Worldcoin isn’t as bad as it sounds: It’s worse
Worldcoin is no radical new financial system, and certainly not one aimed at equality or fairness
Midjourney modified by Blockworks
Worldcoin — a new financial system connected to sensitive biometric information, mostly harvested from poor people — sure sounds like a terrible idea.
“Terrible” doesn’t do it justice.
Worldcoin will need to assemble a vast database of iris data. But not everyone is eager to gaze into an Orb. In the bootstrapping phase, at least, you had to pay people to scan their eyes. And so Worldcoin turned to the global south — home to the cheapest eyeballs — and played a dark game of ‘what will people do for money?’
Incredibly, Worldcoin was unprepared for an obvious consequence of this rollout strategy: A black market for verified credentials. You can now seemingly buy a World ID for as little as $30. Anyone, then, with more than $30 on hand can command more than one digital identity (although Worldcoin is aware of this issue and has proposed solutions to resolve it). Connecting real people to digital identities is a thorny puzzle.
Worldcoin does not fix this. And it’s unlikely it ever can, since nothing in the design can stop professional sybil attackers farming eyeballs on the ground level through nefarious means.
This does not inspire trust in the system or its designers. And yet trust is what they demand. Worldcoin’s promotional materials are full of promises — to delete sensitive biometric information, or keep it hidden from view, or not use it in nefarious ways. One blog post (quoted here; the original appears to have been changed since initial release) put it this way: “During our field-testing phase, we are collecting and securely storing more data than we will upon its completion… We will delete all the biometric data we have collected during field testing once our algorithms are fully-trained.”
“Trust us,” in other words. “We’ll totally delete the eyeball database.”
But when it comes to sensitive information, promises aren’t enough. And the very people who insist that you trust them are the ones who should command the most suspicion. The fact that Worldcoin’s co-founder Sam Altman also heads up OpenAI — a firm currently being sued over allegations of dubious uses of large data sets — asks more questions than it answers.
Sometimes Worldcoin’s privacy promises are conjoined with dazzling technical details. Zero-knowledge proofs, we’re told, will save the day, and allow users to prove humanity without connecting any particular financial activity to a World ID or other associated transactions.
There’s a grain of truth here. Zero-knowledge proofs can generate impressive privacy guarantees. But in the case of Worldcoin marketing, they’re more theater than substance. Taking off your shoes at the airport makes it look like important precautions are being taken (but doesn’t actually make you any safer); and long blog posts about zero-knowledge proofs distract from, but don’t in fact address, the problem of Worldcoin asking for users’ trust.
Linking immutable biometric traits to money could have dystopian consequences.
Imagine that your digital identity has been lost in some way — shut down by authorities for non-compliance, or otherwise blocked. With traditional cash — and other cryptocurrencies — you can always make a new wallet and stash some fresh coins in it. But this isn’t Minority Report, and you can’t get a new iris from your neighborhood surgeon.
When your immutable digital identity is locked — imagine merchants who won’t take your coins from you without a digital signature announcing your World ID — it’s over for you. No old account. No new account. No soup for you. You just lost your digital personhood.
Boosters might reply that, thanks to zero-knowledge proofs, one could prove that a given transaction is associated with a valid World ID without disclosing which World ID that is — thus reducing the risk of total identity blockade. But this reply misses the point.
Zero-knowledge proofs could be used in benign ways or to preserve user privacy. Or authorities could demand more; they could demand that users reveal all, or be locked out altogether. Setting up a system and simply hoping its full powers of surveillance and control won’t be used is naive, at best.
Dystopian premise… dystopian premine?
Worldcoin is billed as a network “owned by everyone.” Early promotional materials claim giving “every person on the planet an equal share of a new cryptocurrency” as a premise of the project. It sounds laudable. But a glance at the actual plan for distributing tokens casts doubt on whether equal distribution is an aim of the project at all, much less one it will achieve.
It’s a curious ‘world’ coin that isn’t even available in the United States, Turkey, Sudan, or China. And if equal distribution is a goal, allocating a significant chunk of all the tokens that will ever exist to insiders is another curious choice. Early documentation put that insider number at twenty percent; it’s now slated to be at least twenty-five.
Who are these insiders? It’s some combination of Worldcoin developers and their partners, Orb operators (with signup bonuses that exhibit a pyramid-like structure), and a slate of (in)famous investors including Sam Bankman-Fried and Three Arrows Capital. Such self-dealing is not the plan one would expect, to put the point mildly, from an operation with genuine egalitarian ambitions.
Read more from our opinion section: Worldcoin hackable by cutting off someone’s face, draping it over your own
Now that Worldcoin has launched, we know a bit more about how token distribution will work. It is not entirely reassuring.
There’s a well-known crypto trick; they call it a “Sam Coin” (yes, after that Sam). The idea is to release into circulation a very small percentage of all the tokens that will ever exist. Despite low liquidity and trading volume, some eye-popping fully diluted market cap numbers can result, which make for great marketing and creative accounting.
Worldcoin — much like MAPS, a notorious crypto dud — is a Sam Coin.
About one percent of the ten billion Worldcoin tokens that will ever exist are in circulation, mostly in the hands of market makers partnered with Worldcoin.
And yet Worldcoin’s fully diluted market cap, at the time of writing, is somewhere around twenty billion dollars. It’s a great setup to attract speculative retail investors. And those market maker insiders, furthermore, have a deal that guarantees them access to tokens at a fixed price. Their profits are secure. The result is a market structure primed for manipulation and pump and dump dynamics — familiar to anyone who’s paid much attention to crypto.
Worldcoin is no radical new financial system, and certainly not one aimed at equality or fairness.
It’s just more of the same, but with extra data harvesting steps.
Do not look into the Orb.
Nick Almond (@DrNickA) is Founder and Architect of FactoryDAO, a next generation modular DAO creation protocol.
Andrew M. Bailey is Associate Professor at Yale-NUS College in Singapore and a Fellow at the Bitcoin Policy Institute.
