See More

What Is Worldcoin? A Guide to the Iris-Scanning Crypto Project

12 mins
Fact Checked
by Ryan Glenn
Join our Trading Community on Telegram

Worldcoin is a crypto project born in a world where personal data and identity are increasingly vulnerable. The innovative —some say dystopian — project introduces an innovative biometric verification process. The project intends to redefine the landscape of digital identities and our interactions within the virtual domain. But what is Worldcoin, and what does all this mean? Here’s what you need to know.

What is Worldcoin?

Imagine a seamless process where a quick scan of your iris grants you a unique digital identity without collecting your personal details, ensuring both privacy and security. This is the core concept behind Worldcoin.

The project seeks to establish a global network of digital identities based on iris scans. Over two million individuals signed up for this innovative endeavor by April 2023 after its debut. It utilizes a specialized orb available in more than 30 cities worldwide.

Worldcoin sending transactions by month 2022-2024
Worldcoin sending transactions by month 2022-2023: Dune Analytics

Within a matter of seconds, the orb creates a distinct online identity for users, rewarding them with digital tokens known as “world coins.” Note that you do not need to give personal information to sign up. The Worldcoin app is the user’s own self-custodial wallet, wherein they have complete control. 

Worldcoin’s ambition extends beyond identity verification and token rewards. The model is a stepping stone towards a crypto-based universal basic income, where participants are financially compensated for their engagement. The Worldcoin project has four main key components:

1. World App

The World App is a wallet designed to hold various crypto, including the project’s native ERC-20 token, WLD. Users have a platform to manage their digital assets securely.

It’s designed for inclusivity — leveraging the Worldcoin and Ethereum protocols, the app seamlessly authenticates users’ proof of personhood with World ID.

2. World ID

This is a unique aspect of the Worldcoin project. The World ID is an “Anonymous ID” that links a person’s digital identity to their real-world identity. This is achieved through the use of “orb scanners” that scan a person’s iris, verifying their existence as a real individual. The scanner generates an identification code based on the structure of a person’s iris — which will be distinctively unique.

3. Proof of personhood

The Worldcoin project focuses on establishing a concept called “proof of personhood.” This means that by using the World ID and the iris-scanning technology, it aims to provide a reliable method for verifying the authenticity of an individual in the digital realm. The aim is to combat the rising difficulty of distinguishing between real humans and AI-generated personas.

4. Worldcoin and universal basic income (UBI):

One of the broader goals of Worldcoin is to eventually distribute a digital currency on a global scale. Users could employ the Worldcoin token for various transactions and interactions within the World App ecosystem.

Furthermore, the project envisions a path to an AI-funded universal basic income (UBI). In short, the UBI concept is one in which every citizen receives a regular sum of money from the government or another central authority to cover their basic needs. In this context, Worldcoin sees its digital currency as a potential means to implement such a system.

The team behind Worldcoin

Sam Altman, co-founder of OpenAI, envisioned the project. Max Novenstern, a philosopher, and Alex Blania, a physicist, joined forces to turn this vision into reality. While Sam remains the chairman, Alex has taken on the CEO role, leading the project and advocating its goals.

Best known as the CEO and founder of OpenAI (the pioneering research laboratory responsible for ChatGPT), Altman boasts a distinguished background. He previously served as the president of Y Combinator, a renowned startup accelerator, and was CEO of Reddit for a brief period.

Alex Blania, on the other hand, commands the position of CEO and Co-Founder at Tools for Humanity. The tech company also plays a pivotal role in the development of Worldcoin.

After three years in development, Worldcoin secured around $100 million in funding. The project has cultivated robust support from notable investors, including Andreessen Horowitz and Khosla Ventures. The culmination of these efforts materialized on July 24, 2023, marked by the launch of the Worldcoin cryptocurrency (WLD).

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.

Worldcoin consists of a privacy-preserving digital identity (World ID) and, where laws allow, a digital currency (WLD) received simply for being human. We hope that, where the rules are less clear, such as in the US, steps will be taken so more people can benefit from both.

Sam Altman and Alex Blania: Introducing WorldCoin

How does Worldcoin work?

