A Quick Understanding of OpenAI Founder’s ‘World Coin

Almost everyone has had a dream like this: “Doing nothing and getting paid every day.”

Now, this dream that seems absolutely impossible from various perspectives actually has a chance to come true.

On July 24th local time, Worldcoin, a cryptocurrency co-founded by Sam Altman, the leader of OpenAI, was officially launched.

Just after its launch, Worldcoin soared from $1.70 to $3.58, with a 111% increase in price on its first day.

What exactly is Worldcoin and what is its connection with the AI superstar Sam Altman? What ambitions does Sam Altman hide behind Worldcoin?

01 Worldcoin for the people of the world

Even just a year ago, the most well-known tech star in the world was Elon Musk; but now, Sam Altman, the founder of OpenAI, may have even higher fame than the Silicon Valley Iron Man.

However, Musk and Altman have one thing in common–besides their super successful main businesses, they also have more ambitious side businesses. Musk, who manufactures electric cars, dreams of leading humans to outer space; Altman, who researches AI, is truly concerned not only about the arrival of general artificial intelligence (AGI), but also about the ultimate question of how human society will operate after AGI arrives.

One of Altman’s ideas is to provide a “Universal Basic Income (UBI)” for humans in the “AI era,” allowing people around the world to “share” the abundant profits brought by AI.

However, the first problem to solve in order to give money to billions of people around the world is identity verification.

And the solution that Altman found is Worldcoin, a Web3 project that aims to help people cope with the challenges brought by AI by solving “digital identity” and implementing “Universal Basic Income (UBI).”

Sam Altman has always been concerned about blockchain projects.

In his early years, he founded Y Combinator and launched a very ambitious project in the United States–“Universal Basic Income (UBI).” In this plan, participants can receive a fixed salary without any additional conditions, so they can freely choose their favorite careers without worrying about their livelihood.

In March 2021, Sam Altman also publicly voiced his support for the token mechanism in the blockchain field, believing that tokens can serve as a “Universal Basic Income (UBI)” and provide fair financial infrastructure for low-income groups.

A few months later, Sam Altman co-founded the cryptocurrency project Worldcoin with Alex Blania and Max Novendstern.

Alex Blania and Sam Altman|Worldcoin

Worldcoin is an open-source protocol supported by global developers, individuals, economists, and technical experts, dedicated to expanding participation in and access to the global economy. It consists of two parts: the Worldcoin Foundation and Tools for Humanity (TFH). The former is the initiator and guardian of Worldcoin, focusing on the community development of Worldcoin; the latter is the actual technical development entity and currently serves as the advisor of the foundation and operator of the World App.

Interestingly, founder Sam Altman positions Worldcoin as adaptable and timely.

In its early stages, Sam Altman positioned Worldcoin as a company focused on Universal Basic Income (UBI). He hoped to use cryptocurrency to distribute the immense wealth generated by AI equally to every person in the world. Specifically, it involved airdropping “inclusive and open” cryptocurrency to one billion people who underwent iris scanning.

However, due to negative news coverage and the volatility of cryptocurrency prices, Worldcoin’s progress was not smooth. It was even forced to halt operations in at least seven countries. However, coincidentally, ChatGPT and AI became popular, providing Worldcoin with a new direction.

Therefore, in March of this year, Altman repositioned Worldcoin as a project focused on “identity verification,” emphasizing the “inherent value,” “equal rights,” “privacy protection,” and “open collaboration” that individuals possess in the AI era.

Altman explained, “With the development of AI, the demand for systems that provide proof of identity, wealth redistribution, and new experiments in global governance systems is growing.” Worldcoin also stated on its official Twitter account, “The popularity of ChatGPT brings challenges in distinguishing between humans and AI in the digital world.”

Therefore, the current official description of Worldcoin is as follows:

Worldcoin is building the world’s largest public infrastructure for identity and financial networks, giving everyone ownership.

Our goal is to create universal access to the global economy, accelerating the transition to an economic future that benefits every person on Earth, regardless of their country or background.

In short, Worldcoin now aims to create a fair global digital identity and cryptocurrency system. By using cryptocurrency as infrastructure, it aims to achieve the concept of “inclusive finance” and make the “global economy belong to everyone.”

This “vision” is significant because there are still hundreds of millions of people worldwide who are unable to verify their identity digitally, leaving them unable to access financial systems and services.

Additionally, it is worth mentioning that Worldcoin’s long-term goal is to create a completely decentralized system. However, the development of this project is currently managed by Tools for Humanity (TFH), with plans to eventually transfer control to a non-profit foundation.

So far, over 700,000 users from approximately 25 countries and regions, including Chile, France, and Kenya, have registered with Worldcoin. The company plans to fully launch the project in 2023 and hopes to rapidly expand its user base.

However, when Worldcoin was introduced in 2021, many critics viewed it as a “dystopian nightmare.” Nevertheless, it received support from notable investors such as a16z, Coinbase Ventures, Day One Ventures, and also received support from several Ethereum projects, Polkadot, and Web Foundation founders in its angel round of financing. In total, it raised $125 million in two rounds of funding and recently raised $115 million in a series C financing led by Blockchain Capital.

