On July 24th, Worldcoin officially launched, once again attracting a lot of attention and controversy.
Worldcoin is another Web3 project founded by Sam Altman, the CEO of OpenAI. It identifies user identity by scanning the user’s iris and establishes a digital identity and crypto network.
Worldcoin's iris scanning device Orb deployed in Hong Kong Source: BlockTempo
The vision of Worldcoin is to enable everyone in the world to have access to global economic opportunities, regardless of their country or background. As long as a person scans their eyes once with Worldcoin’s spherical scanner “Orb” to prove that they are a real person, they can receive a certain amount of WLD coins.
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There is also a similar project in the Polkadot ecosystem called Encointer.
Like Worldcoin, Encointer aims to provide a more fair and inclusive economic system for people around the world, both offering UBI (Universal Basic Income) to users. Encointer allows any community to create and distribute its own local currency to promote local economic activities and verify users’ real identities through offline gatherings.
This article will help everyone understand how Worldcoin and Encointer work and their similarities and differences.
Vision & Implementation
Worldcoin was founded in 2019 with the vision of creating the world’s largest human identity and financial network, providing ownership to everyone. It aims to enable everyone in the world to share the opportunities for global economic development, regardless of their country or background.
Worldcoin believes that as the era of artificial intelligence approaches, we need a means to distinguish real people from AI on the Internet, and everyone should have their own digital identity and wealth. Therefore, Worldcoin aims to build a global, fair, and inclusive open-source financial protocol and create a globally owned currency, WLD, which is distributed fairly to as many people as possible.
Encointer, also founded in 2019, aims to enable communities around the world to generate their own autonomous currency and use it to stimulate the local economy. Each community currency has its own unique symbol and name, as well as its own determined issuance and distribution cycle. Each community currency is formed based on local supply and demand relationships, unaffected by external macroeconomic factors.
Encointer believes that economically underdeveloped areas often lack growth momentum. Although people have skills and products to sell, they do not have enough purchasing power to buy from others. Encointer provides a free and user-friendly technology that allows any community to generate its own currency and distribute it evenly to all active participants on a regular basis, thereby promoting local economic activities.
Both adopt a similar “three-piece suite” – DID + protocol (token) + wallet.
Worldcoin consists of three main components:
- World ID: A digital identity system based on iris scanning, which can provide a unique and difficult-to-fake identity for each individual. Users can generate a World ID by using the spherical scanner Orb developed by Worldcoin for iris scanning.
- Worldcoin: A cryptocurrency protocol based on Ethereum Layer 2 technology. Worldcoin adopts a distribution mechanism similar to Universal Basic Income (UBI), which periodically distributes a certain amount of Worldcoin tokens (WLD) to all users who have been verified through World ID. Users can use WLD for transactions or investments, or exchange it for other fiat currencies or cryptocurrencies.
- World App: A mobile application compatible with World ID and Worldcoin protocol, which allows users to manage their digital identity and assets. Users can register and participate in iris scanning verification, obtain WLD tokens, and conduct transactions or transfers with other users through World App.
Encointer also consists of three parts:
- Encointer Identity System: A system that verifies human identity through physical meetings (Ceremonies), which prevents anyone from obtaining additional income through multiple identities or robots. The Ceremony is a regularly held social event that requires each participant to meet and communicate with three other strangers. In this way, each participant can prove that they are a real and actively participating human in the community.
- Encointer Protocol: A cryptocurrency protocol developed based on the Substrate framework, which allows any community to create its own independent and customizable currency. Each community currency has its own unique symbol and name, as well as its determined issuance and distribution cycle. Each community currency is based on local supply and demand relationships and is not affected by external macroeconomic factors.
- Encointer App: A mobile application compatible with Encointer protocol and identity system, which allows users to easily create or join a community currency, participate in Ceremonies, and receive the allocated currency. Users can also view and manage their coins through Encointer App, invite friends to join, and endorse their identities.
Methods of Verifying User Identity
For any operation involving “giving coins” to users, a major challenge is how to verify that users are real people and prevent “Sybil attacks” where one person controls multiple accounts.
Worldcoin uses iris scanning as the verification method. The iris is a unique and less changeable biometric feature for each individual, which is more difficult to forge than facial information. Therefore, users can prove that they are real people through iris scanning without the need for identity documents issued by the government.