World App - Worldcoin Wallet
World App, Worldcoin Wallet: Google Play

Step 1: Download the World App

Downloading the World App from Tools for Humanity allows users to create a Worldcoin account. Users can then access a digital wallet supporting various digital and traditional currencies, including stablecoins.

Step 2: Sign up for World ID

Users can sign up for World ID within the World App. The Orb uses iris biometrics to establish a person’s identity. This information results in a digital World ID that can be used pseudonymously for various applications. To receive free Worldcoin tokens and other digital currencies, visit a Worldcoin Operator and verify your unique identity using an Orb.

Step 3: Receive your free share of Worldcoin and other digital currencies

After verifying their identity through World ID, users can use the World App to learn about digital currencies and receive free airdrops of cryptos like bitcoin and ethereum. The project is also exploring ways users in eligible countries can claim their share of Worldcoin tokens using their World ID.

What are the benefits of Worldcoin?

Inclusion of underserved communities: For individuals in third-world countries or underserved populations who might not have access to traditional identity verification methods, Worldcoin’s biometric scanning could offer them a way to participate in the digital economy and access financial services.

Protection against AI threats: Having a robust proof of personhood protocol can help protect against identity theft and fraud. Worldcoin’s technology could provide an additional layer of security in financial transactions.

Potential for financial inclusion: If Worldcoin evolves into a global open-source network, it could facilitate financial inclusion for unbanked or underbanked — granting them access to a secure and efficient payment network.

Global universal basic income (UBI): While the concept of Worldcoin evolving into a global UBI is speculative, the potential of a decentralized cryptocurrency-based UBI system could provide a safety net for individuals in various economic situations.

Potential socio-economic impact: Worldcoin could potentially empower individuals in impoverished areas by providing them with access to a new form of digital wealth — potentially improving the economic prospects of many.

The iris scan

iris scanning

Worldcoin’s digital ID system revolves around an innovative iris scan technology. The iris, which is the colorful part of your eye, is unique to each person — making it a great way to identify people. A device called the Orb uses this iris scan to create a special World ID code.

The Orb is about the size of a bowling ball and is smooth with a chrome shell. A clear shell covers the chrome shell to slow down the Orb’s deterioration over time. This novel technology employs infrared cameras, sensors, and AI-driven neural networks. This combination of futuristic tech scans a user’s iris, confirming their human identity. 

The Orb is a high-tech gadget that costs $50 million to develop. Worldcoin has placed more than 370 of these devices worldwide, and the project’s success depends on many people using them. Specially trained operators handle these devices, scanning people’s irises. Every time someone is successfully scanned, they receive rewards in crypto.

In short, people look into the Orb, it scans their irises, and then it makes their World ID. These World IDs are connected to Ethereum’s Optimism layer-2 solution using a QR code made by the World App.

The technology takes this special data and turns it into a code on the blockchain to keep the person’s private information safe and secure.

Privacy implications of the iris scan

While the concept of a decentralized digital ID sounds promising, it inevitably raises concerns about privacy and data security. Worldcoin’s approach to iris scanning presents several implications that warrant careful consideration.

Data collection and storage

Initially, Worldcoin collected all Orb-related data for training purposes. However, the project has since offered an opt-out option for data collection. Yet, there are questions about the actual processing of this data and whether it is locally stored or deleted after registration. Not all of the Orb’s hardware is open-sourced, raising concerns about data security and privacy.

Linking World IDs to wallets

A critical aspect of the World Coins system is the connection between World IDs and users’ wallet addresses on the World App. While the hash-based approach ensures some degree of privacy, the linkage becomes problematic when World ID holders transact on crypto exchanges that require Know Your Customer (KYC) procedures. This potentially compromises the privacy intended by the system.

Centralization and regulation

Worldcoin’s foundation controls the project’s smart contracts through a multi-signature wallet. This centralized aspect contradicts the project’s vision of a decentralized identity system. Moreover, concerns about global regulations targeting digital IDs could lead to government crackdowns, hampering the project’s development and potential adoption.

