Co-founded by OpenAI CEO Sam Altman, Worldcoin aims to build a decentralized proof-of-personhood solution.
Proof-of-personhood is based on the idea that because AI is going to create an abundance of creations but also high volumes of spam, the need to prove that someone is a unique real person becomes increasingly critical.
Worldcoin’s native cryptocurrency, Worldcoin (WLD), was officially launched on July 24, 2023.
Users visit a special hardware called the Orb to have their iris scanned to be verified as a unique real human by Worldcoin. Users are then eligible to receive the WLD token.
While Worldcoin’s vision excites many people, others are more concerned about the potential risks of its operations.
Who Founded Worldcoin?
The original idea of Worldcoin came from co-founders Sam Altman and Alex Blania. Sam Altman is the most high-profile co-founder and is also the current CEO of OpenAI, the artificial intelligence research lab that launched ChatGPT at the end of 2022. Altman was previously the president of Y Combinator and was briefly the CEO of Reddit. Blania was formerly an AI researcher.
Worldcoin has raised venture funding worth over $100 million from investors including Andreessen Horowitz and Khosla Ventures in multiple financings starting from 2021. Worldcoin’s native cryptocurrency, Worldcoin (WLD), was officially launched on July 24, 2023.
What Is Worldcoin?
As a cryptocurrency that was created based on the co-founders’ AI experiences, Worldcoin’s objective has a strong focus on AI. Self-described as a digital identity protocol aiming to support humanity in the age of AI, Worldcoin aims to build a decentralized proof-of-personhood solution.
Proof-of-personhood is based on the idea that because AI is going to create an abundance of creations but also high volumes of spam, the need to prove that someone is a unique real person — instead of a bot or another real person — becomes increasingly critical.
Worldcoin plans to distribute a special piece of hardware called the Orb around the world for anyone to scan their iris and get an ID via an app. Worldcoin says it uses privacy-preserving technology and plans to decentralize the governance of the protocol over time.
Why Is Worldcoin Important?
Worldcoin and many earlier proof-of-personhood protocols try to solve a few pressing issues in the real world. They include the following:
Centralized proof-of-personhood systems
Many identification systems are reliant on centralized governments and are controlled by centralized entities. These centralized entities face a myriad of challenges including data privacy and sometimes limited accessibility.
Spamming and AI-generated content
As AI becomes more capable of creating digital content that’s increasingly indistinguishable from human creations, it’s necessary to have a way to tell if certain content is created by a real human or AI. Having a proof-of-personhood solution can make it easier to resolve bot-generated spam, a problem that troubles many platforms and users.
How Does Worldcoin Work?
There are several key components of Worldcoin; a World ID, WLD tokens, the World App. A World ID is an ID that’s issued to one real person and used as proof of his or her personhood. A Worldcoin token is issued to the network’s participants. Both are accessed through the World App that users can download on their phones.
The way Worldcoin works is that users generate a private and public key with their World App. Users go to an Orb located nearby to have their iris scanned by the device to be verified as a real and unique human. This means that the iris scan must be of a real human and cannot be the same as another verified human.
Once verified, users will have an Orb-verified World ID. Around two million Orb-verified World IDs have been created as of July 2023 and the project aims to increase the number of Orbs to 1,500 over the next few months in more than 35 cities around the world. Worldcoin Users in some countries can already receive Worldcoin tokens, or WLD.
What Does Worldcoin (WLD)’s Tokenomics Look Like?
Worldcoin (WLD) is an ERC-20 token on the Ethereum Mainnet and eligible users are to receive their tokens on the Optimism Mainnet.
The initial token supply of WLD will be capped at 10 billion tokens for 15 years. After that point, the governance of the network can decide to implement an inflation rate of up to 1.5% and set up allocation mechanisms for the newly-minted tokens.
The initial token allocation of the 10 billion tokens looks like this:
75% of the tokens will be allocated to users, the ecosystem fund, and network operations, with a majority of these tokens allocated to users.
Nearly 10% will be allocated to the founding team, 13.5% will be allocated to investors, and 1.7% will be used for reserves.
Before the launch of WLD, all 7.5 billion tokens allocated to users will be minted but the vast majority of those tokens will gradually unlock over 15 years. According to the token unlock schedule, the maximum circulating supply of WLD tokens at launch is 143 million, of which 43 million are allocated to verified users and 100 million are loaned to non-US market makers.
Worldcoin states that its tokenomics is designed to give the vast majority of the tokens to new and existing users over many years to come to create a proof-of-personhood network with as many people as possible. As more new users join the network, the circulating supply of WLD will continuously expand.
Who Is in Charge of Worldcoin?
Worldcoin’s goal of building a decentralized proof-of-personhood solution means that its governance should ultimately be decentralized. The initial development of the protocol, however, was developed by a team of developers at a Delaware corporation headquartered in San Francisco, California called Tools for Humanity (TFH). With a German subsidiary, TFH conducted multi-year beta testing of the protocol and developed the Orb and the World App.
A non-profit organization called the Worldcoin Foundation was set up in 2022 to scale the network as a public utility and build it toward decentralized governance. The Worldcoin Foundation is currently governed by a board with three directors alongside additional advisors and uses a 4-of-6 multi-signature wallet to take any action related to Worldcoin’s smart contracts. Ultimately, the Worldcoin protocol aims to be governed by its community with the foundation playing a limited role.
What Are the Limitations and Risks of Worldcoin and WLD Token?
Worldcoin has ambitious goals but it also has limitations and risks that you should be aware of if you intend to participate in its protocols or invest in its tokens. Some of the major challenges are as follows:
The security of the Orb is potentially a major risk, as no hardware systems can be 100% secure. The Orb is subject to a wide range of vulnerabilities, including fraud, accuracy, and potential data leaks or theft. Interacting with sensitive biometrics data, the Orb could produce devastating consequences in any potential security incidents.
Token price volatility
The WLD token prices could experience significant volatility, similar to other cryptocurrencies. Investors should exercise caution and conduct thorough research before investing in the token.
Risks of manipulation
Potential fraudsters could manipulate and use other people’s World IDs. Despite Worldcoin’s efforts to prevent anyone from accessing more than their own World ID, there are still ways for people to find loopholes to acquire multiple World IDs.
Personal data privacy concerns
Some users are concerned about the safety of their sensitive biometric data. Even though Worldcoin doesn’t store full iris scan data and only stores the hashes of the scan, there are still many risks relating to scanning one’s eyeballs and sharing that personal data. Worldcoin may also implement facial recognition, which adds to this risk of data privacy.
Centralization and open source
While large parts of the Worldcoin protocol are open source, some other parts such as the firmware of the Orb are not yet open source. Many operations of Worldcoin are centralized right now, including the data centers that store the hashes of iris scans and the Orb’s production and distribution. Even though decentralization is the long-term objective of Worldcoin, it’s subject to how well it can be implemented in the future.
Aiming to build a global protocol, Worldcoin is likely to encounter regulatory uncertainty and compliance issues as it navigates complicated and diverse local jurisdictions around the world. Local regulations could also change which could impact its operations significantly.
Worldcoin is an ambitious project that’s trying to achieve aggressive goals. It sees its World ID as a tool that could ensure some form of universal basic income (UBI) can be equitably distributed to everyone around the world in the age of abundance driven by AI. While such visions excite many people, others are more concerned about the potential risks and challenges of its operations, particularly the iris scan and the collection and storage of biometric data.
As always, be cautious and do your own research when you invest in any crypto project and its tokens. The WLD token’s value will largely depend on how users react to the Worldcoin idea and if any practical applications and vibrate ecosystems can be built around it.