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EYES OF THE WORLD

A closer look at Worldcoin, Sam Altman’s eyeball scanning crypto project

In 2023, Sam Altman has become the public face of ChatGPT and the latest generation of artificial intelligence in his role as CEO of OpenAI. But before the meteoric rise of the generative AI tool, Altman had also planted the seeds for Worldcoin, a crypto project that aims to provide a universal currency and a new standard for digital identity and privacy, in part by … scanning people’s eyes to confirm their identities.

Let’s take a closer look at how Altman’s initiative — which just raised $115 million last week amid a bear market for VC funding of crypto projects — works, as well as some of the questions raised about Worldcoin's efforts. 

What is Worldcoin?

Founded in 2019 by Tools for Humanity, Worldcoin is a crypto-focused project with a three-part goal of creating universal online IDs (World ID), a global cryptocurrency (WLD), and a self-custodial wallet app (World App) that enables payments using WLD, stablecoins, and traditional fiat currencies. It was co-founded by Altman and Alex Blania, who serves as Tools for Humanity’s CEO.  

Worldcoin’s lofty mission entails freely distributing WLD as a form of universal basic income to everyone “just for being a unique individual,” and to establish unique digital identities to prove “humanness in an online world populated with increasingly advanced artificial intelligence.”

The company, which is still in beta, says it has so far onboarded nearly two million users across five continents, however, U.S. residents are not currently able to receive the Worldcoin token. Its World App launched in more than 80 countries in early May.

How does Worldcoin work, and will it really scan people’s eyes?

It’s possible to use Worldcoin without scanning your eyes, but in order to claim a free share of Worldcoin tokens, an individual has to verify their identity with a five-pound, chrome imaging device called The Orb, which scans users’ irises in order to create a numerical code that confirms “unique personhood.” 

Worldcoin explains their privacy measures (encryption, image deletion) in detail, and says that it “does not use your iris to identify who you are, only to verify that you’re unique.” 

How will Worldcoin use its new $115 million funding round?

The latest capital raise will fund product expansion and also go toward bot detection, as well as an alternative to the universally despised, click-on-the-traffic-lights CAPTCHA test — both efforts to better differentiate between humans and AI on the internet. The series C was led by Blockchain Capital, and included firms such as a16z and Bain Capital Crypto. (Coinbase Ventures participated in a previous funding round in 2021.) 

What has been the response to the project?

When Worldcoin was announced in 2021, the project received some criticism from privacy advocates such as NSA whistleblower Edward Snowden, who voiced alarm about how the project planned to handle its biometric information. (Altman acknowledged in response that he had “definitely underestimated the visceral reaction to using biometrics for identity verification.”) And in April of 2022, the MIT Technology Review detailed what it claimed were serious shortcomings in Worldcoin’s privacy and marketing practices. (Worldcoin addresses some common questions about its approach to data privacy and security on its website.) 

Last week, Spencer Bogart, a general partner at Blockchain Capital, called some of the critiques of Worldcoin “wildly off the mark” in a blog post about the project. “What at first appeared to be a dystopian attempt to create a global currency … was actually something else altogether: an entirely privacy preserving solution to an increasingly pervasive problem” of distinguishing between humans and machines on the internet, Bogart said. 

Why it matters… For many in the crypto community, ownership of digital data and privacy are fundamental to the decentralization that crypto enables. And while Worldcoin’s method to authenticate and preserve digital identities has been headline-making, its underlying technologies (like zero-knowledge proofs and Merkle trees), may power alternative ways to own your own personal data across the internet and verify your ID in an age of rapidly advancing AI. As Altman stated on Twitter back in 2021, “no matter what you think about Worldcoin,” some of its ideas are “likely important to the future of privacy.” 

BTC UPDATE

Bitcoin had its worst month of the year amid 2023 rally

The largest cryptocurrency by market cap is up more than 60% this year. But after starting May above $29,000, BTC has ended the month down about 7%, making this its worst performing month since December 2022 and its first monthly drop of 2023. 

Here’s what you need to know about BTC’s price movements.

After outperforming ETH all year, BTC was down against ETH in May.

While BTC sank as low as $25,900 last week, it had rebounded nearly 8% since last Thursday to $27,800, only to fall back below $27,000 on Wednesday morning after comments from a Federal Reserve official regarding future interest rate hikes.

Following consecutive months of improving prices, BTC was battered in May by fears about a U.S. debt default, as well as uncertainty about whether the Federal Reserve will continue to increase interest rates. ETH, however, ended the past month up ever so slightly and has had its stability boosted by an increase in ETH staking.

Macroeconomic concerns could continue to weigh on bitcoin’s price.

Bitcoin’s rough May comes as the market seems to think that the Federal Reserve will continue with its rate hikes. As rising interest rates mean that holding dollars in money market funds now yields a low-risk 5% return, the dollar has strengthened by roughly 2% this month. Bitcoin has tended to move in the opposite direction of the dollar. 

NUMBERS TO KNOW

$192 million

The NFT sales volume hosted on the BItcoin blockchain over the past 30 days as of Wednesday morning, making it second only to Ethereum’s $396 million, and more than four times the $43 million traded on Solana. The driver behind Bitcoin’s emergence as a NFT sales powerhouse: the popularity of Ordinals. 

110

The number of S&P 500 companies that cited the term “AI” in Q1 earnings reports, a record high since at least 2010, per FactSet. The crypto industry has also seen an uptick in interest in artificial intelligence in recent weeks: Solana launched a ChatGPT integration, web3 VC firm Paradigm (co-founded by Coinbase board member and co-founder Fred Ehrsam) expanded its scope to “frontier tech” like AI, and several AI-related cryptocurrencies rallied last week after Nvidia’s blowout earnings call.

30%

The proposed tax on crypto mining electricity usage put forward by the White House as part of its proposed 2024 budget, which had received criticism from lawmakers such as Republican Sen. Cynthia Lummis, who said, “I will not let President Biden tax the digital asset industry out of existence.”  However, the law appears unlikely to pass after it was left out of the proposed deal in Washington to raise the debt ceiling. 

7

The number of global central banks, including the U.S. Federal Reserve, Bank of Japan, and European Central Bank, that co-wrote a paper about possible central bank digital currency (CBDC) implementation and related policy questions. The paper notes that some of its members are nearing a point where they “may decide” whether or not to pursue CBDCs, which have become a topic of debate.

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