Hardware reliability

The success of the iris scan technology relies heavily on the accuracy and reliability of the Orb. External factors such as geopolitical tensions and supply chain issues could impact the manufacturing and distribution of these devices, potentially affecting the overall functionality of the system.

The regulatory landscape for Worldcoin

Active investigations are underway in the U.K., France, Germany, and Spain. These inquiries focus on the legality of data collection, consent processes, and secure data storage.

Worldcoin’s interactions with the Bavarian Data Protection Authority (DPA) are ongoing in 2024. Prompted by an information request from their French counterpart, the DPA closely monitors Worldcoin’s activities in Bavaria, a German state where the project manages European user data.

Additionally, Worldcoin’s financial dimension is subject to examination by Germany’s Federal Financial Supervisory Authority (BaFin). BaFin is monitoring the project’s developments, ensuring comprehensive oversight. As of March 2024, regulatory bodies around the globe are examining how Worldcoin’s use of data complies (or doesn’t) with national and international standards.

In February 2024, Worldcoin updated its documentation around compliance assurance. The company states the following:

“Worldcoin is designed to be fully compliant with all laws and regulations governing data collection and data transfer. These include, but are not limited to:

  • Europe’s General Data Protection Regulation (“GDPR”)
  • The Argentine Personal Data Protection Law (“PDPL”)
  • The Mexican Federal Law on the Protection of Personal Data held by Private Parties and related regulations
  • The Singaporean Personal Data Protection Act (“PDPA”)
  • The Hong Kong Personal Data Privacy Ordinance (“PDPO”)
  • The Japanese Act on the Protection of Personal Information Act No. 57 of 2003 (“APPI”)
  • The South Korean Personal Information Protection Act (“PIPA”)

    In the European Union, the project is also under the supervision of the Bavarian State Office for Data Protection Supervision (Bayerisches Landesamt für Datenschutz)”.
How Worldcoin engages with policymakers and ensures compliance: Worldcoin

Other concerns surrounding Worldcoin

what is worldcoin? privacy concerns

It’s important to note that due to regulatory concerns, users from the United States are currently excluded from participating in this token-based economy. Another significant user concern is the centralized control exerted by the Worldcoin Foundation, despite its claims of decentralization.

We definitely need digital ID of humans urgently and Worldcoin is one answer. There will be many but it is vital. The next step is fully decentralized versions (with zk proof too). It too will come and is needed and desired. But Worldcoin is another example of how blockchain changes everything and how it gets to 1 billion people. CBDC’s too.

The fight will be over centralization vs. decentralization. Our physical nation state stuff will be centralized and our digital nation /network state stuff will be mainly decentralized.

Raoul Pal: Twitter

The WorldCoin token (WLD)

The core of Worldcoin’s ecosystem revolves around the Worldcoin token (WLD), acting as the conduit for the digital identity system’s functioning. Worldcoin (WLD) is an ERC-20 token on Ethereum Mainnet. Its value experienced a notable increase post-listing on major cryptocurrency exchanges like Binance. The initial supply cap was 10 billion WLD, with a circulating supply of over 141.53 million.

However, in November 2023 WLD would take dive in price reacting to the ousting of Sam Altman. To this date, the reasoning for Altman’s firing is shrouded in mystery. This decision was eventually reverted and the price of WLD would recover.

In February 2024, Worldcoin (WLD) experienced a significant surge, increasing its valuation to over $1.1 billion. This growth was linked to the launch of OpenAI’s Sora, another of CEO Sam Altman’s AI projects, and a bullish trend in the crypto and AI markets.

What is Worldcoin? price surge
WLD price surge: coinmarketcap.com

The WLD token’s price peaked at $8.6. Moreover, this period also saw remarkable growth in user signups, adding 600,000 new users within a week, propelled by the unique iris scan requirement via the project’s orb devices, totaling over 3.5 million signups.

This bullish trend can also be attributed to NVIDIA’s earnings report, which beat its second quarter projections. As a result, many AI related tokens surged in price, including WLD. However, this news would quickly be short lived.

On Friday March 1, 2024, the market reacted to news of Elon Musk suing OpenAi and Sam Altman for breach of contract. Musk who was a former co-chair with Sam Altman also assisted in founding the company. He cited his reasoning was OpenAi losing its core values of benefitting humanity instead of individuals.

