With nearly 2 million people already registered, Worldcoin and its eyeball-scanning Orb are now set to launch in over 35 cities in 25 countries worldwide.
Worldcoin’s “World ID” claims to have solved the AI and online “proof-of-personhood” problems, but some critics aren’t convinced.
So in this article, we will be getting into what Worldcoin is, learning about the WDC token, how it works, its stated use case, and discussing some of the industry backlash that’s been following this project. So hopefully, you can make up your own mind about this fascinating yet controversial project.
Let’s jump right in!
Table of Contents
The History of Worldcoin
Worldcoin was launched in 2019 and stems from the San Francisco/Berlin-based company Tools For Humanity (TFH).
TFH is a blockchain and digital identification company created by CEO and co-founder Sam Altman, of ChatGPT/Open AI fame.
You also have co-founder Alex Blenia, who leads strategy and development, and Max Novendstern, a former National Geographic photographer and current lead marketing executive at Worldcoin.
Worldcoin, which according to Crunchbase has already raised around $125 million in funding, is evaluated to be worth $3 billion, with venture capital backing from investors like Andreessen Horowitz and Khosla Ventures.
No doubt, Worldcoin caught the attention of these investors and much of the crypto space due to the scope of the project, and while many are hyped about the possibilities, others aren’t so sure if they can deliver.
What Does Worldcoin Do?
Worldcoin claims to do a lot, so to keep things nice and simple, let’s start with what Worldcoin’s stated goals are.
Worldcoin aims to increase participation in the global digital economy while simultaneously managing the effects that bots and AI will have on the digital landscape.
It hopes to achieve this by creating user-specific “World IDs” tied to biometric data that can authenticate your actions online. Which will, in theory, help separate people from AI.
Underlying all this is the Worldcoin token, WDC, which is found on the Ethereum Network.
As you can imagine, a lot of technology underpins this kind of use case, so let’s break some of that tech down into sections.
Eyeball Scanning: The Orb
The Orb is probably Worldcoin’s most recognizable piece of technology so far.
This small chromatic orb is a dense biometric scanner that registers your face, iris, body, and doppler detections of your breathing, heartbeat, and vital signs via a two-camera optical system.
This data is then compiled and analyzed via AI detection software, which creates a unique hash value for your biometrics. This hash value is then compared to the registry, and, if unique, entered into the database.
Then this unique hash value is tied to your World ID.
World ID (Digital Identity)
After you are done staring into The Orb and everything is finalized, a World ID is created.
This World ID is hoped to act as your digital identity, or “proof-of-personhood” separating you from the bots. The idea is that the World ID will create the largest network of real, verifiable humans online.
According to Worldcoin’s official page, the purpose of the World ID is to create a decentralized, privacy-focused digital ID. This ID can then be tied to all kinds of online applications like social media, dApps, DAOs, and DeFi systems as proof of personhood.
This World ID is also tied to a World App, which grants you access to the Worldcoin ecosystem (found on the Ethereum network) and its native WDC token.
Worldcoin also states that it supports “multiple different types of personhood verifications” via things other than biometrics, like your phone number, for instance. Though it’s unclear how this will work, or when this feature will be released.
Worldcoin’s Tokenomics (WDC)
It’s easy to forget that behind all these Orbs and World ID technology, there is a cryptocurrency called WDC that has some elements to its tokenomics that are worth paying attention to.
First, let’s look at the token distribution.
The lion’s share of the coin, 75%, is reserved for the Worldcoin community. This element has already sparked concerns, as the initial promise was 80%, before being rescinded.
After that, you have 13.5% for TFH and other investors, 9.5% for the development team, and 2% in reserve.
But what is very important is the total value theoretically held by its supply.
The total supply of Worldcoin is 10 billion tokens, with only 1% currently in circulation.
This means that the total theoretical value of the Worldcoin supply is estimated to be over $22 billion, with a current market cap of around $2 million.
The goal for Worldcoin is to release more funds into supply as adoption increases. As more users get scanned, more WDC gets released, with the full circulation supply not being achieved for 15 years.
