Worldcoin: A New Era of Biometric Cryptocurrency and Its Impact
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The Worldcoin startup aspires to transform the landscape of digital transactions by integrating biometric identification with a cryptocurrency framework. Known as "World ID," the initiative envisions a future where digital identity and financial transactions are seamlessly intertwined.
Traditional identity verification typically hinges on government-issued IDs. Worldcoin intends to disrupt this norm by proposing that its iris scanning technology offers a secure identity verification process, enabling users to establish their identity confidently. The company promotes its solution as a stride toward a more equitable financial landscape and even the establishment of a universal basic income. Marketed as “Worldcoin: Owned by Everyone,” this ambitious goal has sparked discussions about the ethical ramifications and privacy issues associated with the collection of biometric data.
What Exactly is Worldcoin?
This pioneering cryptocurrency initiative functions as an identity and payment system that generates a digital identity for users through iris scanning, which is stored in the World App.
Essentially, the Worldcoin protocol acts as a network that allocates digital IDs to users by gathering personal information (iris scans) and saving it in a specific app. This digital credential allows users to identify themselves uniquely in cyberspace.
The Leadership Behind Worldcoin
Leading the charge for Worldcoin is Sam Altman, the founder of OpenAI, known for the ChatGPT chatbot. Teaming up with economist Alex Blania under the umbrella of "Tools For Humanity," Altman aims to tackle issues related to online identity. The project has managed to secure about $130 million in funding from various venture capital sources.
> Worldcoin is an open-source protocol, backed by a worldwide network of developers, economists, and technologists dedicated to enhancing participation in the global economy. The Worldcoin Foundation oversees the initiative, aiming to nurture and sustain the community until it achieves self-sufficiency. Tools for Humanity were instrumental in launching Worldcoin and continue to serve as advisors to the Foundation and operators of the World App. — worldcoin.org
How It Functions
To realize its objectives, the Worldcoin team utilizes three distinct layers, each fulfilling unique roles.
World ID
This layer allows users to confirm their humanity online while ensuring privacy. Just as fingerprints are unique, each individual's iris pattern is distinct. The “Proof of Humanity” is produced using an iris scanner called Orb.
The Orb scans a user’s iris to generate a unique identification code (iris code).
Once the Orb scans and archives the iris, creating an anonymous iris code, the system produces a World ID and permanently discards the iris image.
World App
The World App serves as the digital wallet for World ID, granting access to an expanding array of decentralized financial services. This app also acts as a cryptocurrency wallet, allowing users to send and receive Bitcoin, Ethereum, and USD Coin.
Worldcoin
After users establish a World ID and download the World App, they can access the WLD cryptocurrency.
Participants in the beta program were able to earn WLD coins ahead of time, with a total of 43 million tokens set aside for early testers. The WLD coin is classified as an ERC-20 token on the Ethereum blockchain. All Orb-verified World ID holders are eligible for regular distributions of free WLD tokens allocated via the Optimism mainnet.
The WLD token is crafted as a utility token with governance features, allowing users to influence the protocol's future.
The Worldcoin whitepaper outlines a total issuance of 10 billion WLD coins over 15 years. At launch, approximately 143 million WLD were already circulating, with 43 million designated for verified World App users and 100 million for market makers to ensure smooth trading of WLD.
Purpose
> Worldcoin aims to become the world's largest privacy-preserving human identity and financial network, granting ownership to all. The initiative seeks to provide universal access to the global economy, regardless of a person's background or location, creating a platform for everyone to benefit in the AI era — worldcoin.org
#### Digital Identity The founders of Worldcoin foresee a future where validating one's humanity via digital identity becomes crucial as algorithms evolve to bypass CAPTCHAs, blurring the lines between human and machine. By scanning users’ irises and generating unique identification codes saved on a decentralized blockchain, Worldcoin strives to offer a secure and permanent digital identity verification.
#### AI Basic Income Individuals who undergo iris scanning are rewarded with additional Worldcoin tokens, the project’s cryptocurrency. The tokens are intended to underpin a proposed AI basic income, based on the premise that AI will increasingly take over tasks previously performed by humans.
#### Criticism Worldcoin has come under fire in recent months.
Privacy Concerns
Concerns regarding privacy have emerged due to Worldcoin’s plan to distribute its cryptocurrency via biometric identification. Critics argue that this method could jeopardize user privacy and security. Biometric information, such as iris scans, is highly sensitive and susceptible to misuse if not adequately protected. There are worries about data storage, access, and safeguarding against abuse, particularly in vulnerable communities.
> “This looks like it produces a global (hash) database of people’s iris scans (for ‘fairness’), and waves away the implications by saying ‘we deleted the scans!’ Yeah, but you save the hashes produced by the scans. Hashes that match future scans,” — Edward Snowden tweeted.
