What Is Worldcoin ($WLD)?
The protocol consists of:
- An Ethereum-based cryptocurrency called worldwide token ($WLD)
- A digital credential called World ID
- A digital wallet called World App
The Worldcoin project aims to establish a distributed, blockchain-based identity network that allows users to prove they are actual humans without disclosing their real-world identities.
The Worldcoin project is spearheaded by OpenAI chief Sam Altman and Alex Blania, the CEO and Co-Founder of Tools for Humanity. The founders hope to boost global economic opportunities by enabling every human to participate in the digital economy through a universally accessible, decentralized identity infrastructure.
An important project goal is to prevent generative AI from being used to launch Sybil attacks in FinTech distributed networks. A Sybil attack is a cyber exploit in which a malicious actor creates multiple fake identities in order to:
- Manipulate a distributed network’s behavior
- Deceive other network nodes
- Subvert the network’s trust mechanisms
- Potentially compromise the network’s integrity and security
Defending against Sybil attacks can be challenging, especially in open and permissionless networks where participants’ identities are not strictly verified.
How Worldcoin Works
The project uses a special type of high-resolution iris-scanning technology to validate that people signing up for Worldcoin accounts are unique human beings and not bots or repeat registrants.
The first thing an interested party must do is download and install an iOS or Android World App digital wallet. The second thing they have to do is locate the nearest authorized image scanning location by using the app or by visiting the Worldcoin website.
Then they have to physically visit the authorized location where an open-source hardware device called an Orb will perform an iris scan.
An Orb is a silver image-scanning sphere that is about the size of a soccer ball. It is equipped with a high-resolution camera and a custom algorithm that can capture and analyze the unique patterns in a person’s iris.
Iris scans can be performed in a variety of lighting conditions, and the accuracy of the scan is not affected by aging or other changes in a person’s appearance. This quality makes this type of biometric technology a more reliable option for identity verification than other biometric technologies, such as facial recognition.
Worldcoin scanners generate a cryptographic hash that anonymizes the data they collect. The hash is sent to the Worldcoin network, which uses zero-knowledge proof to determine whether or not a specific iris hash is unique.
If the hash is unique, the network assigns the person a World ID proof-of-personhood (PoP) credential, which is stored on a decentralized blockchain. The World ID can then be used to access financial services, make payments, and participate in other online activities.
Why Worldcoin is Important
The concept of a blockchain-supported distributed identity management system is important because it’s estimated that more than 4 billion people worldwide currently lack a legal, digitally-verifiable identity.
As generative adversarial networks improve and AI-as-a-Service goes mainstream, it’s easier than ever for bad actors to create bots that can impersonate people on the Internet, and it’s becoming more difficult than ever to distinguish specific faces and individual people’s voices from AI programming.
The project is currently in the process of rolling out Orb operations to 35 cities in 20 countries. As an incentive for participating in the project, Worldcoin is rewarding users in certain countries with $WLD airdrops that are marketed as a way for early project investors to gain real-world value in fiat-driven markets.
Project Launch and Controversy
At the time of the launch, 143 million $WLD were issued. 100 million were allocated to market makers, and the rest of the tokens were rolled out to early investors who verified their identities by scanning their irises during Worldcoin’s pre-launch phase. Project leaders have outlined plans to hold on to about 20% of the project’s tokens and use their value to fund future Orb scanner production, protocol ecosystem development, and project maintenance.
Critics have questioned why the project has been promoted as a way to provide users with a universal basic income (UBI). Alex Blania, Worldcoin’s co-founder, said the company was limited in what it could say about its commercial ambitions because of regulatory compliance scrutiny in the United States, but according to Tiago Sada, head of product at the company, Worldcoin is intended to be a profitable project.
Worldcoin claims it already has over 2 million users from its beta phase, but an investigation by MIT Technology Review raised concerns over the project’s method of collecting biometric data from developing countries and found the company failed to be transparent about how and where it stored personally identifiable information (PII).
The proprietary nature of the project’s algorithms means that Worldcoin has control over the data it collects. This has raised privacy concerns because, in theory, Worldcoin could use the data it collects for other purposes.
In response, The Worldcoin Foundation has stated it is fully compliant with all laws and regulations governing biometric data, including the EU General Data Protection Regulation (GDPR). Worldcoin is not currently issuing tokens in the United States, however, which suggests that the cryptocurrency company may be concerned about its compliance with U.S. laws and regulations.