Pi Coin

In my previous post I hinted at a rekindled interest in cryptocurrencies and then seem to have gone into my suspicions about the NFT art market. It's time to balance that with my thoughts about Pi Coin.

Anyone can download and run the Pi Coin app on their mobile phone. Unlike BitCoin mining, you don't need a massive server farm to start earning the coins. There are aspects and critics which might make you think it's a scam but is it? It's unusual for a scam to tell you exactly who is behind it.

One thing Pi has going for it is a link to Pi day (3.14) so every year provides an opportunity for computing professionals and educators to discover the network. It has nothing to do with the Raspberry Pi although I suspect with the right software you could use one to mine the coins since essentially it is the taking part that counts, not the ability to throw powerful computing equipment at it.

I only signed up a couple of days ago but I have already accrued 7 pi and seem to be building the pot up at a rate of 2.4 pi per day. For my part, all I have to do is open an app and click a button once per day. Of course there is no guarantee that my coins will ever be worth anything. Today I have tried 3 times to verify my account by sending a SMS message and each time this has failed. Well I have plenty of free texts and this claims not to add any additional charges so time will tell. There is an option to verify using a Facebook account too but I find Facebooks involvement with analytics companies and sowing trackers all over the web to be against my resistance to them tracking me. Selling my details off without my consent or any form of reward for taking part to their customers just repulses me from using their network. At least with Google I get useful free software so I guess I'm ok with being tracked as long as there is value for me (I have my own cats and don't need Facebook for this :P)

Can Pi Coin create enough worth to accrue value or are these free coins going to be worth less than the Nectar points I pick up without trying at Sainsbury's (a UK supermarket chain for those who might not know). Of course something given away for not much should be viewed as having low value but my previous post explains how I thought the same about BitCoin many years ago and now wish I had backed up the wallet I made way back then. The truth is we don't know for sure. There are clearly a lot of people willing to give it a chance as there are sign-up codes all over the internet for anyone who needs a referral code (which is essentially the nickname of another Pi Coin miner). Does the world actually need another crypto-currency when you can already pick from over 130 which are already established?

I think yes but lets be honest, it's because there are no barriers to earning coins. The reason I would not mine BitCoin now is because I have an understanding that I need a server farm for it to be anywhere near worthwhile and the cost of running that farm might outweigh the returns. I think any future crypto should have the same level of mining for new users that was given to the early adopters with declining returns later on in line with the law of diminishing returns. Now many people are going to ask why should they earn at a lower rate when they gave their support early on when it was most needed? I believe the initial higher interest rate for savings accounts works for mainstream financial institutions for the same reason. People need a reason to buy-in. With crypto maybe a similar approach would counter the MOSFIT mindset (Missed Out So F*** IT). Driving away potential users can't be good for anyone in the long term. The spending power of money in our high street banks is similarly reduced if nobody wants or has confidence in our national currency.

I have read comments about the multi-level-marketing nature of Pi Coin referrals meaning it must be a scam. After all MLM is bad and free coins for being honest about our online identity in this mix must mean it's a scam right? After all you can verify your identity with Facebook who know more about you than the CIA even if you don't have a Facebook account. I remain undecided at this point but will wait until I am asked for whatever is required by their identity verification system. Mainstream banks insist on proof of your identity just the same. If anything, taking this pre-emptive stance adds a bit of credibility these days. I am reminded of how another previous work colleague signed up for a Monzo(?) bank account and they wanted a picture of him holding his bank card for verification. To me this is invasive given modern facial recognition systems. Still, I have my hat, shades and facemask at the ready just in case.

The big question is will Pi Coins ever have value and if so, how much? When people on YouTube are finding ways to trade with them already, there's a chance they will. We can't know how much the Pi network will earn from our data or showing us adverts and how much of that will be eaten away by set-up and running fees but there is potential for some value as the network of verified users expands. Will advertisers switch to an alternative network of Facebook verified users rather than just using Facebook itself? Well they might consider it if they want the attention of people like me. Only time will tell. For now we must wait and see what happens. At least we can use the time to research further and keep an eye on the test ledger while we wait for Pi to go live.

[Disclaimer: I am not a financial adviser and I am not suggesting you sign-up for the Pi Network or any other crypto-currency network or MLM scheme which is why I am not posting my own referrer code here. I have researched the topic for myself and decided I will give it a go. If anyone reads this and decides for themselves to do the same, you can use a search engine to find a referrer code from the internet - there are loads published and this way I know you are not basing your decision on my ramblings alone which do not constitute or replace proper financial advice]

Crypto-Confused?

Many years ago, a workmate introduced me to crypto-currency. It was called 'BitCoin' and was something new. We didn't really understand it but we set it up on a couple of work machines to try it out. It used 'unused' processing power to do some complex maths and rewarded users by giving them back a small amount of 'digital currency' for taking part. My colleague concluded this was a good way to perform a burn-in test. We had computer labs to set-up every year and needed to create a software image for each lab and also to make sure all the hardware was fully functional. That was my first experience of BitCoin. I no longer work at the same place and neither does my former colleague. I have no idea if he kept his BitCoin or perhaps like me, he concluded that the rewards were not worth it. After all this currency was not widely known about and 'mining' seemed to reward you with a very small fraction of whatever a BitCoin was.

My colleague was bright enough to realise that a small personal gain for using work computers and power might eventually land him in trouble, but now we were aware of grid-computing and burn-in tests switched to more socially acceptable applications (including SETI and later on another application for protein-folding which I can't remember the name of). I continued to mine BitCoin on my own machines for a while but it wasn't too long before I too lost interest. None of us could ever imagine this digital currency being valued at $50,000 per coin.

