The highly anticipated cryptocurrency project Worldcoin (WLD) just launched on July 24, but the crypto project has already divided investors and regulators with its controversial goals.
Worldcoin was co-founded by Sam Altman, the CEO of ChatGPT maker OpenAI. The Worldcoin project and its cryptocurrency token WLD are intended to be a solution for some of the problems associated with artificial intelligence chatbots.
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The ambitious Worldcoin project is centered on its World ID “digital passport” that verifies users’ identities by scanning their eyes. Altman says the Worldcoin project could help address the increasingly difficult problem of determining whether or not a person on the internet is real or AI, but critics of the plan have said a catalog of eye scans could pose a major security and privacy risk.
What Is Worldcoin (WLD)?
Worldcoin is a digital identification platform intended to provide a convenient way for a person to verify that online text, videos or any other types of content came from a real human being rather than generative AI software. Worldcoin was built by a company called Tools for Humanity, which was co-founded by ChatGPT creator Altman.
Worldcoin seeks to leverage the same cryptographic blockchain technology that keeps networks like Bitcoin (BTC) and Ethereum (ETH) secure and tamper-proof.
The Worldcoin project consists of the World ID digital passport, the World App crypto wallet and the WLD cryptocurrency token. Worldcoin uses an iris-scanning biometric imaging device called an Orb to scan users’ iris patterns in their eyes and create a World ID identification code called an “IrisCode.” Iris patterns are unique to each person, much like fingerprints. Worldcoin claims it deletes each iris image it uses, and the system does not rely on subsequent eyeball scans to verify identity.
The World App stores a user’s credentials and can be used to verify identity on third-party apps. It also serves as a crypto wallet that can hold WLD tokens, as well as bitcoin and ethereum.
WLD tokens are the native cryptocurrency of Worldcoin. Roughly 2 million users who participated in the Worldcoin beta program each received 25 WLD tokens. There are currently more than 110 million WLD tokens in circulation, and the Worldcoin white paper suggests a total of 10 billion total tokens will be issued over a 15-year period, at which point the WLD supply will be capped.
In addition to allowing internet users to differentiate between real people and AI bots, the Worldcoin team hopes the platform could eventually help users profit from the economic boom AI will create. For example, Altman has said World IDs could be used to reduce fraud when distributing universal basic income, or UBI.
“If successful, we believe Worldcoin could drastically increase economic opportunity, scale a reliable solution for distinguishing humans from AI online while preserving privacy, enable global democratic processes, and eventually show a potential path to AI-funded UBI,” Altman and Tools for Humanity co-founder Alex Blania said in an open letter posted to Twitter on July 24.
How to Buy Worldcoin
Worldcoin is currently scaling up its “orbing” operations to create World IDs in more than 35 cities in 20 different countries, including New York, San Francisco and Miami. Worldcoin plans to add additional scanning locations in the future and will announce dates and cities on Twitter and Discord.
Users who sign up in certain countries will receive WLD tokens as a reward. Unfortunately, U.S. citizens are not allowed to use, purchase or access WLD tokens at this time, according to the Worldcoin terms of service.
WLD token began trading on major crypto exchanges Binance, Bybit, Huobi, OKX, Gate.io and KuCoin on Monday, July 24. After starting at $1.70 and going as high as $3.58 on its first day of trading, WLD was last trading at around $2.15 as this story went to press.
Users outside of the U.S. can buy WLD by opening an account on one of the exchanges that supports WLD trading. While users are not required to scan their retinas to verify their identity, reputable cryptocurrency exchanges will require “know your customer” verification to open an account. After opening and funding a crypto wallet, users can purchase WLD just like they would Bitcoin or any other crypto.
Is Worldcoin Safe?
The cryptocurrency market in general has its fair share of skeptics, but Worldcoin’s approach to biometrics, its unavailability in the U.S. and its lack of clarity about token distribution has made it a particularly controversial topic.
Some critics are concerned about the company’s lack of explanation about how WLD tokens will be distributed. In a recent interview with Bankless, Blania declined to answer questions about WLD distribution, citing “regulatory uncertainty” in the U.S. Several cryptocurrencies and exchanges have come under fire from the U.S. Securities and Exchange Commission in recent months over allegations that they have been selling and distributing unregistered securities. It’s still unclear at this point just how regulators will classify digital assets, but crypto enthusiasts scored a big legal victory in July when a court ruled Ripple’s XRP token is “not necessarily a security on its face.”
In addition to concerns over token access and distribution, other skeptics say collecting biometric data is a security risk in itself.
In a new blog post this week, Ethereum co-founder Vitalik Buterin said Worldcoin’s proof-of-personhood system has potential problems with accessibility, privacy, security and centralization.
“The problem of making a proof-of-personhood system that is effective and reliable, especially in the hands of people distant from the existing crypto community, seems quite challenging,” Buterin wrote.
MIT Technology Review published a story in April 2022 questioning Worldcoin’s data-collection ethics during its beta phase.
“Our investigation revealed wide gaps between Worldcoin’s public messaging, which focused on protecting privacy, and what users experienced. We found that the company’s representatives used deceptive marketing practices, collected more personal data than it acknowledged, and failed to obtain meaningful informed consent,” the report said.
Some traders have raised concerns over potential WLD dilution and the impact on Worldcoin’s price, given only about 1% of the crypto’s total supply is currently in circulation.
In a series of tweets following the Worldcoin launch, Altman said the “haters” give the company energy, and he encouraged critics to continue naysaying.
“Like any really ambitious project, maybe it works out and maybe it doesn’t, but trying stuff like this is how progress happens,” he said.
Will Worldcoin Be Available in the U.S.?
At this point, it’s unclear if or when WLD tokens will be available to U.S. investors. On July 20, House Republicans introduced the Financial Innovation and Technology for the 21st Century Act, a bill that aims to establish clear regulatory oversight of the crypto industry in the U.S.
Regulators have intensified their scrutiny of the cryptocurrency market after several crypto lenders, banks and exchanges collapsed during 2022’s “crypto winter,” most notably popular crypto exchange FTX. While the SEC, Commodity Futures Trading Commission, Federal Trade Commission and other U.S. regulators have yet to issue an outright ban on any major cryptocurrency, Worldcoin seems to be taking a precautionary approach to avoid any potential regulatory headaches.
Altman recently told the Financial Times he is not concerned about missing out on the U.S. market, saying that 95% of the world’s population is outside the U.S. Worldcoin is also unavailable in China, which banned all forms of crypto mining and trading in 2021. China accounts for nearly 18% of the global population.
The Information Commissioner’s Office, a U.K. data regulator, recently said it will also be making “further inquiries” into Worldcoin following the crypto’s launch. For now, U.S. users lining up to get their irises scanned will have to do so without expecting any WLD coin in return.
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What Is Worldcoin (WLD)? The Controversial Crypto Explained originally appeared on usnews.com
