Introduction:
Currently, our everyday financial transactions rely upon a trusted third party to maintain a record of transactions. For example, when you do a bank transaction, the banking system keeps a record & guarantees that the transaction is safe & reliable. Intermediaries like banks, PayPal, and other members of the current economic system play an important role in regulating the world’s financial transactions.
However, the role of these trusted intermediaries also has limitations:
1. Unfair value capture. These intermediaries amass billions of dollars in wealth creation, but pass virtually nothing onto their customers - the everyday people on the ground, whose money drives a meaningful proportion of the global economy. More and more people are falling behind.
2. Fees. Banks and companies charge large fees for facilitating transactions. These fees often disproportionately impact lower-income populations who have the fewest alternatives.
3. Censorship. If a particular trusted intermediary decides that you should not be able to move your money, it can place restrictions on the movement of your money.
4. Permissioned. The trusted intermediary serves as a gatekeeper who can arbitrarily prevent anybody from being part of the network.
5. Pseudonymous. At a time when the issue of privacy is gaining greater urgency, these powerful gatekeepers can accidentally disclose -- or force you to disclose -- more financial information about yourself than you may want.
Bitcoin’s “peer-to-peer electronic cash system,” launched in 2009 by an
anonymous programmer Satoshi Nakamoto,
was a watershed moment for the freedom of money. For the first time in history,
people could securely exchange value, without requiring a third party or
trusted intermediary. Paying in Bitcoin meant that people pay each other
directly, bypassing institutional fees, obstructions and intrusions. Bitcoin
was truly a currency without boundaries, powering and connecting a new global
economy.
Introduction
To Distributed Ledgers
Bitcoin achieved this historical feat by using a distributed record. While the current financial system relies on the traditional central record of truth, the Bitcoin record is maintained by a distributed community of “validators,” who access and update this public ledger. Imagine the Bitcoin protocol as a globally shared “Google Sheet” that contains a record of transactions, validated and maintained by this distributed community.
The breakthrough of Bitcoin A general blockchain technology is that, even
though the record is maintained by a community, the technology enables them to
always reach consensus on truthful transactions, insuring that cheaters cannot
record false transactions or overtake the system. This technological
advancement allows for the removal of the centralized intermediary, without
compromising transactional financial security.
Benefits Of Distributed Ledgers
In addition to decentralization, bitcoin, or crypto currencies in general, share a few nice properties that make money smarter and safer, although different crypto currencies may be stronger in some properties and weaker in others, based on different implementations of their protocols. Crypto currencies are held in cryptographic wallets identified by a publicly accessible address, and is secured by a very strong privately held password, called the private key. This private key cryptographically signs transaction and is virtually impossible to create fraudulent signatures. This provides security and unseizability. Unlike traditional bank accounts that can be seized by government authorities, the crypto currency in your wallet can never be taken away by anyone without your private key. Crypto currencies are censorship resistant due to the decentralized nature because anyone can submit transactions to any computer in the network to get recorded and validated. Crypto currency transactions are immutable because each block of transactions represents a cryptographic proof of all the previous blocks that existed before that. Once someone sends you money, they cannot steal back their payment to you . Some of the crypto currencies can even support atomic transactions. “Smart contracts” built atop these crypto currencies do not merely rely on law for enforcement, but directly enforced through publicly auditable code, which make them trustless and can potentially get rid of middlemen in many businesses, e.g. Escrow for real estate.
The Role of Pi Users
· Pioneer: A user of the Pi mobile app who is simply confirming that they are not a “robot” on a daily basis. This user validates their presence every time they sign in to the app. They can also open the app to request transactions e.g. make a payment in Pi to another Pioneer
· Contributor: A user of the Pi mobile app who is contributing by providing a list of pioneers he or she knows and trusts. In aggregate, Pi contributors will build a global trust graph.
· Ambassador: A user of the Pi mobile app who is introducing other users into Pi network.
· Node: A user who is a pioneer, a contributor using the Pi mobile app, and is also running the Pi node software on their desktop or laptop computer. The Pi node software is the software that runs the core SCP algorithm, taking into account the trust graph information provided by the Contributors.
The Pi Economic Model
Pi, on the other hand, seeks to strike a balance between creating a sense of scarcity for Pi, while still ensuring that a large amount does not accumulate into a very small number of hands. They want to make sure the users earn more Pi as they make contributions to the network. Pi’s goal is to build an economic model that is sophisticated enough to achieve and balance these priorities while
remaining intuitive enough for people to use.
Pi’s economic model design requirements:
· Simple: Build an intuitive and transparent model
· Fair distribution: Give a critical mass of the world’s population access to Pi
· Scarcity: Create a sense of scarcity to sustain Pi’s price over time
· Meritocratic earning: Reward contributions to build and sustain the network
PI Deployment plan
Phase 1 - Design, Distribution, Trust Graph Bootstrap.
The Pi server is operating as a faucet emulating the behavior of the decentralized system as it will function once its live. During this phase improvements in the user experience and behavior are possible and relatively easy to make compared to the stable phase of the main net. All minting of coins to users will be migrated to the live net once it launches. In other words, the livenet will pre-mint in its genesis block all account holder balances generated during Phase 1, and continue operating just like the current system but fully decentralized. Pi is not listed on exchanges during this phase and it is impossible to “buy” Pi with any other currency.
Phase 2 - Testnet
Before we launch the main net, the Node software will be deployed on a test net. The test net will use the same exact trust graph as the main net but on a testing Pi coin. Pi core team will host several nodes on the test net, but will encourage more Pioneers to start their own nodes on the testnet. In fact, in order for any node to join the main net, they are advised to begin on the testnet. The test net will be run in parallel to the Pi emulator in phase one, and periodically, e.g. daily, the results from both systems will be compared to catch the gaps and misses of the test net, which will allow Pi developers to propose and implement fixes. After a thorough concurrent run of both systems, testnet will reach a state where its results consistently match the emulator’s. At that time when the community feels its ready, Pi will migrate to the next phase.
Phase 3 - Mainnet
When the community feels the software is ready for production, and it has been thoroughly tested on the testnet, the official mainnet of the Pi network will be launched. An important detail is that, in the transition into the mainnet, only accounts validated to belong to distinct real individuals will be honored. After this point, the faucet and Pi network emulator of Phase 1 will be shut down and the system will continue on its own forever. Future updates to the protocol will be contributed by the Pi developer community and Pi’s core team, and will be proposed by the committee. Their implementation and deployment will depend on nodes updating the mining software just like any other blockchains. No central authority will be controlling the currency and it will be fully decentralized. Balances of fake users or duplicate users will be discarded. This is the phase when Pi can be connected to exchanges and be exchanged for other currencies.
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