I'm usually good with backups however I have no idea what happened to my files from back then. It did spark an interest in cryptography at the time, but I was more interested in using PGP to stop my employers snooping on my personal email. I vaguely remember setting up a crypto-keyring or something. That would be a double-digit number of work computers and replaced drives ago and it turns out I was better at backing up personal photo's than crypto certificates for worthless currencies.

So now that crypto is more established and many of us have adopted the mantra of 'if only we kept copies...', why do I find myself returning to explore the crypto scene again? It's too late to mine BitCoin with anything less than a server farm and the world is a lot more renewables-hyped since then. My colleague realised way back that excessive power usage would land him in hot water eventually and now with youngsters like Greta, big miners are going to face serious flack sooner or later. Crypto-fans like to point out that their activities are 'nothing compared to the energy usage of the big financial institutions'. What they haven't factored in is the potential of cancel culture. BitCoin appears to have a 'bit of a shady reputation' to some, with its mysterious creator, anonymity and links to nefarious dark-web activities. On the digital side, there is evidence that digital miscreants have built botnets to mine crypto too. If this isn't enough to make most regular people avoid it, then there's also the burning buy-in question. If you have to invest $50,000 for a bitcoin, who gets your $50,000? Ultimately it must be the person who owns the BitCoin who gets the majority of it (less some exchange fees).

So it's now expensive to obtain BitCoins either by buying or mining which means if you weren't in it at the start, you probably can't get into it. It's also now getting the attention of speculators and investors; buying, holding, selling at the right time to take profits. It's the daddy of all crypto-currencies and it's success has spawned imitators... a LOT of imitators. The first thing I looked up this weekend was digital wallets (for storing your crypto coins or tokens). YouTube revealed a good free app for desktop or mobile called 'Exodus'. They allow you to store & trade over 130 different crypto-currencies but currently not the one I will talk about in my next post.

Another reason I've been pushed back towards crypto is the explosion in NFT digital art. This seems to be making the news a lot at the moment as some digital artists are earning huge sums of money. My cynical bone has gone into overdrive because of it. Essentially there are websites like Rarible and OpenSea which are allowing people to 'buy' unique digital artworks. I put the word 'buy' in quotes because there is an implication of ownership which is not quite in line with what most people understand as ownership and it's all about intellectual property and copyright laws.

Essentially an NFT is a copy of a digital file. What's to stop anyone else taking a screen-grab and copying it? Absolutely nothing in the same way you can have a picture of the Mona Lisa on your device but the original is in the Louvre museum. Under modern laws, the creator of an original work of art automatically has copyright. The creator could sell it, create a copy, change it, add graffiti or whatever. It is their work and their right to do what they want with it. Historically it would have been difficult and time consuming for an artist to duplicate a work, but since photography and now computing has made it so much simpler, existing laws had to be adapted to cope. So a photographer might rent a studio space, hire models, create images then keep the negatives but sell any number of prints. They could license an image to magazines to earn money and also develop their reputation (see what I did there) as a photographer. Although you might buy a print, that means you can use it for personal non-commercial use - you can stick it on your wall. You don't automatically get the right to scan that image and print it on a couple of dozen tee-shirts for your neighbours market stall.

It's probably fair to point out here that I'm not a crypto expert or legal expert; This is just my understanding of these complexities which in my mind is correct until an expert in such things corrects me.

I suspect since this is new there will be legal cases springing up in the future. For instance if my hobby is showing NFT art I've bought on my YouTube channel for my friends, that seems ok. If on the other hand my YouTube channel has millions of subscribers then it could be argued it's commercial usage. Since this is new it may be my own ideas of intellectual property which are incorrect and it does appear that a new type of media license has been created which would allow a buyer to profit from transferring an NFT from one medium (a .jpg file) to another (the proverbial tee-shirt) in the example above. This makes sense as a media or game company could create interest in the topic if they chose to splash out an an expensive NFT artwork for publicity purposes. There is no explanation of  whether an artist may revoke these rights at any point in the future (the word revoke does not appear in the NFT license text at all so legal test cases will surely follow). I can imagine a scenario where a political party picks up some NFT art but they hold contradictory views to the artist. While the party may not openly break the hatred aspects of the NFT license, it is not clear whether artists could revoke the granted rights at some future point in time.

I also suspect the NFT art market has been constructed to be the next gold rush. From my perspective it appears that a few artists are earning huge sums and news coverage is generating lots of interest from artists hoping to cash-in on the rush. It appears that Rarible and OpenSea price their artworks in units of the Ethereum crypto-currency. There are 130 other crypto-currencies, which may have smaller fees for the blockchain transactions necessary to trade 'ownership' so why just use this one? Is it because Ethereum is the best suited for NFT art or did a group of speculators get together, buy up a load of Ethereum and then create this whole NFT marketplace to raise the value of their crypto? Are they promoting a couple of artists to benefit while a whole generation of artists are fleeced 80EUR or so just to have one of their works included on the Ethereum blockchain so it can be shown in a vanity gallery? 

Finally, it's worth reiterating the famous phrase - 'Caveat Emptor' (let the buyer beware). Some paragraphs ago I mentioned lost files; replaced hard drives and computers. I'm sure those who are willing to invest large sums into NFT's will take more care of their digital wallets and passwords. Just remember technology is likely to fail at some point though and backups can also be lost. I wonder how much my tiny fraction of a BitCoin would be worth today if I had the ability to restore it? Nobody will ever know

[Edit]

At this point I should point out that I am not a financial advisor and this post reflects my opinions on the subject on the day it was posted. Since then I have noticed that at least one of the NFT creation sites includes a tick-box to transfer copyright to the buyer via an optional tick-box. I will not be posting my thoughts about this here at this moment in time.