Worldcoin Explained

Image 1:Worldcoin Logo.png
Code:WLD
Developer:Tools for Humanity

Worldcoin is a for-profit cryptocurrency project that uses iris biometrics developed by San Francisco- and Berlin-based Tools for Humanity. Founded in 2019 by OpenAI chief executive Sam Altman, Max Novendstern, and Alex Blania, it has accumulated $250 million in funding from venture capital firms Andreessen Horowitz and Khosla Ventures, as well as from Reid Hoffman.[1] [2] [3] [4]

Worldcoin hopes to provide a reliable way to authenticate humans online called World ID, and attempts to recruit new users to join its network by getting their iris scanned using Worldcoin's orb-shaped iris scanner in return for some WLD tokens. This has caused privacy concerns in multiple countries.

History

Worldcoin project was started by a company called Tools for Humanity (TFH), founded by Sam Altman, Max Novendstern and Alex Blania in 2019.[5]

In 2021, the company stated that its token (WLD) is intended to be a larger effort to drive a more unified and equitable global economy driven by the internet economy, although it will not be available in the USA. The token will be a Layer 2 Ethereum-based cryptocurrency that leverages the security of the Ethereum blockchain while having its own economy.[6] [7] [8]

In October 2021, the project raised an initial $25 million. Within six months, an additional $100 million was raised, pushing the token's value up to $3 billion.[9]

In April 2022, a report from MIT Technology Review cited those from the community who accused Worldcoin of "taking advantage of students" and "targeting lower-income communities", and came to the conclusion that "it's just cheaper and easier to run this kind of data collection operation in places where people have little money and few legal protections."

In May 2023, TechCrunch reported that hackers had been able to steal login credentials of several of Worldcoin's operators' personal devices including their credentials to the Worldcoin operator app. However, Worldcoin's spokesperson said that no personal user data was compromised, as the operator app does not access user data.[10]

Further funding of $115 million was announced in May 2023, to be used for investment into bot detection, research and development, and expanding the Worldcoin project and application. While in beta, Worldcoin was reported to have onboarded approximately two million users.[11] By July 2023, they had $250 million in funding from venture capital firms Andreessen Horowitz and Khosla Ventures, as well as Reid Hoffman.

Worldcoin launched out of beta on July 24, 2023[12] [13] with 11 orb locations in the U.S. and plans for 35 cities in 20 countries.[14] Users in London received 25 WLD tokens for scanning their irises.[15] WLD tokens became freely tradable on several cryptocurrency exchanges, though not in the U.S.

Design

Worldcoin hopes to provide a reliable way to authenticate humans online called World ID,[16] to counter bots and fake virtual identities facilitated by artificial intelligence. Worldcoin attempts to recruit new users to join its network by getting their iris scanned using Worldcoin's orb-shaped iris scanner in return for some WLD tokens.[17] In order to access their WLD, users are required to provide an email address or phone number and use the Worldcoin app. Worldcoin claims the distribution mechanism was inspired by universal basic income discussions.[18]

Ten percent of all WLD tokens are reserved for Worldcoin investors, and another 10 percent are reserved for Worldcoin employees. Worldcoin uses so-called "operators" to sign up new users. These are independent contractors paid per sign-up in Tether stable coin.

Legal and regulatory issues

The currency has not formally launched in the US and other countries because of concerns by national regulators regarding privacy and potential use of the tokens for fraudulent purposes.[19]

In July of 2023, the data protection authorities in both France (CNIL)[20] and the United Kingdom (Information Commissioner's Office)[21] announced they had opened investigations into Worldcoin over privacy concerns. In addition, regulators in Bavaria[22] and South Korea[23] also announced they had opened investigations.

In August 2023, Kenya, one of the first countries where Worldcoin was launched, suspended its enrollment in the country, citing security, privacy and financial concerns.[24] [25] Worldcoin was previously ordered to stop collecting personal data by the Kenyan Office of the Data Protection Commissioner, but did not comply.[26] Worldcoin also stopped offline verifications in India.[27] The same year, Worldcoin suspended operations in Brazil[28] and Kenya.[29]

In late January 2024 representatives of the Hong Kong Office of the Privacy Commissioner for Personal Data executed warrants on six Worldcoin offices in Hong Kong. Some of the offices had been used to collect iris scans. The commissioner's office expressed concern the company's collection and processing of iris scans might violate the Personal Data (Privacy) Ordinance and could carry the potential for abuse of personal information.[30] On 22 May, the Office after investigation found Worldcoin has violated the privacy rules through collection of face and iris images from those participating in the project.[31] [32]

On March 6, 2024, the Spanish Data Protection Agency (AEPD) ordered Worldcoin to stop its activity of “collection of biometric data” and to “block all data collected in Spanish territory”.[33] [34] It ordered the temporary suspension using the "urgency procedure" contained in Article 66 of the General Data Protection Regulations. Worldcoin unsuccessfully sought an injunction from the High Court in Madrid to prevent the order coming into effect.

