The Pi Network price remained under pressure as concerns about its future persisted after last week’s ‘nothingburger’ news event. The Pi Coin token was trading at $0.7295 on Monday, a decline of over 56% from its peak last week. Let’s explore Pi’s centralization problem and why it is hindering its success.
Pi Network Price at Risk Amid Centralization Problem
A good cryptocurrency should have several important characteristics, one of which is decentralization. This is what separates these coins from fiat currencies controlled by central banks.
Pi Network faces a similar problem, as it resembles a central bank that controls supply. Data shows that there are now 7.16 billion Pi coins in circulation, with the rest, 92.8 billion, locked.
Pi Network differs from other cryptocurrencies in that all the tokens are pre-mined and locked in wallets controlled by the Pi Foundation. This is different from Bitcoin, where new coins are mined by solving complex mathematical calculations. It also differs from Ethereum and other proof-of-stake coins.
The issue with Pi Network’s model is that an obscure foundation controls all coins. No one knows who the members are, and the pioneers, who in theory control most of the tokens, are not represented.
Pi Network’s diluted valuation is over $73 billion, making it a big player in the crypto market. As such, one solution would be to hire a top-4 auditing company like Deloitte or PwC to audit these tokens regularly.
Another solution would be a pledge to decentralize the network fully and reduce the power of the foundation.
This ongoing centralization also puts the community at risk for two main reasons. First, as we saw last week with Coinbase, sabotage or an insider leak is a possibility. In this case, something can happen to the foundation’s wallet, leading to a token dump.
Second, this centralization means that major tier-1 exchanges will never list the Pi Network because of the risks described above.
The other risk that Pi Network faces is that, currently, the chain lacks inherent utility because no one is using the ecosystem’s apps. While the Pi Network Venture is a noble idea, analysts predict that developing notable apps within the ecosystem will take over a year.
Pi Coin Price Prediction
The four-hour chart indicates that the Pi Network price plummeted from $1.67 last week to $0.73 today. It has plunged below the 78.6% Fibonacci Retracement level and the 50-period moving average, a sign that bears are fully in control.
The coin also forms a bearish pennant pattern, a popular bearish continuation sign. Therefore, the most likely scenario is further decline, with the next key level to watch at $0.5650, the month’s lowest swing.