Hardware Security
Skepticism also surrounds Worldcoin’s dependence on hardware devices for its distribution model, raising worries about potential security weaknesses if these devices are compromised. If the hardware is breached or tampered with, it could lead to unauthorized access to users’ biometric data or cryptocurrency holdings. Additionally, maintaining the security and integrity of the distributed hardware across various geographic and socioeconomic contexts presents logistical hurdles.
Jeremy Clark, an associate professor focused on applied cryptography, questions the security of the orb:
> “The machine itself will have some security protections,” he notes, “but none of that technology is perfectly secure. So it’s usually an economic question…if this project is as successful as they want it to be, then it’s going to become more profitable to try and tackle.”
Fairness & Consent
Worldcoin has also faced criticism for heavily marketing its platform in developing nations, raising issues about consent, fairness, and potential exploitation. Low-income countries might lack adequate regulatory structures to protect the rights and interests of participants in these trials. Critics argue that without sufficient protections and transparency, deploying Worldcoin’s system in poorer nations could exacerbate inequalities and perpetuate systemic injustices rather than alleviate poverty or foster financial inclusion.
Additionally, some have pointed out that 20% of the coins have already been allocated: 10% to Worldcoin employees and another 10% to investors, including Andreessen Horowitz.
Worldcoin frequently describes its biometric scan as confirming its “unique humanity,” prompting discussions about whether the tech elite should control the definition of humanity.
Vitalik Buterin on Worldcoin
Ethereum founder Vitalik Buterin recently penned an article critiquing the initiative and biometric proof of personhood in general. He contended that the iris scans could gather more data than Worldcoin admits, or that someone might scan another person’s iris to ascertain if they possess a World ID, warning that Worldcoin's structure presents risks to user data protection, yet he sees it as one of the most promising projects currently available. He argues that a solution will be necessary moving forward.
> “AI is going to create a lot of abundance and wealth for humanity, but it also may kill very many people’s jobs and make it almost impossible to tell who even is a human and not a bot, and so we need to plug that hole by (i) creating a really good proof-of-personhood system so that humans can prove that they actually are humans, and (ii) giving everyone a UBI. Worldcoin is unique in that it relies on highly sophisticated biometrics. […] Worldcoin has been criticized for privacy and security concerns around the Orb, design issues in its “coin”, and for ethical issues around some choices that the company has made. […] Risks include unavoidable privacy leaks, further erosion of people’s ability to navigate the internet anonymously, coercion by authoritarian governments, and the potential impossibility of being secure at the same time as being decentralized. […] The concept of proof-of-personhood in principle seems very valuable, and while the various implementations have their risks, not having any proof-of-personhood at all has its risks too: a world with no proof-of-personhood seems more likely to be a world dominated by centralized identity solutions, money, small closed communities, or some combination of all three.” — Vitalik Buterin, in “What do I think about biometric proof of personhood?”
Responding to Criticism
The company has addressed the backlash, reiterating its dedication to privacy and data security. Plans are in place to enhance its system, encrypting data stored on users’ devices for better privacy and regulatory compliance. This new approach means that all information (images, metadata, and derived data) created in an “orb” for verifying the “World ID” will reside on the user’s device, as explained by TFH. Lawyer Tim Wybitul from Latham & Watkins, which advises Worldcoin, stated that the company is not merely adhering to legal data protection standards but also implementing forward-thinking strategies that exceed legal requirements. Furthermore, Worldcoin’s approach focuses on recognizing users solely as individuals without collecting extensive personal data.
Though the business model of crypto startup Worldcoin may seem unclear to outsiders, the underlying technology is becoming increasingly transparent. The software powering Worldcoin’s iris scanner is now accessible on GitHub. Similar to the Rust programming language used by Worldcoin, the code is licensed under both MIT and Apache licenses, permitting its use under either.
Current State and Future Prospects
Worldcoin's project is still in early stages, with opinions on the cryptocurrency diverging significantly. While some users find the concept appealing and promising, apprehensions about user privacy continue.
Despite initial skepticism from policymakers and regulatory bodies, the premise of Worldcoin remains captivating, as the need for unique identification online grows increasingly relevant.
Since late July 2023, Worldcoin Orbs have been deployed in cities globally, offering iris scanning services. In Germany, users can have their irises scanned in Berlin at the Alex shopping center.
Ultimately, Worldcoin's ambitious goal of combining biometric identification with cryptocurrency has sparked discussions, illuminating the intricate relationships between technology, privacy, and ethics in today's digital landscape.
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With warm regards, Maximilian
This article represents the author's personal opinion and should not be construed as Financial or Legal Advice. All data and figures were sourced as of March 24, 2024. Changes may occur.
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