Pi Network cryptocurrency: How virtual is it?

Pi Network is one of the most talked-about new cryptocurrencies recently. Does Pi Network offer high returns for investors, or does it pose potential risks?

The more than 70% drop in Pi Network's value on April 2nd, from $2 to $0.68, is a major warning for new investors entering the cryptocurrency market. Although Pi Network 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 noteworthy new cryptocurrencies recently. Pi Network offers users the opportunity to mine coins for free without paying any fees, attracting millions of users globally. In theory, if the project is successful, early participants could reap huge profits when Pi Network is listed on major exchanges and its value increases.

The value of Pi Network cryptocurrency dropped from $2 to $0.68 on April 2nd. (Illustrative image)

Participating in emerging cryptocurrency projects, such as Pi Network, offers significant opportunities for early investors as the value of the coin skyrockets after listing. Investors can benefit from rapid growth in the early stages, when the market has little competition.

New cryptocurrencies often bring groundbreaking technologies and significant growth potential. Pi Network, for example, utilizes a free mining system with community participation, promising to create a robust ecosystem. A strong community and user support could be key factors in driving the cryptocurrency's value in the future.

Investor concerns about sustainability

Many emerging cryptocurrencies 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 technology and development plans of the project remains unclear. This raises concerns among investors about the project's sustainability.

The dramatic drop in Pi Network's value from $2 to $0.68 in just a few months is a clear illustration of the instability of emerging cryptocurrencies. Investors can easily be swept up in the investment frenzy when its value rises rapidly, but will suffer significant losses when its value plummets without a quick recovery.

Compared to established cryptocurrencies like Bitcoin and Ethereum, investing in Pi Network and other emerging cryptocurrencies carries significant risks.

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

Regarding the platform's legality and potential legal consequences, Colin Wu, a renowned blockchain journalist with deep insights into the Chinese cryptocurrency market, frankly stated that Pi Network employs a multi-level marketing strategy.

" The mining process requires users to press a button every 24 hours without incurring any financial cost. The platform uses a multi-level marketing strategy, encouraging users to invite others to join, which accelerates their mining speed. This structure has led to comparisons with pyramid schemes, as the platform's growth relies heavily on user recruitment, " Colin Wu emphasized.

Furthermore, Cem Dilmegani, founder of AIMultiple – a company specializing in providing data analytics for the high-tech industry – expressed concern that the Pi app is primarily a platform for users to view advertisements rather than a true blockchain system. “Users are providing personal data and building communities, but they don’t actually own any assets of clear value,” he stated.

Comparing Pi Network to stablecoins: Bitcoin and Ethereum

While Pi Network and other emerging cryptocurrencies can offer huge short-term returns, they are also susceptible to sudden price drops due to a lack of stability and global acceptance. Bitcoin and Ethereum, on the other hand, have demonstrated long-term stability thanks to strong technological development and widespread acceptance from the community and financial institutions.

Bitcoin is a cryptocurrency that has been accepted by many large investors and financial institutions. (Illustrative image)

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

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

Liquidity and widespread acceptance: One of the key factors that makes Bitcoin and Ethereum stablecoins is their high liquidity and widespread acceptance from financial institutions, exchanges, and large businesses. Emerging cryptocurrencies like Pi Network have yet to achieve this level of acceptance, making their value easily affected by external factors .

Tips for cryptocurrency investors

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

First, gain a solid understanding of the cryptocurrency market: Before investing in any cryptocurrency, investors need to have a thorough understanding of the cryptocurrency market, how blockchain works, and the factors affecting the value of the currency. Stay updated on established cryptocurrencies like Bitcoin and Ethereum to recognize the differences between them and emerging cryptocurrencies.

Secondly, thoroughly evaluate the project before investing: New cryptocurrencies like Pi Network can offer large profits in the short term, but they also carry significant risks. Investors need to carefully consider the development team, technology, and long-term strategy of the project. Is the project transparent in its management? Can the cryptocurrency maintain its value and develop sustainably? These factors must be carefully considered.

Investor feedback shared on Pi Network online groups.

Thirdly , diversify your investment portfolio: Don't put all your capital into one asset class, especially emerging cryptocurrencies. Diversifying your portfolio helps minimize risk and increase opportunities for profit. The cryptocurrency market is highly volatile, and new coins are often easily affected by external factors, so consider allocating assets to stable cryptocurrencies like Bitcoin, Ethereum, or other assets besides cryptocurrencies.

Fourth, accept and prepare for risk: The cryptocurrency market is highly volatile, and emerging coins can change value very quickly. Investors need to be mentally prepared to face ups and downs and always be ready for unexpected changes. Clearly define your acceptable risk tolerance and don't let emotions dictate your investment decisions.

Fifth , monitor and update information regularly: To seize opportunities and avoid risks, investors need to regularly monitor the market, project information, events, and factors affecting the value of the currency. Staying updated on news and receiving in-depth analysis from experts will help investors make informed decisions.

Sixth , avoid getting caught up in short-term hype: Emerging cryptocurrencies like Pi Network may create a short-term frenzy, attracting a large number of investors. However, it's important to be cautious and not be swayed by the herd mentality. Investing in cryptocurrencies doesn't always have to rely on rapid growth. Sometimes, a long-term, stable, and carefully calculated investment strategy yields greater returns.

Seventh , be cautious with cryptocurrencies lacking widespread acceptance: One of the key factors in maintaining the long-term value of cryptocurrencies is widespread acceptance from the community and financial institutions. Emerging cryptocurrencies like Pi Network have not yet achieved this level of acceptance, so investors need to carefully consider this before making a decision. This also helps assess the long-term sustainability of the cryptocurrency.

Ultimately , investors need to adhere to the principle of "only invest what you can afford to lose." The cryptocurrency market can offer significant profits but also carries considerable risks. Investing in cryptocurrencies requires careful consideration and should not involve borrowed capital or funds that you cannot afford to lose .

Compared to established cryptocurrencies like Bitcoin and Ethereum, emerging cryptocurrencies like Pi Network are more susceptible to significant risks and lack widespread community acceptance. To optimize returns and minimize risks, investors need to carefully weigh potential profits against risk factors before deciding to invest in emerging cryptocurrencies. Diversifying their portfolios and thoroughly researching projects will help investors protect their assets from the volatile cryptocurrency market.

Thanh Thanh

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