What kind of business model has Worldcoin developed in the face of many investors?

Worldcoin’s approach is similar to OpenAI’s. In a statement, it disclosed that the company would transition into a nonprofit organization. Currently, trading on the WorldAPP wallet is free. Not only that, participating in background tests within the wallet can also earn cryptocurrency rewards equivalent to $9. It is worth noting that interactions on the blockchain require gas fees. So WorldAPP being free means that they not only bear the transaction fees but also use the money for “rebate subsidies”.

It is estimated that when Worldcoin reaches a certain scale, it will inevitably charge fees. For example, when it becomes a platform for application entry, it can impose taxes. Another example is providing identity verification services to third parties. This has already been implemented since March of this year and may become Worldcoin’s new revenue model.

It is also worth mentioning that Worldcoin’s ambition in the Web3 space extends beyond the cryptocurrency field. It is actively planning applications in social networks, voting, financial services, customer incentives, markets, currency distribution, and other areas.

02 How can “Web3” save “AI”?

So, how does Altman plan to use Worldcoin to achieve the vision of “global economy belongs to everyone”?

Altman divides Worldcoin into three tasks: a privacy-protecting identity protocol (World ID), a global token (Worldcoin) to be distributed for free to 1 billion people worldwide, and a wallet system (WorldAPP) that supports the use of Worldcoin tokens, digital assets, and traditional currencies for payment, purchase, and transfer on a global scale.

Three important applications of Worldcoin|Worldcoin

World ID

First is World ID, which is the prerequisite for users to participate in the “global economy”. It is the underlying identity protocol that Worldcoin attempts to build for the “global digital identity” authentication system. It serves as the identity credential for users to receive Worldcoin, so it must ensure “one person, one identity” in order to achieve fair distribution of wealth.

To achieve this, Worldcoin uses the biometric device Orb for “iris scanning” of users, providing them with a unique and verifiable digital identity – World ID. Since the iris is one of the human biometric features with high uniqueness and stability, it cannot be duplicated or imitated.

Orb device used for iris recognition|Worldcoin

At the same time, World ID adopts the “Proof of Personhood (PoP)” mechanism, which is a complex combination of custom hardware, machine learning, cryptography, and blockchain technology. Through this credential, the World ID protocol enables everyone to prove their humanity online without relying on third-party institutions.

This innovative identity verification method utilizes “Zero-knowledge proofs (ZKP)” to protect user privacy to the greatest extent and achieves identity security through World ID managed by the users themselves.

In short, World ID is an open and permissionless identity protocol with broad application prospects. It can not only serve as a secure and reliable “universal digital passport,” but also prove a person’s identity while protecting privacy.

This is crucial for addressing the problem of widespread false accounts caused by AI. For example, in social media, it can reduce the presence of AI-generated false accounts and malicious comments, as well as the spread of AI-generated misinformation, and even promote democratic governance online. In addition, it can prevent AI accounts from participating in certain tasks, ensuring that only real humans are involved, thereby safeguarding human employment rights and interests.

In response to this, Alex Blania, CEO of Worldcoin, said that “in this world where AI raises new questions about what is human and what is not human, World ID is very important. This is also an example of the overlap between cryptocurrencies and the AI industry. It can help solve one of the most challenging problems on the Internet: preventing false identities from interfering with online activities while respecting privacy. In addition, potential applications include dealing with false personal profiles on social media, distributing universal basic income (UBI), and authorizing new forms of digital democracy.”

Worldcoin

As mentioned earlier, once users complete the authentication process for World ID, they receive Worldcoin tokens and obtain their own universal basic income (UBI). They can then use these tokens to purchase daily necessities on the World App.

Considering the future, 65% of human jobs will be replaced by AI, which means that soon, more than 65% of the global population will have no income. The global distribution of Worldcoin ensures that every user can receive fair and stable basic income, effectively alleviating job losses caused by AI and providing a certain degree of economic security to people.

According to the plan, Worldcoin is expected to issue 10 billion WLD tokens by the end of June, of which 2 billion will be used for long-term funding of Worldcoin protocol developers and investors, and the remaining 8 billion will be distributed for free to all users worldwide.

Principle of Worldcoin distribution|Worldcoin

In terms of token mechanism, Worldcoin adopts a “deflationary reward model” and enhances activity through task incentives. This means that the distribution of WLD tokens is not a one-time issuance, but rather through completing tasks. In the early stages, users can receive 1 token per week, and later on, the time interval for token distribution may increase to 1 token per month, which helps maintain user activity.

From the data perspective, it has also achieved good results. Currently, there are nearly 2 million registered users, and according to Altman’s vision, billions of people will use World ID to receive universal basic income (UBI) in the future.

