This is the third article related to Pi Network's whitepaper. In the previous article, I discussed the preface and the introduction. In this article, I want to explain the problem that Pi intends to solve.

Problem

What is the problem that Pi wants to solve?

In simple terms, the problem that Pi wants to solve is the situation that the majority of people in the world do not have access to early cryptocurrencies like Bitcoin.

According to the white paper, in the early days of Bitcoin, when large companies saw its value continue to increase, these companies built large farms of servers and used advanced chips for mining. Result? A large percentage of Bitcoin went to them. The common man whom the creator of Bitcoin originally intended to empower by providing this alternative monetary system is left in the dark.

How can a common man own Bitcoin? If you do mining, it's almost impossible to compete with those giant server farms. So the only way for a common person to own BTC is to buy it on a spot or decentralized exchange. The case with BTC being so expensive is that if you have 15,000.00 PHP, all you can buy is 0.01 in July 2021. Today, with the continued price appreciation of BTC, the same amount can only buy 0.003013 BTC.

Bitcoin has indeed brought many benefits to the financial system. This has given people the freedom to have financial transactions without the need for a third party. It is flexible, and it protects citizens' privacy. This is also the reason why, starting with Bitcoin, the number of cryptocurrencies in July 2021 was just 8,000. After four years, the number exploded. I asked ChatGPT about this, and the bot gave me two replies.

One response that I find shocking is the existence of over 36.4 million crypto tokens as of February 2025. I find this unbelievable, but who am I to challenge the response of an AI? However, the bot qualifies that even though the number of tokens is vast, many of them are not traded and lack significant market value. ChatGPT added that as of June 2023, there were over 25,000 cryptocurrencies. This made me wonder: What caused such a giant leap from 25,000 cryptocurrencies in 2023 to 36.4 million as of February 2025?

The second response is more conservative. The cutoff date was November 2024, and the sources are considered reliable: coinmarketcap.com and coingecko.com.

Coinmarketcap.com lists 9,916 cryptocurrencies, whereas CoinGecko shows 15,142 cryptocurrencies. The number is not so shocking and is more realistic.

Now, despite the benefits of Bitcoin and older cryptocurrencies, they also caused what Pi Network describes as "unintended results," which is the concentration of power and money in the new crypto elites. This is a major obstacle to the mainstream adoption of cryptocurrency as a medium of exchange.

Solution

Let's go to the solution.

So how can the inaccessibility of cryptocurrency by the majority be solved?

In 2021, a huge portion of the world's population was afraid of cryptocurrencies. The regulators commonly associated them with criminal activities. People think they are dangerous, and entering them is extremely risky. There is truth in this, for scammers are widespread in crypto. Nevertheless, this does not negate the existence of solid and legitimate projects.

Four years passed, and the tune that the regulators and politicians are singing now has changed. Some of them created their meme tokens.

I think the technical section of the solution is the most difficult part to explain. This is where computer science majors and programmers should enter. In this section of the whitepaper, strange terms like Stellar Consensus Protocol (SCP), consensus algorithm, Federated Byzantine Agreement (FBA), and others are mentioned. We have a Filipino expression for this: nosebleed.

Nonetheless, despite the difficulty of that section, the key takeaway is that all we see at the end of the day is that by downloading the mobile app, you now have access to cryptocurrency.

How does Pi Network use SCP to help people mine coins? At this point, let's note the difference between the definition of mining in the Pi Network and the definition of mining used in Bitcoin, Ethereum, and others. They do not mean the same thing. With Bitcoin, mining is laborious. They say it is not eco-friendly or user-friendly. It's intensive and requires a lot of computation; in short, a lot of hard work.

In contrast, through Pi Network's mobile app, by simply pressing the lightning icon, your cell phone is in mining mode. In that sense, it is user-friendly, it doesn't drain your battery, and it doesn't use your data either. This is the reason that even if you close the app and you are offline, or you turn off your cell phone after that 2 to 5 seconds of pressing that lighting icon, just like coming to the class for attendance and you could leave immediately, when you do that, Pi Network will credit to your account all the coins that you "mine" in 24 hours.

The next section is easy to understand. The white paper explained how Pi Network applied SCP so that we can mine in 4 ways:

As pioneers. Everyone who downloads the mobile app is automatically a pioneer.

As contributors. To become contributors, you must first complete three mining sessions, and you will form a so-called security circle. The security circle consists of 3 to 5 people you trust. Although I can't follow, I think this is what Pi Network will use in what it calls the trust graph. How to make that code, that's what I don't know.

Ambassadors are those who invite the new pioneers.

As node providers. I am not sure if the situation has changed. In 2021, China was the number 1 provider of nodes, and Vietnam was in second place. I noticed then that not a single node existed in the Philippines yet. Now, I am a node provider, and I encouraged my brother-in-law to do the same.

So that's it for the problem that Pi Network aims to provide a solution to. The next article is about the economic model.

If you are curious about Pi Network, you can download the app by following this link. You also need to have a Bitget account where you can transfer your Pi from your Pi wallet to a crypto exchange and exchange it for your currency.