Are concerns about WorldCoin unfounded?

Not since Facebook’s (now Meta ’s) failed digital currency project Libra has a project generated so much controversy in the crypto community, so are concerns about Sam Altman’s ambitious iris-scanning UBI project unfounded?

Clearly, many are enthusiastic about the project, with Worldcoin seeing it as a way to empower humanity in the face of the rapid expansion of AI, with its unique proof of personhood solution designed to distinguish humans from deepfake bots and support the fair distribution of all AI-created wealth.

Within minutes of the launch of the Worldcoin mainnet on Monday, the token surged more than 40%, and about 250,000 people who had their irises scanned with the Worldcoin silver sphere received an airdrop token. Currently, about 2 million people around the world have signed up to be scanned, and Altman tweeted this week that this popularity is equivalent to one person being scanned every eight seconds.

Jeff Wilser visits Worldcoin's Berlin offices and reports in depth on the incubation and launch of Worldcoin, including the CEO having never held any position before in charge of this complex back-office and regulatory effort.

Many people are uneasy about the project. The voices within the cryptocurrency community are particularly loud, with many suggesting that it is like Leviathan, harvesting highly sensitive personal data.

Crypto author David Z. Morris puts the critics’ point well. In a column a month ago, Morris acknowledged the potential benefits of Worldcoin’s universal basic income (UBI) ambitions, but added that Altman and his co-founders “have found a way to make this appealing premise seem downright dystopian.” He warned of the dangers of centralized entities collecting retinal fingerprints, noting that the $5,000 cost of each sphere and the logistical challenges of distributing it around the world make a mockery of any so-called “universal” rollout.

(Morris added in a side note that the name “Sphere” also sounds “creepy,” suggesting “the Eye of Sauron, Foucault’s Panopticon, the Saudi intelligence sphere, Saruman’s Palantir, and for-profit spy companies.”)

On the other side are backers like Jake Brukhman , a partner at Coinfund, which invested in Worldcoin in 2021. Brukhman predicted on CoinDesk TV that the project will bring billions of people into the cryptocurrency space and the attendant benefits of financial inclusion.

Brukhman , Altman and other backers inside and outside of Worldcoin emphasize that neither the company’s servers nor its devices store any raw human data, but instead convert scans into unique, undiscoverable hash codes, eliminating privacy concerns.

A more balanced, but still cautious, view was offered by Ethereum founder Vitalik Buterin , who in a blog post praised the Sphere Coin’s commitment to privacy and the advanced technology it uses to protect people’s data. But he highlighted the project’s “four major risks,” noting that there is no way to guarantee people’s data is absolutely secure in a centralized model. He said it’s impossible to know if there’s a “backdoor” built into the Sphere hardware that would allow companies or governments to access data at some point.

My opinion is somewhere in between these comments.

While Vitalik Buterin believes perfect privacy is impossible, I think concerns about major leaks of people’s biometric data and the threats it could pose to them are probably overblown — or at least they’re no greater than the privacy threats we face elsewhere. (For example, we store more data on iPhones with similar device-localized encryption protections, and let’s not forget that the largest cryptocurrency exchanges must collect Know Your Customer (KYC) identification information on all of their customers.)

What worries me is the centrality of the corporation in this and the misaligned incentives that it creates.

Why should UBI be the responsibility of a private company? Wouldn’t that create uneasy dependency among poorer recipients? What exactly would the token be useful for? Worldcoin appears to be hoping that it can become the foundation of a decentralized ecosystem of AI applications as it promotes its software development kit to developers.

But, for now, the project is designed to bootstrap participation through speculative enthusiasm, which in turn is fueled by the buzz surrounding high-profile projects and founders, creating a lucrative exit opportunity for early token holders and setting the stage for post-launch investors to take losses. (Sure enough, the WLD token fell sharply later in the week.)

Many have questioned the token economics of the Worldcoin launch, which severely limits the total circulating supply, and the whole thing feels like a hyped money grab to many, and rampant profiteering around something as important as a person’s identity will not end well.

This brings me to a point I’ve made before, which is that there are lessons to be learned from Web2 as we enter this new era of AI. The risk isn’t in the technology itself — we’ve known for years that AI has the power to destroy us. The problem is that if we concentrate control of these technologies in the hands of a few overly powerful companies that have an incentive to use them as proprietary “black box” systems in pursuit of profit, then they will quickly move into dangerous, human-harming territory, just as some Web2 platforms have done.

Still, there is at least one positive that can come out of the Worldcoin project. It draws attention to the need for some kind of proof of humanity, which could bring life to a number of interesting projects that aim to give people more control over their identities in the Web3/AI era. The answer to proving and promoting true humanity may lie in capturing the “social graph” of our online connections, relationships, interactions, and authorization credentials through initiatives like the Decentralized Identity (DID) model or the Decentralized Social Network Protocol (DSNP) project. Or it may lie in a biometric solution like the one being developed by Worldcoin, albeit hopefully with a more decentralized, less corporate structure. What is clear is that we have to do something.

To take a less apt but thought-provoking example: an AI robot creates an extremely realistic digital female character and appears in pornographic videos sold to OnlyFans customers, who believe they are real sex workers. You may not hold pornography in high regard, and you may think that simple-minded men deserve no sympathy if they fall for it. But consider what this means for sex workers .

Despite all the criticism, OnlyFans, or more specifically the direct-to-customer model it has established, has been embraced by sex work advocates as providing a safe working environment for these people to earn an income on their own terms. If they cannot adequately prove they are human and are outcompeted by a swarm of fake bots for client money, what choice do they have? Return to the streets, where they can easily prove they are “real people” but once again face the risk of violence from clients and pimps?

In the digital age, dignity is everyone’s bottom line. Achieving this requires balancing reliable solutions that distinguish humans from machines with a commitment to protecting privacy and, most importantly, personal data.