Iris collection is not a common method of identity verification. For this reason, Worldcoin has developed a dedicated device called “Orb” to scan irises. Worldcoin recruits local operators in each region and provides Orb devices for operators to promote and conduct scans to local users.
However, collecting iris information as biometric data is obviously sensitive, which has brought Worldcoin a lot of controversy and promotion difficulties.
In Worldcoin’s original plan, after collecting eye images, a unique identifier called IrisHash will be generated through hashing, and the eye images will then be permanently deleted. Semaphore zero-knowledge proof system is used to enhance privacy protection. However, in order to optimize the data algorithm for generating unique identifiers, the team still establishes an iris database for users who have no objections. Although the team claims that all iris data will be deleted after the algorithm optimization is completed, no specific deletion time is mentioned. If these biometric data are stolen, it may invade user privacy.
In addition, some countries have explicit regulations on how commercial companies can use privacy data, which do not allow the transfer of biological information of their citizens to foreign countries. However, Worldcoin’s data processing organizations are located in countries such as the United States, the United Kingdom, Germany, Japan, and India. According to Bloomberg’s report last year, Worldcoin has suspended operations in at least 7 countries.
If Worldcoin uses eyes to verify that you are a real person, Encointer uses feet to verify. Encointer also adopts a novel verification method called Ceremony.
Ceremony is a regular social event that requires each participant to meet and communicate with three other strangers. In this way, each participant can prove that they are a real person who actively participates in community life.
After users download the Encointer application, participants in each Encointer community will be randomly assigned to a small physical gathering. These gatherings are held regularly at randomly selected locations. When the event starts, each participant will scan the QR code of other participants to confirm their attendance, and these proofs will be recorded on the highly secure Kusama blockchain ledger. Since all Encointer gatherings are held simultaneously, it is impossible to participate in more than one event within each cycle (because a person cannot be in multiple places at the same time). In this way, it can be ensured that one person cannot control multiple Encointer accounts.
This verification method also does not require users to provide any national or institution-issued identification documents, making Encointer open and inclusive to people without formal identification.
Compared with Worldcoin, Encointer’s verification method does not collect users’ biometric information, nor does it require any centralized institutions or third parties to review or store users’ identity information, ensuring users’ privacy and autonomy. Moreover, no special scanning devices are needed, and users can register anywhere in the world with just a smartphone. Regular gatherings also help strengthen the connection among community members and enhance community cohesion.
However, it is still a bit troublesome to verify through real attendance at events (not very friendly to social anxiety), and the number of participants in offline events is limited by venues, etc., so there are generally not many people. This makes Encointer more suitable for smaller-scale local currencies.
Worldcoin had its first registered user in May 2021 and has been continuously expanding the deployment of Orb and recruiting new operators to collect more iris photos. Before the mainnet went live, rewards for users were in the form of WLD “vouchers”. On July 24, 2023, Worldcoin’s mainnet officially went live, and the promised rewards to users were finally delivered.
According to the Worldcoin official website, 346 Orb devices have been deployed in 34 countries, and 2.21 million people have proven their identities and registered World IDs by scanning. In the past 7 days, the average daily transaction volume of the World App wallet exceeded 120,000 transactions.
The Encointer blockchain became the second system parallel chain (Common Good LianGuairachain) of Kusama in January 2022, providing real-person identity verification infrastructure for the ecosystem.
Encointer does not directly issue its own currency but provides a platform for communities to create local tokens. Currently, there are two communities using Encointer.
The first is Zurich Leu in Zurich, Switzerland, which provides additional income for community users and helps the development of local businesses. Although Zurich is a relatively affluent area, it still faces high levels of inequality, and the citizens of Zurich are very open to new concepts such as basic income, making it suitable for this kind of social experiment.
The second community using Encointer is Green Bay in Wisconsin, USA, where they have issued a local community currency called the Green Bay Dollar. With over 100,000 residents, the main purpose of the Green Bay Dollar is to encourage users to support local businesses and foster community participation, as well as help businesses cultivate customer loyalty and reward outstanding employees.
Both Worldcoin and Encointer hope to achieve economic inclusivity using Web3 technology. However, they differ significantly in verification methods, target users, and operational methods.
Worldcoin is a global project with a unified token, WLD. It requires the use of dedicated Orb devices to scan the eyes and register, and then distributes WLD to registered users. Encointer is a local project where each local community can create its own local currency. It does not require any dedicated devices, only regular participation in offline gatherings to mutually verify identities with other randomly assigned users on-site.