X user @Token_Unlocks shared this graph explaining the WDC token drop schedule.
Critics Look to Worldcoins Tokenomics
Worldcoin’s tokenomics have drawn a lot of criticism.
WDC’s value is distinctly tied to adoption, meaning that people need to keep buying in/scanning their biometrics to keep the price afloat.
Critics have pointed out that tokens that have these kinds of supply drop schedules are often easy pickings for mass selloffs.
“Most tokens that have a small amount of distribution or a large fully diluted valuation have shown themselves to be easy targets for quick sell-offs.” – Tom Dunleavy in an interview with Decrypt.
Mass sell-offs are, of course, a downward pressure, which over the last week or so WDC has already been experiencing, with WDC dumping 70% of its value after its initial launch.
Worldcoins Use Case
So if WDC wants to succeed, then the Worldcoin tech needs mass adoption, and that means it has to have a rock-solid use case. So let’s talk about that for a moment.
Anti-Sybil Attack Software
One of the clearest use cases for a World ID is that it would reduce both “Sybil Attacks” and subsequent 51% attacks.
A Sybill Attack is where a malicious actor manages to create numerous identities within a system in an attempt to gain a majority. In blockchain, specifically, this usually involves the creation of multiple different nodes controlled by the attacker.
This means that the attacker can manipulate votes in their favor, reverse transactions and refuse or abuse consensus.
These attacks can be very costly, but with a World ID, they could theoretically be a thing of the past.
A blockchain (or any digital system) could require a World ID to participate, meaning that each member would be linked via biometrics to the actions of the system. Creating multiple fake identities to abuse this system would theoretically be extremely difficult.
AI Funded UBI
One of the larger claims of Worldcoin is that its technology could lay the groundwork for “AI-funded” UBI, or Universal Basic Income, presumably in the form of WDC.
The idea of a global universal basic income is extremely ambitious and would be maddeningly complex to roll out, and as of yet, Worldcoin has yet to share exactly how this would work. For now, Worldcoin has offered vague statements about sharing the wealth created by AI in an egalitarian fashion.
Right now, it isn’t clear what that means, with the best guess being that mass adoption of the ID-tied cryptocurrency WDC would lay the groundwork for future global UBI in some way.
Other Use Cases
But beyond Orbs and AI UBI, mass adoption of Worldcoin would theoretically have lots of other use cases.
For instance, bots would be seriously mitigated, meaning that things like social media moderation would be much cleaner and reviews of goods and services would be much more trustworthy.
This could also mean that DAO protocols, uncollateralized lending or even welfare distribution could end up using World IDs, which would mean both more and less KYC simultaneously
Industrial Ick, Criticism of Worldcoin
People from both inside and outside the crypto world have been quick to criticize Worldcoin, with backlash coming from sources like the BBC, the MIT Technology Review, and the founder of Ethereum, Vitalik Buterin.
In an essay, Vitalik Buterin noted that Worldcoin had some “dystopian vibez,” referencing the almost Orwellian undertones of the technology that many have been pointing out.
Worldcoin seems well aware of this kind of criticism, with Sam Altman stating that the eye technology has “a clear ick factor,” but that he believes people will likely warm up to the technology over time.
There are, however, more serious criticisms.
Eileen Guo and Adi Renaldi of the MIT Technology Review published an article about how Worldcoin took advantage of the lax government oversight of developing nations to conduct their research.
The article stated that in nations like Indonesia, Kenya, India, and others, Worldcoin has been testing its technology by paying participants, government officials, or third parties to conduct their research. Some of these “Orb Operators” are alleged to have conducted their research without meaningful informed consent and with a lack of accessible or translated Whitepapers.
It’s very difficult to say what is or isn’t possible in the world of crypto and crypto technology. New ideas, concepts, and paradigms are emerging all the time, and it’s beyond doubt that Sam Altman in particular has been part of projects that have radically changed how people interact with technology.
It is, however, very important that we all do our best to make sure that customers are well-informed about the actions of any company, especially when it makes huge promises and is doing so in the wake of heavy criticism.
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