WLD would eventually take a 6.5% drop from it’s top on the same day. However, it would eventually recover and make higher lows and maintain resist at a little less than $8.

WLD distribution and usage

Worldcoin token distribution fits into several categories. Around 75% of the tokens will be allocated to the Worldcoin Community, serving ecosystem funds and network operations managed by the Worldcoin Foundation, with a gradual shift towards decentralized governance.

The initial development team, Tools for Humanity (TFH), and other providers will receive 9.8% for their foundational contributions. The distribution reserves another 13.5% for TFH Investors who supported the project’s pre-launch phase, aiding in developing critical components like the biometric imaging device (Orb), the initial protocol version, and the World App.

Worldcoin token is designed as a utility token with governance properties, empowering users by assigning them a role over the future of the protocol.  The initial supply of 10 billion WLD is intended to correspond to the global population — with allocations for early investors, the Worldcoin community, and the project’s development.

Beyond conventional “one-token-one-vote” governance mechanisms, the introduction of World ID paves the way for “one-person-one-vote” mechanisms and novel voting systems. These two mechanisms combine in many ways to enable new ways of governance. 

Ultimately, WLD distribution follows an aggressive vesting schedule, emphasizing the role of the Worldcoin community in shaping the token’s utility. While WLD can be utilized for various purposes within the Worldcoin ecosystem, its success hinges on user adoption and real-world applications.

WLD wallets

Worldcoin users interact with the WLD token through the Worldcoin app and its supported wallets, which facilitate transactions, claims, and interactions within the Worldcoin network. 

A Worldcoin (WLD) wallet can be either a software wallet or a hardware device designed to securely store your private keys, enabling seamless participation in the Worldcoin (WLD) network for sending and receiving tokens.

For optimal security, encrypted hardware wallets like those crafted by Ledger or Trezor stand out as prime choices for safeguarding your Worldcoin (WLD) holdings.

Worldcoin (WLD) is also compatible with various renowned wallet options, including Trust Wallet, Ambire Wallet, Atomic Wallet, Binance Chain Wallet, Coinomi, and more.

What’s in store for Worldcoin’s future?

Worldcoin marks a significant milestone in the realm of digital identity and cryptocurrencies. Its innovative approach to iris-based digital IDs and the potential for users to earn tokens has garnered attention, debate, and investment. However, while the project’s vision aligns with the broader goals of blockchain technology, it also raises significant concerns about data privacy, centralization, and regulatory challenges.

The ultimate success of Worldcoin will eventually rely on a delicate balance between achieving its mission and navigating the evolving landscape of crypto regulations, privacy rights, and user adoption.

Frequently asked questions

Top crypto projects in the US | July 2024
Harambe AI Harambe AI Explore
Uphold Uphold Explore
Exodus Exodus Explore
Coinbase Coinbase Explore
Chain GPT Chain GPT Explore
Top crypto projects in the US | July 2024
Harambe AI Harambe AI Explore
Uphold Uphold Explore
Exodus Exodus Explore
Coinbase Coinbase Explore
Chain GPT Chain GPT Explore
Top crypto projects in the US | July 2024

Trusted

Disclaimer

In line with the Trust Project guidelines, the educational content on this website is offered in good faith and for general information purposes only. BeInCrypto prioritizes providing high-quality information, taking the time to research and create informative content for readers. While partners may reward the company with commissions for placements in articles, these commissions do not influence the unbiased, honest, and helpful content creation process. Any action taken by the reader based on this information is strictly at their own risk. Please note that our Terms and Conditions, Privacy Policy, and Disclaimers have been updated.

Ayotomiwa-Oladotun.jpg
Ayotomiwa Oladotun
Ayotomiwa is a tech writer and marketer focused on blockchain, crypto, DeFi, the metaverse, and NFTs. Ayotomiwa works with a number of emerging tech startups and crypto exchange platforms, including being the content manager for BeArt LLC. Ayotomiwa holds a Bachelor of Engineering from the Federal University of Technology, Akure.
READ FULL BIO
Sponsored
Sponsored