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Why do we need KYC?
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The vision of Pi Network is to build an inclusive and most widely-distributed digital currency and economy for all people around the world. The mining mechanism of Pi Network is social-network based and the mining rate halves as the social network size grows by 10X. So Pi has a strict policy of one account per person. This requires a high degree of accuracy to establish that members in the network are genuine human beings, in order to prevent individuals being able to hoard Pi through creating fake accounts unfairly. In addition to various layers of technical solutions to detecting, preventing and excluding fake accounts to enforce the one account per person policy, KYC provides an extra defence to ensure the true humanness of the network. The KYC process of Pi Network does not just fulfill a regulatory checkbox, but is important to guarding Pi’s mining mechanism and the purpose of the project.
How is the current KYC conducted?
Current Pi KYC is conducted by a third-party KYC provider. Even though the current required documents in many countries are limited to only passports, such identity verification solutions provide the level of authenticity that we’re looking for right now, while preserving people’s privacy. Member privacy is a guiding principle at Pi Network. Pi Network does not care as much about the content of the data you submit during KYC as the authenticity of your identity (i.e., that you are a real human being and not a bot). Pi Network deeply respects member privacy and aims to minimize intrusions on member privacy while keeping the currency safe. All Pi KYC processes will only be initiated from this App, and you will be notified if you’re selected within this app. Beware of any scams that claim to give Pi KYC opportunities outside of our app.
We recognize and hear that obtaining passports is difficult for some Pioneers, and we hope to develop a decentralized, reliable, low- to no-cost KYC process customized for the Pi community in the future that does not necessarily require passports. The ultimate goal is to enable every real Pioneer in the network to pass KYC or prove their humanness eventually for the Mainnet. The discussion of the future KYC solution will also potentially be a topic in the upcoming Pi Convention, and we welcome creative ideas from Pioneers.
What does KYC right now enable Pioneers to do?
Currently, we mostly use KYC to enable Pioneers to run nodes in the Pi Testnet, be a developer of Pi Apps on our platform, spend Pi in Pi Apps and perform in-app transfers, which are pillars of building Pi’s economic ecosystem. Eventually, every Pi member will need to pass KYC in order to migrate their Pi to the Pi Mainnet.
KYC does not exempt Pioneers from complying with Pi policies and from prohibited behavior, including selling Pi to exchange with other currencies, selling Pi accounts to others, using any automated scripts in their accounts, and creating fake accounts. Even if a Pioneer passed KYC, the prohibited behavior may cause the KYC’ed account to be frozen, revoked, burnt or banned before the Mainnet. Thus, please do not participate in any prohibited activities. Being a real human following Pi’s policies is the best strategy to secure your Pi.
What are the selection criteria and process for the 100,000 free KYC slots?
The selection criteria as previously announced will be meritocratic, based on Pioneer’s previous contributions to Pi including the length of time being a Pioneer, the amount of time and reliability of Nodes, engagement, growing the community, fostering constructive conversations, and future potential contributions including Pi Node and Testnet, Pi Apps Platform, bootstrapping Pi’s peer-to-peer economy and building the ecosystem. The consideration for future potential contribution means there will be both recent and senior Pioneers being selected, but in aggregate the distribution will have more senior Pioneers than Pioneers who recently joined.
We also take into account the probability of being or associating with fake account creation. We actually also invite to KYC some of these accounts that we suspect to be “fake” or “running automated scripts”, so that we can further study their practices and evaluate them. These accounts will obviously be excluded from transferring their Pi to the Mainnet if we confirm our suspicions.
We’re also introducing a new KYC selection process where our system automatically selects Pioneers probabilistically based on the above criteria on a daily basis. The selected Pioneers will be notified by a popup prompt inside this app. On the in-app prompt, the Pioneer will be asked to confirm if they have the right identity documents given their country of issuance. If so, they proceed to conduct the KYC in the third-party app. If not, it does not mean they will not be selected again. If someone has been prompted by the system to pass KYC this time, there is a chance they may be selected again for the 100,000 free slots later, but it’s not guaranteed. Falsely claiming to have a certain document not only will lead to a KYC failure right now, but also reduce this person’s chance of being selected in the future to pass it again.
If someone is selected and has the right documents, they have the next 24 hours to pass the KYC. After 24 hours, if the Pioneer has not used this slot, this free KYC opportunity will roll over to other Pioneers. The reason for the 24 hours period for Pioneers who already confirmed they have the right document is because we want to ensure each day we complete a targeted number of KYCs, having an even allocation of KYC slots each day and avoiding peaks of traffic for us and for our third-party providers.
All in all, the 100K free KYC is only the beginning of our enrollment of Pioneers for identification verification that enables more Pioneers to build Pi’s decentralized network and bootstrap Pi’s economy, and again, you can always wait for future opportunities and future KYC solutions as mentioned above.
Why is KYC free for the 100K Pioneers?
Because it is a relatively small group and the 100K Pioneers will be working to bootstrap our economy and build our Testnet. KYC is costly because it is currently performed by third-party apps that charge on a per KYC check basis. While the Core Team can potentially cover the cost for a small fraction of Pi’s global community, it cannot cover the KYC costs for our millions of current and future Pioneers before we find the low- to no-cost solution. As announced in December 2019, the Core Team will not profit from any of the identity verification processes or KYC solutions. For the large mass of Pioneers, the future KYC will either be at cost for Pioneers(i.e. whatever the third-party KYC provider charges) or a decentralized, low- to no-cost KYC process, customized for the Pi community. Our aspiration is to create a free KYC option. Although we cannot yet promise we will achieve this goal, we can promise that we will try our best.
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