World App

Finally, there is the World App, which is a native wallet developed specifically for Worldcoin and also serves as the carrier for WorldID, which means it is both a “cryptocurrency wallet” and an “identity card” in the AI era.

The World App is built on Polygon, and anyone can download and use it at any time. Its purpose is to enable billions of people worldwide to have access to “decentralized” identity and finance, thus participating in the “global economy”.

The World App made its debut on May 8, 2023, and after extensive development and learning from more than 1.5 million beta testers, the first phase of the World App has now been launched globally. With the establishment of the non-profit Worldcoin Foundation, the World App is undergoing the process of “decentralization” in governance, operations, and funding activities.

The team behind the World App, Tools for Humanity (TFH), stated in a statement to The Chainsaw, “The World App has now been launched in more than 100 countries, with nearly 2 million users and 600,000 monthly active users, making it the most popular way to engage with cryptocurrencies today.”

World App Design | Worldcoin

They are excited about the important role that the World App plays in popularizing “decentralized” technology and believe that the resulting achievement will ultimately promote privacy-oriented identity verification and the popularization of internet-native financial services, thereby allowing digital currencies to occupy a place in global fair distribution and public governance.

In summary, Worldcoin’s vision is highly forward-looking and ambitious. Its plans to establish global identities (World ID), global tokens (Worldcoin), and wallet systems (World App) all have extensive practical application value, which can help address the “challenges” brought by AI and bring new “opportunities” for the development of the digital economy.

03 “Risks” and “Challenges”

Although Worldcoin has influential founders behind it, its advanced concepts still face many doubts and challenges. Specifically, the problems that Worldcoin faces mainly include the following aspects:

Technological and Privacy Risks

The first and foremost is Worldcoin’s “iris scanning” technology solution. It has not been widely validated and applied, so many people are questioning the reliability and stability of this biometric technology, especially its ability to protect privacy. Edward Snowden, the protagonist of the US “Prismgate” incident, wrote on Twitter, “The human body is not a punching machine,” expressing his resistance to human “iris scanning”.

In response to this, although the Worldcoin team claims that “IrisCode” is the only information that leaves the iris scanning device Orb, and the users’ original biometric information will be immediately destroyed, and the on-chain identity is completely encrypted and secure, and untraceable, this does not completely eliminate people’s concerns about privacy issues. Even privacy and surveillance experts have issued warnings that “collecting biometric data, even if not stored, is still a risky business.”

In addition, the popularity of the iris scanning device Orb is also an important issue for Worldcoin. Worldcoin needs to ensure that this device can achieve wide coverage and is easily accessible to users around the world. To address this, Worldcoin has taken measures such as providing coupons and loan incentives to promote user registration and device adoption, but the actual results have been minimal.

Legal and Regulatory Risks

Currently, Worldcoin has not received widespread legal recognition, so its compliance also faces certain difficulties and challenges.

For example, some countries and regions like the United States have restrictions and regulations on World ID and Worldcoin, which prevents Worldcoin from entering these countries. Currently, Worldcoin is only licensed in 24 countries, 14 of which are developing countries and 8 are in Africa.

However, residents in impoverished areas generally lack legal protection, and the cost of data collection is also the lowest. Collecting user data in such places has been criticized by many media as “a form of crypto-colonialism.”

Ari LianGuaiul, the founder of crypto investment firm Block Tower Capital, has also pointed out that “Worldcoin’s core business model is to steal data from the poorest people in the world, exploit the data in a way that exploits the poor, and monetize it. This is just a criminal act of stealing data from the poor through fraud.” Moreover, users in impoverished areas generally have little knowledge about Worldcoin and the crypto industry, so it may not be a good thing for them to join the crypto world.

In addition, regulation is a risk that Worldcoin cannot bypass, as currency is the sovereignty of nation-states. The stablecoin project Libra, which once carried the vision of a “world currency,” ultimately failed even with Facebook’s support.

Competition and Financial Risks

The digital currency market is highly competitive, and Worldcoin needs to face challenges from other competitors. Established cryptocurrency projects like plnetwork have a strong position that is difficult to shake, and emerging competitors are constantly launching more attractive products and services, which will affect Worldcoin’s market share and user base. In addition, Worldcoin also has to deal with financial risks under the high volatility of cryptocurrency prices.

As an innovative cryptocurrency project, Worldcoin combines AI, blockchain technology, and the concept of universal basic income (UBI) to provide a sustainable and fair income solution for everyone in the world.

It is Sam Altman’s vision for the future of artificial general intelligence (AGI) world, as he previously mentioned, “I hope the benefits, access, and governance of AGI can be widely and fairly shared.” This vision is also endorsed by “his own child” ChatGPT, which states, “AI and Web3 can mutually promote and support more innovation.”

Despite facing many doubts and challenges in the short term, there is no doubt that Worldcoin is one of the most promising cryptographic applications to date.

“With the booming development of AI, the demand for systems that provide identity verification, as well as the demand for wealth redistribution and global governance systems, is growing.”

Sam Altman is so confident about the future of Worldcoin.

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