On March 26, 2024, the Portuguese data protection authority—CNPD—made a similar temporary order to prevent data collection over concerns including the inability to withdraw consent, "deficiencies in the information provided to the data subjects" and the collection of data from minors.[35]

Notes and References

  1. Web site: Mascellino . Alessandro . 2023-02-13 . Iris biometrics crypto project Worldcoin reportedly looks for $120M investment Biometric Update . 2023-04-14 . www.biometricupdate.com . en-US . April 18, 2023 . https://web.archive.org/web/20230418224853/https://www.biometricupdate.com/202302/iris-biometrics-crypto-project-worldcoin-reportedly-looks-for-120m-investment . live .
  2. Web site: Nieva . Richard . Sethi . Aman . 2022-04-21 . Worldcoin Promised Free Crypto If They Scanned Their Eyeballs With "The Orb." Now They Feel Robbed. . 2023-05-27 . BuzzFeed News . en . November 17, 2023 . https://web.archive.org/web/20231117110023/https://www.buzzfeednews.com/article/richardnieva/worldcoin-crypto-eyeball-scanning-orb-problems . live .
  3. Web site: Guo . Eileen . Renaldi . Adi . 2022-04-06 . Deception, exploited workers, and cash handouts: How Worldcoin recruited its first half a million test users . 2023-05-27 . MIT Technology Review . en . April 6, 2022 . https://web.archive.org/web/20220406161221/https://www.technologyreview.com/2022/04/06/1048981/worldcoin-cryptocurrency-biometrics-web3/ . live .
  4. You Can Get This Free Crypto—If the 'Orb' Scans Your Eye . 2021-10-21 . . https://web.archive.org/web/20230629192434/https://www.wired.com/story/get-free-crypto-orb-scans-eye/ . 2023-06-29 . live .
  5. Web site: Loizos . Connie . 2023-03-08 . Worldcoin, co-founded by Sam Altman, is betting the next big thing in AI is proving you are human . 2023-04-14 . TechCrunch . en-US . November 18, 2023 . https://web.archive.org/web/20231118230623/https://techcrunch.com/2023/03/07/worldcoin-cofounded-by-sam-altman-is-betting-the-next-big-thing-in-ai-is-proving-you-are-human/ . live .
  6. Web site: Sam Altman wants to give you crypto to scan your eyeballs. Can he get 8 billion people stare into a futuristic orb to prove they're not A.I. bots? . 2023-06-25 . Fortune Crypto . en . March 21, 2023 . https://web.archive.org/web/20230321121213/https://fortune.com/crypto/2023/03/21/sam-altman-orb-scan-eyeballs-ai-bot-worldcoin/ . live .
  7. Web site: Matney . Lucas . 2021-10-21 . Sam Altman's Worldcoin wants to scan eyeballs in exchange for crypto . 2023-06-25 . TechCrunch . en-US . October 21, 2021 . https://web.archive.org/web/20211021153327/https://techcrunch.com/2021/10/21/sam-altmans-worldcoin-wants-to-scan-every-humans-eyeball-and-give-them-crypto-in-exchange/ . live .
  8. Web site: Secure Bitcoin Exchange . July 23, 2023 . January 29, 2021 . https://web.archive.org/web/20210129110908/http://coinspotreview.com.au/ . live .
  9. News: Levingston . Ivan . Hammond . George . 2023-05-14 . OpenAI's Sam Altman nears $100mn funding for Worldcoin crypto project . Financial Times . 2023-06-25 . June 7, 2023 . https://web.archive.org/web/20230607132929/https://www.ft.com/content/f1de2aee-ee13-45e1-bd61-0a269cd650d3 . live .
  10. Web site: Hackers stole passwords of Worldcoin Orb operators. Carly. Page. May 12, 2023. May 31, 2023. May 12, 2023. https://web.archive.org/web/20230512161953/https://techcrunch.com/2023/05/12/hackers-stole-passwords-of-worldcoin-orb-operators/. live.
