In the article entitled “The $314,159 Controversy” earlier published this week, I have made this comment, and will say it again here – “While I agree that we, all Pioneers, desire a high value for Pi, that over $314 thousand value is beyond reality.”
The reason why I am saying this it’s because I am thinking on the context of the long term sustainability of the Pi ecosystem. The way I see it as of now, that $314,159 value will not happen, not even in ten years after.
If ever a peer-to-peer transaction could really happen on such a very high Pi value, it will be for just one or two transactions at most. As a sort of demonstration just to prove it can be done. But not as normal occurence.
The following are the reasons why I believe such valuation is not realistic:
- Majority of Pioneers, if not all, will not be able to hold for long period of their Pi to wait for its price to reach its value to a high of $314,159. It’s because that even just at $10, or any lower value, I’m pretty sure lots of Pioneers will be much willing to use and unload few Pi tokens from their wallet. As what had happen to a Pioneer who recently bought 1 box of pizza by paying 10 Pi tokens.
- No vendor of the right mind will be willing to accept payment in Pi at the consensus value of $314,159. It’s because at this exchange rate, a dollar will just be equivalent to 0.0000031831 Pi. So that to buy a brand new car worth $100,000, you only need to have just a third part of a Pi token or 0.31831015504 Pi. Do we think there’s a car dealer willing to sell a highly priced SUV for less than one Pi token as payment?
- The dollar or any fiat money equivalent value of Pi will be determined by its demand. Not by any consensus value set by Pi token holders. While the intensity and degree of demand will partly be influenced by the supply level as well as the utilization rate in the Pi Network ecosystem.
Ever since, it is always the demand and supply situation that is factored in the price of any commodity or currency. Except during extra ordinary situation and economic emergencies.
Now at the start of peer-to-peer transactions during enclosed mainnet, the valuation of Pi would be low because those who are selling products are mostly Pioneers having Pi token themselves in their wallet. The demand depends on the need of traders, or any person desirous to acquire and accumulate more Pi. Their intense desire to have more Pi will push the value gradually higher, most especially when supply in circulation is limited.
But surely, demand in the future will increase as more people will join the ecosystem to do various activities, undertake business, and earn more Pi. While the available supply of Pi tokens in circulation may eventually be limited to meet the increasing demand of the tokens as more utilities will be developed and created in the expanding Pi ecosystem, leading to the appreciation of Pi value as time evolve.
More so with the fact that some Pi tokens are locked and are not immediately available in the current circulation. The Pi Core Team (PCT) in their wisdom have already foreseen the possible scenario of dumping more Pi in the market once mainnet comes, hence the lock-up mechanism was implemented. While at the same time giving new entrants of Pi users an opportunity to earn more at higher mining rate as they lock-up more Pi tokens for longer periods.
Moreover, aside from the lock-up scheme, having a Closed Network period before the Open Network of the Pi mainnet is one of the effective ways of avoiding a massive unloading of Pi into the open market. Especially at the early bootstrapping phase of various utilities apps and platforms of the Pi ecosystem. Although it is obvious that the PCT have other purpose and reasons why they instituted the closed network of the mainnet. Such as the facilitation of in-house KYC roll-out, mainnet migration and fortificaton of the security system of the Pi blockchain among others.
The way I see it, a deliberate plan is being put in place now in the Pi Network ecosystem to have just an ample amount of Pi in circulation while the existing peer-to-peer trading platforms is still undergoing development and initial build-up. And as more utilities will be available, adequate supply volume of Pi tokens will be circulating in the ecosystem so as to stabilize the value of Pi. That is not too low, and not too high for both buyers and sellers in the online marketplace.
A value just enough to make the Pi ecosystem economically sustainable. With Pioneers enjoying the benefits of Pi they have earned.