Pi Network Cryptocurrency: How Virtual is it?

The more than 70% drop in Pi Network’s value on April 2, from $2 to $0.68, is a big warning for new investors entering the cryptocurrency market. Although Pi Network has attracted millions of users thanks to its free coin mining capabilities and the promise of huge profits in a short time, this sharp decline clearly reflects the risks of investing in emerging cryptocurrencies.

Profit potential

Pi Network is one of the most popular new cryptocurrencies in recent times. Pi Network offers users the opportunity to mine coins for free without having to pay any fees, attracting the participation of millions of global users. In theory, if the project is successful, early participants can reap huge profits when Pi Network is listed on major exchanges and its value increases.

The value of Pi Network cryptocurrency on April 2, from 2 USD down to 0.68 USD. Illustration photo

Getting involved in emerging cryptocurrency projects, like Pi Network, presents a great opportunity for early investors as the value of the coin skyrockets after listing. Investors can benefit from rapid growth in the early stages, when there is little competition in the market.

New coins often bring with them groundbreaking technologies and great growth potential. Pi Network, for example, uses a free mining system with community participation, promising to create a strong ecosystem. A strong community and user support could be a factor that helps boost the value of this coin in the future.

Investor concerns about sustainability

Many emerging coins lack transparency in project management, information about the development team, or long-term strategy. In the case of Pi Network, despite its large user base, information about the project's technology and development plans are still unclear. This raises concerns among investors about the project's sustainability.

The sharp drop in Pi Network’s value from $2 to $0.68 in just a few months is a clear demonstration of the instability of emerging currencies. Investors can easily get caught up in the investment craze of this coin when its value increases rapidly, but will suffer great losses when its value drops sharply without a quick recovery.

Compared to stable coins like Bitcoin and Ethereum, investing in Pi Network and emerging coins carries obvious risks.

Mr. Duong Ngo Anh, a blockchain technology expert, expressed concerns about the transparency of Pi Network. He pointed out that the system is still a closed network, using the Stellar platform but not publicly releasing the source code. He asked: " If Pi is truly transparent, why don't they open the source code for the community to verify ?"

On the subject of the platform's legitimacy and potential legal implications, Colin Wu, a well-known blockchain journalist with deep insights into the Chinese cryptocurrency market, has been outspoken in saying that Pi Network uses a multi-level marketing strategy.

" The mining process requires users to press a button every 24 hours at no financial cost. The platform uses a multi-level marketing strategy, encouraging users to invite others to join, which speeds up their mining. This structure has led to comparisons to pyramid schemes, as the platform's growth relies heavily on user recruitment, " Colin Wu emphasized.

In addition, expert Cem Dilmegani, founder of AIMultiple - a company specializing in providing data analysis for the high-tech industry, expressed concern that the Pi application is mainly a platform for users to view ads rather than a real blockchain system. "Users are providing personal data and building communities, but they do not really own any assets of clear value," he commented.

Comparing Pi Network with Stablecoins: Bitcoin and Ethereum

While Pi Network and other emerging cryptocurrencies can bring huge profits in the short term, they are also prone to sudden price drops due to lack of stability and global adoption. Bitcoin and Ethereum, on the other hand, have proven to be stable in the long term thanks to their strong technological development and widespread adoption from the community and financial institutions.

Bitcoin is a virtual currency that has been accepted by many large investors and financial institutions. Illustration photo

Long-term stability: Bitcoin and Ethereum are two long-standing cryptocurrencies that have gone through many cycles of price increases and price decreases, but they have achieved relative stability in the long term. Bitcoin, as “digital gold,” has been adopted by many large investors and financial institutions. Ethereum, with its powerful smart contract platform, has become the development platform for many decentralized applications (dApps) and decentralized finance (DeFi). The widespread adoption and continuous development of blockchain technology has helped these two currencies maintain their value and be less affected by short-term fluctuations.

Steady returns and low risk: Although the value of Bitcoin and Ethereum can also fluctuate, their technological stability, community, and global acceptance make them less risky than new coins. In particular, Bitcoin and Ethereum have proven their ability to overcome market challenges and continue to thrive.

Liquidity and Mass Adoption: One of the key factors that makes Bitcoin and Ethereum stablecoins is their high liquidity and mass adoption by financial institutions, exchanges, and large businesses. Emerging coins like Pi Network have yet to achieve this level of adoption, making their value vulnerable to external factors .

Experience for virtual currency investors

Here are some important tips for cryptocurrency investors, especially when participating in emerging cryptocurrencies like Pi Network. These tips help minimize risks and maximize profit opportunities.

First, master the knowledge of the cryptocurrency market: Before participating in any cryptocurrency, investors need to understand the cryptocurrency market, how the blockchain works and the factors that affect the value of the currency. Update information about stable currencies such as Bitcoin and Ethereum to recognize the difference between them and emerging currencies.

Second, carefully evaluate the project before investing: New coins like Pi Network can bring big profits in a short time, but also have many potential risks. Investors need to carefully consider the project's development team, technology, and long-term strategy. Is the project transparent in management? Can the coin maintain its value and develop sustainably? These factors must be carefully considered.

Investor sharing on Pi Network groups

Third , diversify your portfolio: Don't put all your capital into one asset, especially emerging currencies. Diversifying your portfolio helps reduce risk and increase your chances of making a profit. The cryptocurrency market is very volatile and new currencies are often easily affected by external factors, so consider allocating assets to stable currencies such as Bitcoin, Ethereum, or other assets outside of cryptocurrencies.

Fourth, accept and prepare for risk: The cryptocurrency market is very volatile, and emerging currencies can change value very quickly. Investors need to be mentally prepared to face ups and downs and always be ready for unexpected changes. You need to clearly define the level of risk you can accept and do not let emotions influence your investment decisions.

Fifth , monitor and update information regularly: To seize opportunities and avoid risks, investors need to regularly monitor the market, information about projects, events and factors affecting the value of money. Updating news and in-depth analysis from experts will help investors make informed decisions.

Sixth , don't get caught up in short-term hype: Emerging coins like Pi Network can create a short-term craze, attracting a large number of investors. However, you need to be sober and not get caught up in the crowd effect. Investing in cryptocurrencies does not always have to rely on rapid growth. Sometimes, a long-term, stable and carefully calculated investment strategy brings greater benefits.

Seventh , be careful with coins that lack widespread adoption: One of the key factors that helps cryptocurrencies maintain their long-term value is widespread adoption from the community and financial institutions. Emerging coins like Pi Network do not yet have this level of adoption, so investors need to consider carefully before making a decision. This also helps assess the sustainability of the coin in the long term.

Finally , investors need to adhere to the principle of "only invest what you can afford to lose". The cryptocurrency market can bring great profits but also contains many risks. Investing in cryptocurrency must be carefully considered and should not use borrowed capital or money that you cannot afford to lose .

Compared to established coins like Bitcoin and Ethereum, emerging coins like Pi Network are prone to great risks and lack of widespread acceptance from the community. To optimize profits and minimize risks, investors need to carefully consider potential profits and risk factors before deciding to invest in emerging cryptocurrencies. Diversifying your investment portfolio and thoroughly researching projects will help investors protect their assets from strong fluctuations in the cryptocurrency market.

Thanh Thanh

Source: https://congthuong.vn/tien-ao-pi-network-ao-den-muc-nao-381335.html