  11. Web site: Melinek . Jacquelyn . 2023-05-25 . Sam Altman's crypto project Worldcoin got more coin in latest $115M raise . 2023-06-25 . TechCrunch . en-US . May 25, 2023 . https://web.archive.org/web/20230525190451/https://techcrunch.com/2023/05/25/sam-altmans-crypto-project-worldcoin-got-more-coin-in-latest-115m-raise/ . live .
  12. News: Hart . Robert . July 24, 2023 . What Is Worldcoin? Here's What To Know About The Eyeball-Scanning Crypto Project Launched By OpenAI's Sam Altman . Forbes . July 25, 2023 . August 8, 2023 . https://web.archive.org/web/20230808012551/https://www.forbes.com/sites/roberthart/2023/07/24/what-is-worldcoin-heres-what-to-know-about-the-eyeball-scanning-crypto-project-launched-by-openais-sam-altman/ . live .
  13. News: Tong . Anna . July 24, 2023 . OpenAI's Sam Altman launches Worldcoin crypto project . Reuters . July 25, 2023 . October 17, 2023 . https://web.archive.org/web/20231017171903/https://www.reuters.com/technology/openais-sam-altman-launches-worldcoin-crypto-project-2023-07-24/ . live .
  14. Web site: What is Worldcoin? Eye-scanning crypto project launched by OpenAI CEO . Diaz . Maria . 2023-07-24 . . 2023-07-29 . August 5, 2023 . https://web.archive.org/web/20230805202027/https://www.zdnet.com/article/openai-ceo-officially-launches-crypto-project-worldcoin/ . live .
  15. News: 2023-07-24 . Worldcoin: Sam Altman launches eyeball scanning crypto coin . 2024-03-07 . BBC . en-GB . April 9, 2024 . https://web.archive.org/web/20240409002137/https://www.bbc.com/news/technology-66128111 . live .
  16. Web site: Pandolfo . Chris . May 16, 2023 . OpenAI CEO Sam Altman raises $100M for Worldcoin crypto project, which uses 'Orb' to scan your eye: report . FOXBusiness . May 31, 2023 . May 16, 2023 . https://web.archive.org/web/20230516201226/https://www.foxbusiness.com/markets/openai-ceo-sam-altman-raises-100m-worldcoin-crypto-project-uses-orb-scan-eye . live .
  17. News: 2023-08-26. Worldcoin suspended in Kenya as thousands queue for free money. BBC News. 2023-08-02. April 9, 2024. https://web.archive.org/web/20240409002139/https://www.bbc.com/news/world-africa-66383325. live.
  18. Web site: Ryan. Browne. 2023-08-26. Silicon Valley entrepreneur Sam Altman wants to scan your eyes in exchange for free cryptocurrency. 2021-10-21. CNBC. August 2, 2024. https://web.archive.org/web/20240802235736/https://www.cnbc.com/2021/10/21/sam-altmans-worldcoin-wants-to-scan-your-eyes-in-exchange-for-crypto.html. live.
  19. Web site: Hammond . George . Chipolina . Scott . 2023-07-24 . Ready for your eye scan? Worldcoin launches—but not quite worldwide . 21 November 2023 . Ars Technica . August 7, 2024 . https://web.archive.org/web/20240807183000/https://arstechnica.com/tech-policy/2023/07/ready-for-your-eye-scan-worldcoin-launches-but-not-quite-worldwide/ . live .
  20. Web site: Howcroft . Elizabeth . July 31, 2023 . France's watchdog questions legality of Worldcoin biometric data collection . Reuters . August 7, 2024 . May 29, 2024 . https://web.archive.org/web/20240529132034/https://www.reuters.com/technology/frances-privacy-watchdog-says-worldcoin-legality-seems-questionable-2023-07-28/ . live .
  21. Web site: Howcroft . Elizabeth . July 25, 2023 . UK data watchdog to make enquiries about Worldcoin crypto project . Reuters . August 7, 2024 . October 23, 2023 . https://web.archive.org/web/20231023225438/https://www.reuters.com/technology/uk-data-watchdog-make-enquiries-worldcoin-crypto-project-2023-07-25/ . live .
  22. Web site: Howcroft . Elizabeth . July 31, 2023 . German data watchdog probing Worldcoin crypto project, official says . Reuters.
