Step one: Retina scanning at your corner coffee shop.
Step two: Worldwide individual empowerment and a finance revolution.
It sounds like something out of a science fiction movie. But it’s not.
With the rise of biometrics, AI, and crypto, we are in an era where real-life and fictional worlds collide. On July 24, Worldcoin’s founders, including OpenAI CEO Sam Altman, launched the cryptocurrency project after an extended and controversial beta.
While the launch may have marked the end of the beta, the controversy continues. The project’s core offering is a retina-scan-enabled World ID, which the company describes as a “digital passport,” proving the holder is an actual human, not an AI bot. In some countries, new members received Worldcoin’s cryptocurrency token WLD.
Post-launch, the coin achieved a $22 billion fully diluted value (FDV), which values the network’s maximum quantity of tokens higher than most established fixed-cap crypto projects like Solana.
That’s a pretty big splash, even for the crypto space. Let’s take a look.
What is Sam Altman’s Worldcoin Project?
In a traditional identity model, a central authority stores and manages an individual’s information. The public has little control over their personal information and must rely on the central authority to protect it.
At present, governments (or related institutions) issue almost all forms of official ID. Millions of people worldwide have to trust that the government will safeguard their data and make it accessible when needed.
WorldID aims to give individuals a portable ID based on their unique iris scan, not government verification. Refugees are one use case example. In times of disruption, records are often lost or destroyed. Sometimes people have to flee without stopping by the government office. The UN High Commission on Refugees reports that up to 41% of refugees don’t have access to identification documents, severely restricting their ability to travel legally, access credit, and more.
Identity loss consequences for women refugees in male-dominated cultures are even worse. Without ID, they are utterly dependent on others and more vulnerable to abuse and exploitation.
Worldcoin is a part of the broader crypto industry category called self-sovereign identity (SSI), which is based on individual ownership and control of personal data apart from any centralized authority.
Like other SSI technologies, Worldcoin relies on blockchain technology, cryptography, and decentralized systems to enable individuals to control their digital identities. The concept revolves around its native token, WLD, which operates as a Layer 2 Ethereum-based cryptocurrency. Tools for Humanity is Worldcoin’s developer.
The Worldcoin (WLD) tokenomics look like this:
- 75% – Worldcoin community
- 13.5% – Tools for Humanity (TFH) Investors
- 9.8% – Initial Development Team
- 1.7% – Tools for Humanity (TFH) Reserve
Worldcoin plans to leverage security features of the Ethereum blockchain to cultivate a unique Worldcoin economic ecosystem in countries where it can legally do so.
How Does Worldcoin Work?
Worldcoin has an ambitious vision that differentiates it from other SSI projects in the following ways.
Identity Access and Control
World ID offers “proof of personhood,” verified by iris scans. To get a World ID, a customer visits a location that hosts a Worldcoin “orb,” which looks like a silver bowling ball. They meet with an orb operator who helps with the process. Once the orb’s iris scan verifies that the person is a real human, it creates a World ID.
In an interesting commercial twist, everyday people can apply to be “orb operators.” Small businesses like coffee shops or co-working locations can sign up to be orb hosts. Both parties earn WLD for each person that signs up.
Detractors immediately pointed out a major security problem with the informality of the scan process. There is already a thriving black market in biometric identity credentials. One concern is that unscrupulous people will prey on vulnerable individuals, extorting or offering payment for their identity records.
Verify Human Identity in a World Full of Bots
In the future, World ID can counter fake AI-driven bots and counterfeit virtual identities online. Groups using AI to generate fake news and social profiles and circumvent CAPTCHA tests are already a growing problem. In theory, platforms could use WorldID’s “verified human” property to filter out fake content.
Financial System Reform
Worldcoin positions its WLD coin as a truly global currency, hoping to build out an economic alternative not controlled by any one government or entity but by the people belonging to the Worldcoin ecosystem.
Universal Basic Income (UBI)
Worldcoin’s founders also foresee a future where governments must integrate Universal Basic Income (UBI) payments to their citizens. While UBI is still controversial, AI could create job displacement on a scale we haven’t seen before. AI has the potential to scale efficiencies and cost savings in business.
Some believe governments should work with companies to pass on those savings to the public, particularly if unemployment spikes due to AI. According to the International Labor Organization, governments employed about 450 million people worldwide in 1999. Many of those jobs are particularly vulnerable to AI innovations.
Despite rapid growth and an innovative approach, Worldcoin is not immune to criticism. Here are several examples of where Worldcoin is not yet Wondercoin.
- In April 2022, the MIT Technology Review raised concerns in a no-holds-barred post about Worldcoin’s practices to scale sign-ups in low-income countries. The authors suggested that Worldcoin may have exploited impoverished individuals to expand its network. Other experts say the project attempts to dupe late adopters into another internet Ponzi scheme.
- Biometric Identity verification has been helpful in some instances for social welfare resource distribution. India reportedly saved $5 billion in 2021 using biometrics to verify the identities of social welfare recipients. However, there are growing pains as the government recently reported problems with its UDAIA program, from how they secure the data to grappling with persistent card fraud.
- In May 2023, TechCrunch reported a security breach where hackers obtained login credentials for several Worldcoin operators’ devices, including credentials for the Worldcoin operator app.
- Perhaps most surprising is the crypto community’s skepticism about the biometric “proof-of-personhood” and Worldcoin’s apparent lack of scenario planning for potential fraud. Typically, when big crypto projects led by high-profile figures launch, there is a lot of crypto-bro support. Not so this time. Even crypto YouTube posted largely unfavorable video reviews. You can read a good industry insider overview of crypto-twitter’s response in this post from Bankless.
Funding Progress to Date
Despite the controversy, trend watchers agree that the SSI product space is one to watch. Worldcoin has been able to scale its fundraising due to its famous founders and high-profile initial investors. In October 2021, the project raised an initial capital of $25 million and added another $100 million within six months, propelling the token’s value to $3 billion.
In May 2023, Worldcoin secured an additional $115 million in funding for further development in bot detection, R&D, and the Worldcoin project expansion.
The Wordcoin website states, “The future is bright and it belongs to the people of the world.” We are entering a period of intense competition among private global ID companies. The question is, does the future look as bright if it includes massively wealthy private companies storing human identities?
What do you think? Are you ready to sign up for an Orb scan, collect your WLD, and become a citizen of the Worldcoin world?
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This information is for general info purposes only and should not be interpreted as professional advice. Please seek independent legal, financial, tax, or other advice specific to your particular situation.