Pi Network: Figuring out the Price of a Pi Coin | Analyzed by an Accountant

 

 Pi Network: Figuring out the Price of a Pi Coin | Analyzed by an Accountant

 

In this video i wanted to answer question that many people had about the pie network and it's a pretty important question which is how much can a pie coin be potentially worth i did do a video on this topic before but i felt like i didn't go deep enough since i didn't do any calculations and this video is perfect for anybody who wants to see some real hard numbers the goal of this video is really to show you guys how i estimated the price of a pie coin and after doing the estimations i'm actually pretty glad that i got into the pie network recently you see the valuation of the pie coin actually looks a lot better than i

initially thought and for anybody who has no idea what i'm talking about the pi network is decentralized cryptocurrency platform that allows you to mine pi from your phone and the whole thing was started by a couple stanford graduates back in 2019 and if that sounds interesting make sure to use the invitation code magic tuna to join the network and with all this being said let's get started with this video and start

estimating the value of a pie coin you see to be able to estimate the price of a pie coin i wanted to estimate two things i wanted to estimate the potential supply of pie coins and i also want to get a good idea of the demand and from there i'm going to try to calculate a price the first thing i want to take  look at is the supply side which i think many of you guys will find pretty interesting i've always wondered how many pie coins are out there and i guess i finally started to get my butt out of my seat and started to do some work and for me to be able to do this calculation needed a couple pieces of information

 this included things like the historical mining rates on the pi network the date of all the times the money rates have been reduced and also the max number of users before the mining rates are reduced

this is all going to help me estimate the total number of pi coins mined on

the network and it's actually a pretty simple calculation if you really think about it and i don't really plan on doing anything fancy in this video all i need to do is some simple multiplication also divisio and to give you guys an example let's try to estimate the total number of pi coins mined before the network hit ten thousand user and all i need to do here is multiply ten thousand users by three point one pi figure out how much they're getting per hour which turns out to be around thirty one thousand pies and then we multiply that by twenty four to represent a day from this we can see that there's about 744 000 coins that are mined on the network every single day and once we have that information all we need to do next is multiply that number by the number of days before the network

hit 10000 users and this turned out to be 69 days since the project started in march the 14th 2019 and finally hit 10 000 users on may the 22nd and the only thing we need to do now is multiply the number of 69 by the number of pies earned per day and that's actually going to give us a total supply of 51 million 336 000 coins during this period now if you've been following along with this video i hope you realize the problem with this calculation it pretty much assumes that 10000 people were mining every single day from the start of this project until may the 22nd now we know this is not true because the

network didn't start with 10 000 people instead it was a gradual growth over a long period of time but for the purpose of this video we're just gonna assume that this is the case one of the reasons we have to use this is we simply don't have the data i don't have data on the total number of users every single day and also don't think this is a huge problem because it pretty much overestimates supply

meaning that this is pretty conservative and we're also going to get a price that's much lower than reality and if you guys remember anything from your accounting class it's good to be conservative since the price of a pi coin might be much higher than what we will estimate in this video so after finishing this we basically have the total number of supplies for the first 69 days and after this we're pretty much going to repeat this process for every single day until december 31st 2021 and i chose december 31st 2021 as the last day that we can mine pie and this is because the developers estimate that mining for pi will stop in q4 2021 and this can mean either october november or december and i simply chose the very last day just to be conservative again and i'm simply going to share the number i got here because we don't have to run through the whole process again one because i feel like now you guys have a good idea of how i got this number and two because i know it's kind of boring so you guys don't have to see

it again and the total amount of pie here is about 117 billion pies now this number is pretty huge but we

don't actually get to see what the price is until we factor in demand as well

but before we move on to the demand part we do have to adjust this number a

little bit and this is because most people don't actually earn the base mining rate and we also have to factor in the bonus referrals as well so right now the project tells you that you earn 0.2 pies every hour but that number includes afull security circle and also the base pioneer rate but we know that not  everybody is going to have their security circle filled and what i did here was assume that everybody on the network was going to refer one other person and this is because everybody on the

network had to be referred by another person so it made sense to me that we should factor that into our calculation and you can see in the example box right here that this basically gave us a mining rate of 0.21 or basically 105 of the original base money rate and what i did after it was simply multiply 105 percent by our total minable pie of 117 billion now i know this is not perfect but i thought it would be good for a youtube video and also the fact that it's actually really simple to apply the last thing we had to do here is guesstimate the inactivity on the network and also how much the developers are getting as well so i noticed that about 33 of my network isn't active at a given time and this is going to drop the total supply to about 82 billion coins and after this i'm going to assume that the developers here are going to receive one percent of that 82 billion and finally after all this talking work

we have an estimated pi supply of 83 billion 521 million coin now i think this is the boring part of

the video and now we get to the fun stuff Once we finish estimating the supply we also had to get the demand and i'm going to be honest here because getting the demand is not simple and it's hard to find a number for that and for the purpose of this video i use a retty simple method.  i pretty much assume that demand is a ratio between price and supply of a cryptocurrency and to show you guys what i mean let's take a look at stellar for a second stellar has a price of 46 cents right now and it also has a supply of 22.4 billion and if you divide the two numbers they'll give you this ratio right here and what i'm doing here is pretty much assuming that the pi coins will have the same ratio and if we simply cross multiply you can see that we would actually get a price for pi of a dollar and 70 cents now i do want to preface that this is by no means completely accurate and if this was a real project that i had to do for work i would never ever submit something like this but i do want to say that i think this is pretty fun to take a look at and for the purpose of this video and pretty much for the fun of it i also use the price to supply ratio for things like bitcoin and also xrp and this will give us a price of a dollar and also 215 million dollars if you guys have a better way to estimate demand please let me know i know there's probably a better way to do this but i just can't think of it right now and for this video i'm just going to use the number i got from comparing stella to pie coins you can see that this is pretty close to the price that we get if we visit this website.

Now i'm not exactly sure how this price is determined but it seems like people are already trading pie coins or at least speculating on its future value and let's use this number to see how much everybody will be able to get after the coins are released what we see so far is that the average person should have around 835 coins and this is because there should be around 83.5 billion coins and there also should be around 100 million users which gives us an average pie per person of 835 coins and this means that the average person should be able to receive about 1431 but once we move up this gets more and more crazy a thousand coins will get you 1713 10 000 coins could potentially get you thousand one hundred and thirty dollars a hundred thousand coins can get you a hundred and seventy one thousand dollars

and a million coins can potentially get you 1.7 million dollars and if you guys remember the developers

portion of the supply which is around 826 million.   This would be able to net them around 1.4 billion dollars now take this whole video of a grain of salt because all this is based on estimates and a lot of assumptions but like i said it's pretty cool to think about but do realize that i made a lot of assumptions in this video like the demand equals the proportion oprice over supply or that pie mining will stop at 100 million users and also on december 31st 2021. Lastly also the dropout rate along with so many different things in this calculation now i don't think any one of us knows exactly what will happen including the developers here but i don't think this whole project is really labor intensive and it doesn't

cost us anything on our part instead all we need to do for this is press the simple button every 24 hours

all we can really do is hope and see and for some reason i have some pretty good

feelings about this project i'll make sure to release more videos about the pi network in the future i hope you guys enjoyed the video so far make sure to like and subscribe for more videos on this channel

i hope you guys are having a great week and like always i'll see you guys again  next time.