Date: 07/28/2023
Author: Mr. X
Call me a contrarian, but when the press is rallying behind something, I am immediately suspicious.
Sam Altman, the CEO of Open AI, is rolling out his own crypto project. It is called Worldcoin. Like Odin, you will need to give up your eye in order to receive this prize – or at least have it be scanned. You have to look into an orb. I am not making this up.
The eyeball allows one to gain a unique digital identity, the World ID. Presumably we will need future security measures to keep people from stealing eyeballs to fake someone else’s ID as we move into full dystopian territory.
According to the White Paper for the coin:
Worldcoin was founded with the mission of creating a globally-inclusive identity and financial network, owned by the majority of humanity. If successful, Worldcoin could considerably increase economic opportunity, scale a reliable solution for distinguishing humans from AI online while preserving privacy, enable global democratic processes, and show a potential path to AI-funded UBI.
Worldcoin consists of a privacy-preserving digital identity network (World ID) built on proof of personhood and, where laws allow, a digital currency (WLD). Every human is eligible for a share of WLD simply for being human. World ID and WLD are currently complemented by World App, the first frontend to World ID and the Worldcoin Protocol, developed by the contributor team at Tools for Humanity (TFH).
This may sound ridiculous, but it meets a real need. Consider the “Dead Internet” theory. This holds that the Internet is now driven by bots, scripts, algorithms, and other “artificial” content. As AI becomes more common, this is only going to become a bigger problem. I promise you that at least once on Twitter (I mean, “X,”) you have interacted with a bot pretending to be a person.
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The idea behind Worldcoin is that you have a proof of human identity that allows you to interact with a system (and associated apps) that you know is entirely human. Worldcoin, as a worldwide digital currency, would also make it easier for people to send digital cash, provide a more egalitarian means of governance in crypto apps (because rather than “tokens,” you could have votes from verified human beings), and have corruption-free loyalty and welfare programs. (Presuming, again, nobody starts stealing eyeballs).
Like Bitcoin, the number of Worldcoins is capped – at 10 billion. About 143 million are circulating now. These have been increasing in value since launch. It initially was priced at $1.70. After surging to almost $3.60, it is trading (as of this writing) at about $2.10.
There are some arguments that Worldcoin is not secure enough. According to Ethereum founder Vitalik Buterin:
There are two ways in which this design can fail:
- It fails to actually decentralize. This could happen because of the common trap of federated protocols: one manufacturer ends up dominating in practice, causing the system to re-centralize. Presumably, governance could limit how many valid Orbs each manufacturer can produce, but this would need to be managed carefully, and it puts a lot of pressure on governance to be both decentralized and monitor the ecosystem and respond to threats effectively: a much harder task than eg. a fairly static DAO that just handles top-level dispute resolution tasks.
- It turns out that it’s not possible to make such a distributed manufacturing mechanism secure. Here, there are two risks that I see:
- Fragility against bad Orb manufacturers: if even one Orb manufacturer is malicious or hacked, it can generate an unlimited number of fake iris scan hashes, and give them World IDs.
- Government restriction of Orbs: governments that do not want their citizens participating in the Worldcoin ecosystem can ban Orbs from their country. Furthermore, they could even force their citizens to get their irises scanned, allowing the government to get their accounts, and the citizens would have no way to respond.
To make the system more robust against bad Orb manufacturers, the Worldcoin team is proposing to perform regular audits on Orbs, verifying that they are built correctly and key hardware components were built according to specs and were not tampered with after the fact. This is a challenging task: it’s basically something like the IAEA nuclear inspections bureaucracy but for Orbs. The hope is that even a very imperfect implementation of an auditing regime could greatly cut down on the number of fake Orbs.
American citizens are not allowed to buy or use worldcoins, and that is probably not going to change. One of the main purposes of the coin is to pave the way for Universal Basic Income (UBI), supposedly a necessity as AI eliminates many people’s jobs. The problem is that no government is going to agree to give this control to any decentralized system, even assuming it works. What we really should be looking for are Central Bank Digital Currencies, which are already well underway at the Fed and other locations.
I don’t expect America to lighten up regulatory barriers to worldcoin (WLD). However, the concept of digital IDs will likely grow in importance. We’ve already seen from people lining up to have their eyes scanned by orbs that security fears will be secondary to the perceived opportunity of material gain. When UBI becomes a reality, we’ll see even more eagerness to hand over information in exchange for an allowance from the government.
Mr. X is an investment analyst working in the Washington DC area who specializes in the intersection of business and public policy. After fifteen years working in politics, he writes on a classified basis for RogueInvesting.com to bring you news on what those with power are debating, planning, and doing