  23. Web site: Atkinson . Sophie . 2024-03-04 . South Korea launches investigation into Worldcoin . 2024-05-08 . ReadWrite . en-US . May 9, 2024 . https://web.archive.org/web/20240509015441/https://readwrite.com/south-korea-launches-investigation-into-worldcoin/ . live .
  24. News: Njanja . Annie . 2 August 2023 . Kenya suspends Worldcoin scans over security, privacy and financial concerns . 18 August 2023 . TechCrunch . August 18, 2023 . https://web.archive.org/web/20230818152609/https://techcrunch.com/2023/08/02/kenya-suspends-worldcoin-scans-over-security-privacy-and-financial-concerns/ . live .
  25. News: Roth . Emma . 2 August 2023 . Kenya suspends Sam Altman's eyeball-scanning crypto project . 18 August 2023 . The Verge . August 18, 2023 . https://web.archive.org/web/20230818153040/https://www.theverge.com/2023/8/2/23817147/kenya-worldcoin-suspended-sam-altman-eyeball-scanning . live .
  26. News: Njanja . Annie . 15 August 2023 . Worldcoin ignored initial order to stop iris scans in Kenya, records show . 18 August 2023 . TechCrunch . August 18, 2023 . https://web.archive.org/web/20230818153039/https://techcrunch.com/2023/08/15/worldcoin-in-kenya/ . live .
  27. Web site: 2023-12-21 . Sam Altman's Worldcoin discontinues offline Orb verification services in India: MC Exclusive . 2024-02-07 . Moneycontrol . en . April 5, 2024 . https://web.archive.org/web/20240405100524/https://www.moneycontrol.com/news/technology/mc-exclusive-sam-altmans-worldcoin-discontinues-offline-orb-verification-services-in-india-11937331.html . live .
  28. Web site: Peñarredonda . José Luis . 2024-08-06 . Worldcoin may not be legal in Colombia, but that's not stopping it . 2024-08-07 . Rest of World . en-US . August 7, 2024 . https://web.archive.org/web/20240807122152/https://restofworld.org/2024/worldcoin-colombia-data-protection/ . live .
  29. News: Nkonge . Anita . 2023-08-02 . Worldcoin suspended in Kenya as thousands queue for free money . 2024-08-07 . . en-GB . April 9, 2024 . https://web.archive.org/web/20240409002139/https://www.bbc.com/news/world-africa-66383325 . live .
  30. Web site: 2024-01-31 . Hong Kong eye scan for cryptocurrency scheme probed by city's privacy watchdog . 2024-02-08 . South China Morning Post . en . July 10, 2024 . https://web.archive.org/web/20240710123449/https://www.scmp.com/news/hong-kong/law-and-crime/article/3250480/hong-kong-eye-scan-cryptocurrency-scheme-probed-citys-privacy-watchdog . live .
  31. Web site: 22 May 2024 . Privacy Commissioner's Office Finds that the Operation of the Worldcoin Project in Hong Kong Contravenes the Personal Data (Privacy) Ordinance . PCPD . August 7, 2024 . August 4, 2024 . https://web.archive.org/web/20240804023928/https://www.pcpd.org.hk/english/news_events/media_statements/press_20240522.html . live .
  32. Web site: Worldcoin ordered to get its eyes off Hongkongers - RTHK . 2024-05-22 . news.rthk.hk . en-gb . August 7, 2024 . https://web.archive.org/web/20240807183001/https://news.rthk.hk/rthk/en/component/k2/1754216-20240522.htm?spTabChangeable=0 . live .
  33. Web site: Spain blocks Sam Altman's eyeball-scanning venture Worldcoin . 2024-03-06 . www.ft.com . August 7, 2024 . https://web.archive.org/web/20240807183006/https://www.ft.com/content/204c1c81-7a6f-4a6a-907e-8782b9d1bed2 . live .
  34. Web site: March 6, 2024 . Spain temporarily blocks Sam Altman's eyeball-scanning venture Worldcoin . March 6, 2024 . www.reuters.com . Reuters.
  35. Web site: Howcroft . Elizabeth . March 26, 2024 . Portugal orders Sam Altman's Worldcoin to halt data collection . Reuters.

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