from being able to spend the same coin twice pretty much. Basically, if a 51% percent attack happened they could reverse a transaction. Scammers could make it look like they didn’t spend a coin, then spend the coin again. This term is known as double spend. Its counterpart definition in the digital world is perfect counterfeit.
The above untoward incident occurred in the history of Bitcoin Gold in May 2018. The attackers were able to double spend for a few days before it was stopped. But after they had stolen about 18 million dollars worth of Bitcoin Gold.
Etherium developers realized the flaws that Proof of Work has. So they have been working hard to transition to Proof of Stake.
Proof of Stake
Proof of Stake is a consensus algorithm with a public blockchain also. But it relies on a validator’s economic stake within a network. The validators basically propose and vote on blocks. Their power in regard to their vote is proportional to the size of their stake.
It is better to many because it offers more security. Less points of centralization. And above all, it is far more energy efficient.
The creator of Ethereum designed it to be better. Now there are actually two major proof of stake models – Chain-Based Proof of Stake and BFT Proof of Stake.
While both have many benefits they also come with their own challenges.
Stellar Consensus Protocol
Pi will be using the Stellar Consensus Protocol as its platform.
This type of blockchain technology has been in existence for a few years already.
It is not Proof of Work, and it also does not operate on the concept Proof of Stake.
The Stellar Consensus Protocol was designed and built in 2014. Its greatest features are extremely fast transactions and very low cost fees. It has the capability for international payments. And allows one to create smart contracts.
Byzantine Fault Tolerance
The Byzantine Fault Tolerance is a great system which utilizes nodes within a distributed network. It interacts with them to determine the ledger. There will be trusted notes and corrupted nodes. The system must be set up though to process the data that is true despite having the nodes that are corrupted within it. The BFT is necessary to prevent double spending from occurring.
The Federated Byzantine Agreement Algorithm
The Federated Byzantine Agreement Algorithm has several features that make it attractive. Anyone has the potential to become a validator within the network. Consensus can be reached very quickly. The Pi users who participate have the ability to determine which nodes they trust. It has tremendous security against even very powerful computing power machines.
Quorum and Quorum Slices
As you go deeper into this rabbit hole, you will begin to understand that the Stellar Consensus Protocol uses Quorums and Quorum Slices.
What in the world is a Quorum? It’s really just the minimum amount of nodes required to reach a consensus.
What in the world is a Quorum Slice? It’s basically a minimum amount of nodes required to convince a different node of a transaction’s credibility.
Think of it like this to help you understand –
Two pizza boxes.
Each pizza is cut into slices. However, the amount of slices in each box is different.
Pizza Box 1 has 8 slices.
Pizza Box 2 has 4 slices.
You can combine any amount of slices together in Pizza Box 1 to form as many different groups as possible. While having a majority of the groups you created having the same pizza slice.
That pizza slice being used in most of the groups created represents the node that can determine the agreement of the Quorum. Such Quorum represents Pizza Box 1, and the different groups you created with the pizza slices represent the Quorum Slices.
You replicate this with Pizza Box 2. Which is a totally different Quorum. The slice being used the most for most of the groups you created will also be able to determine the agreement of the quorum.
Yet Quorum 1 which is Pizza Box 1, and Quorum 2 which is Pizza Box 2 never intersect with one another.
This is known as a Disjoint Quorum.
When you start making the idea more complex by introducing a larger quorum, there will be a node intersecting between two sub-quorums within a larger quorum.
Having Quorum Intersections is extremely vital for consensus to happen.
Slots may be introduced later after the Mainnet also known as Phase 3 occurs. Where the network is fully decentralized. It will be open sourced and others can update the ledger. All nodes will need to come to a consensus and these block or blocks will be added to the blockchain.
Federated Voting is later used in alignment with quorums as well as quorum slices to help achieve consensus despite corrupted nodes AKA blocked or divergent nodes being present within the network.
The SCP does not provide a way for the digital Pi to be minted. However, The Pi Network has solved this issue with Phase 1. It has developed the system we are using now to determine the distribution of its cryptocurrency by using a Pi Emulator, a Faucet, and a meritocratic system at this time for Pi’s accumulation. Later, the developers will honor the Pi holding amounts by using KYC (Know Your Customer). And they will employ other methods of verification to determine the amount that will be minted for each Pi user in the near future.
Pi is Unique
Pi is different as opposed to Bitcoin which uses 210,000 blocks to determine its next halving which occurs roughly every 4 years. Pi has its own halving based on reaching a specific amount of Engaged Pioneers within its Network. Then when it has ten times that amount another halving will occur. Time is neither the factor nor the blocks on a blockchain. It will happen when the user thresholds are crossed. This is a very different dynamic than what other cryptocurrencies have used in the past.
Pi also has plans within its design to create a Pi Marketplace within its own app. Where a Peer-to-Peer (P2P) Network will exist where transactions can take place between Pi users.
One can earn Pi through their mobile device. This separates Pi from many others. However, there are still some that do offer this feature as well.
Pi though uses an app that’s being built socially. Incentives for earning its cryptocurrency is built upon those who help build and establish its network. All the Pi users within its network have the ability to speak to one another in a global chat room any time of the day. Each person with the ability to contribute ideas towards the project. Where the developers interact with them to formulate a better way to run the platform.
Pi is creating the Pi Marketplace where Pi users can use Pi to transact for goods and services offered by others also within the Pi Network.
“1 Pi Account – 1 Pi Mobile Device – 1 Pi Account User” prevents users from manipulating the system to generate more Pi for themselves by using fake accounts.
The Exchange will come after the Pi Marketplace shall have been established. The value of Pi will be given by its people. It will be determined by the demand for Pi based on how many users it has. As well as how useful Pi is in relation to what it can buy within the Pi Marketplace. The more value it can offer to more people, the more valuable it will become to more people.
Pi’s blockchain technology and four roles for accumulation for Pi have been implemented in a way to slowly introduce each role. Building upon what is necessary to create a secure and integrated network for all.
The biggest problem with a vast majority of cryptocurrencies that exist today, and there are over 2500+ cryptocurrencies as of today, is its use. Many people haven’t been able to use it for smaller purchases they would use their fiat currency for such as a cup of coffee, meals, transportation, among many others.
Currently, Bitcoin is expanding into areas where you could purchase electronic gadgets with Bitcoin on Newegg. Expedia offers you the ability to only book hotel rooms with Bitcoin. Flight bookings are not possible yet. Overstock.com has a lot of things people could purchase with Bitcoin.
It has taken many years to get to this level. Still, the ability to use cryptocurrency for every day daily transactions has not happened on a massive scale with any cryptocoin yet.
Maybe, Pi will be the answer.
Other Post by Author: