The project uses a device called an “orb” — which looks like a Magic 8 Ball but bigger and silver-colored — to scan a person’s iris, which has a unique pattern in every human much as a fingerprint does. That creates a World ID, which grants its holders “proof of personhood” — a way to verify their identities on various online services without disclosing their name or other personal data. Worldcoin is also the name of the cryptocurrency that’s used to reward people who scan their eyeballs or who support the project. The Worldcoin Foundation is listed as the steward of the technology, but the organizers say that it has no owners or shareholders and that holders of Worldcoin tokens will have a say in the direction of the project. Worldcoin is also affiliated with a tech company called Tools for Humanity Corp. that says it was “established to accelerate the transition towards a more just economic system.”
2. Why is there so much excitement about Worldcoin?
Worldcoin is promising to link two of the hottest contemporary financial trends: artificial intelligence and crypto. As AI becomes more popular, the argument goes, World ID will become more needed, to help distinguish between humans and AI-powered smart software. Another big reason for the build-up is the involvement of Altman, who’s the public face of ChatGPT. The AI chatbot was introduced in November 2022 and ignited the public’s imagination about what artificial intelligence can do.
3. What’s the controversy with Worldcoin?
There are several. One is that it’s creating tokens to compensate participants outside the US and the other excluded countries who scan their iris. Also, several of the project’s early backers were swept up in last year’s crypto collapse, including FTX founder Sam Bankman-Fried, who’s under house arrest and facing fraud charges. An MIT Technology Review investigation found evidence of what it called deceptive and exploitative practices used by Worldcoin to attract participants in countries such as Indonesia, Ghana and Chile. The project is being scrutinized in Europe for its collection of biometric data, which may run afoul of some countries’ privacy laws. There have also been issues with the theft of login credentials from some Worldcoin operators who were signing up new users, and with black-market sales of World IDs. Worldcoin said it upgraded its security in response.
The project had registered and created digital identities for more than 2.1 million people by the end of July, though the vast majority of those were issued before the official July 24 launch. The related cryptocurrency has fluctuated. The price of a Worldcoin token roughly doubled on that day to as high as $3.58 before dropping to as low as $1.92 a week later. But Worldcoin still had a total market capitalization of $267 million on July 31, according to CoinMarketCap.
Altman, 38, is a seasoned entrepreneur. In addition to leading OpenAI, he was the longtime president of Y Combinator, the startup accelerator, and has investments in Airbnb, Stripe, Dropbox and Instacart. He also co-founded Loopt, a smartphone-location service.
6. Why are Worldcoin tokens not available in the US?
Altman has said the project wouldn’t offer tokens in the US and in some other countries where the regulatory rules regarding crypto were either uncertain or unclear. Indeed, Worldcoin is among many crypto projects that have chosen to stay out of the US market in recent years as US regulators and lawmakers continue to grapple with which coins are classified securities and which ones aren’t. Gary Gensler, the chairman of the US Securities and Exchange Commission, had long said that most coins were securities. But in a closely followed legal case, a judge ruled in July that Ripple Labs Inc.’s XRP token is a security only when it’s sold to institutional investors but not when it’s sold to retail investors via exchanges. That left the matter unsettled. More litigation and regulation are sure to follow, leaving crypto issuers with uncertainty.
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