Worldcoin has finally launched its token, although questions remain about the motivations and commitment to transparency of the controversial eyeball-scanning project.
On Monday, the Worldcoin Foundation announced that the Worldcoin project “is now live and in a production-grade state.” Worldcoin, co-founded by OpenAI founder Sam Altman, is an effort to introduce online biometric identity verification by scanning the irises of, well, everyone on the planet, though progress on that front has been slow.
However, there are plans to expand the distribution of the ‘Orb’ – the spherical object into which one deeply gazes to have its irises added to the ‘World ID’ database – to ’35+ cities in more than 20 countries around the world’. The plan is to circulate 1,500 Orbs in these cities/countries by the fall.
To date, some two million people have signed up for World ID, at a rate of 40,000 per week. The new Orbs, which will be available in select cities in Asia, Africa, the Americas, Europe and the Middle East, are expected to increase weekly signups by a factor of five.
Worldcoin was intended to be “an identity and financial network,” so Monday’s news included the release of World App, a World ID-based payment wallet that uses “digital assets and fiat-backed stablecoins.” It’s unclear which stablecoins might be on board, but Worldcoin previously paid its Orb operators’ commissions in Tether (USDT).
At the same time, the project announced that its subsidiary World Assets Ltd had “minted and released” the project’s WLD token on the Ethereum blockchain, though users will receive their token “grants” on OP Mainnet, aka Ethereum’s “Optimism Layer 2 Scaling Solution.”
Exchanges such as Binance, Huobi, Bybit, OKX, and Gate have already listed WLD. As the largest gambling venues of the ‘crypto casino’ sector, it should come as no surprise to anyone that Binance and Huobi were first in line. Predictably, the token’s value shot up by nearly half in just a few hours before much of those gains were lost just as quickly. By the end of Monday, WLD was sitting around $2.20.
WorldCoin’s announcement was loaded with out-of-the-box warnings regarding WorldCoin’s utter disinterest in people buying their tokens, along with the very clear possibility that the token’s fiat value could fall faster than venture capital group Andreessen Horowitz (a16z) – which has led or participated in all of Worldcoin’s funding rounds – can dump tokens with retail clients.
While Orbs will scan irises in Los Angeles, Miami and New York, the WLD token will not be made available to US residents, at least not initially. In most markets outside the US, individuals who file their irises receive compensation in WLD, but the token’s clear resemblance to an unregistered security makes such centralized marketing a clear non-starter overseen by Securities and Exchange Commission (SEC) Chairman Gary Gensler.
Don’t be surprised if you can’t read the Worldcoin white paper, as haphazard geofencing requires some extensive VPN experimentation to gain access. But the document states that WLD’s initial distribution is 143 million, of which 43 million has already been allocated to “beta” users who stared into an Orb during the pre-launch period in May 2021. The other 100 million tokens have been ‘loaned’ to select market makers for a period of three months.
There will be a maximum of 10 billion WLD during the first 15 years of its existence, with a possible annual ‘inflation’ of 1.5% after that period. Worldcoin makes the not-at-all-grandiose claim that “the majority of people alive today will receive WLD tokens,” while those poor sods yet to be born can apparently pound sand.
However, a quarter of all WLD will be reserved for insiders – compared to the one-fifth mentioned in a 2021 blog post – with the increased allocation attributed to the cost of launching the network. The Insiders will reportedly face a one-year lock-up, although we are sure adjustments can be made in other areas as the Insider allocation may change due to unspecified circumstances.
While Worldcoin liberally uses the cliché “banking the unbanked,” the company’s head of product, Tiago Sada, makes no secret of the fact that “all of our products are for profit. There will eventually be a ton of different wallets and experiences that will make money.
Indeed, the Orb distribution system is unflattering compared to multi-level marketing programs in that Orb operators are paid per scan. There are also concerns that those two million irises scanned so far have largely come from poor countries in the Global South and that the company “used deceptive marketing practices, collected more personal data than it acknowledged, and failed to obtain meaningful informed consent.”
The eyes have it
Since Worldcoin’s inception, concerns have been raised about its ability to protect the incredibly personal data it collects from its ‘customers’. While Worldcoin insists it removes the eyeball scans and only keeps hashes of the scans, critics including Edward Snowden have pointed out that this does not prevent sensitive data from being compromised.
The historical record of “crypto” companies protecting their customers’ privacy isn’t great. Earlier this year, TechCrunch reported that the credentials of several Orb operators were being sold on the dark web, apparently due to these operators’ shoddy security habits. Worldcoin responded by belatedly imposing two-factor authorization for its operator app and resetting all logins out of “abundance of caution”.
This doesn’t inspire much confidence, especially when customers are asked to submit their biometrics, an element of their personal identity that cannot be reset like a random alphanumeric password.
Related concerns were raised on Monday in a blog post by Ethereum founder Vitalik Buterin, who listed the many potential pitfalls of any system based on biometric “proof of personality.”
One of the concerns specific to Worldcoin is the fact that “the Orb is a hardware device, and we have no way of verifying that it is constructed correctly and has no backdoors. So even if the software layer is perfect and completely decentralized, the Worldcoin Foundation still has the ability to put a backdoor into the system, allowing it to create any number of false human identities.
If users’ phones are hacked, “users could be forced to scan their irises while presenting a public key that belongs to someone else, and there would be the ability to 3D print ‘fake people’ who could pass the iris scan and be given world IDs.” All of these potential additional identities could be used to take sides in governance decisions.
Buterin also finds flaws in Worldcoin’s plans to eventually extend responsibility for making Orb devices to other manufacturers. Buterin suggests there’s no way to prevent manufacturers from making malicious or defective Orbs. Even plans for regular audits of Orbs would only detect malicious activity after the fact.
Birds (usually vultures) from a feather
Only time will tell if Worldcoin’s intentions are honorable when it comes to protecting the biometrics of “the majority of the people”. But looking at some of the entities Worldcoin has chosen to affiliate with doesn’t paint the most flattering picture.
Worldcoin is a member of the Crypto Open Patent Alliance (COPA), a community made up of real entities that are currently or recently targeted by one or more US government agencies for violating various rules and regulations. These include exchanges Coinbase (NASDAQ:COIN), Kraken, and OKCoin, not to mention Microstrategy’s (NASDAQ:MSTR) Michael Saylor, who is currently indicted on tax fraud charges.
COPA was founded with the lofty ambition to “encourage the adoption and advancement of cryptocurrency technologies and remove patents as barriers to growth and innovation.”
But in the company’s more than two years of existence, its only concrete action is to sue nChain’s UK-based chief scientist Dr. Craig Wright. COPA is trying to discourage public acceptance of Wright as the real person behind the pseudonym Satoshi Nakamoto, credited with writing the 2008 Bitcoin white paper.
Wright was recently the subject of a lengthy Forbes article detailing his extensive patent portfolio, which includes 800 issued patents and 3,000 others awaiting approval in 46 different jurisdictions. COPA members have built their empires on the innovations of others and are now trying to deny Wright the rightful fruit of his intellectual endeavours.
We don’t know if Worldcoin’s Orb hardware uses one of Wright’s patents, but their WLD token no doubt acts in a way that Wright would recognize. Dump them quick guys before the eyes of intellectual property law look deep into yours.
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