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Orbs, Irises, and AI: An investor’s guide to understanding WorldCoin


This week, a project called WorldCoin has emerged as a unique intersection of artificial intelligence (AI) and crypto. On July 24, the WorldCoin team unveiled plans for worldwide expansion and the launch of its token WLD. The primary goal of this highly ambitious project is to create a reliable solution for distinguishing humans from AI on the internet while promoting universal access to the global economy, regardless of geographic or socioeconomic boundaries. In this article, we will explore what WorldCoin is, how it works, its potential web services, market numbers, the challenges it faces and why it matters for crypto investors.


What is WorldCoin?


WorldCoin is an open-source protocol driven by a global community of developers, economists, and technologists, co-founded by Sam Altman, the CEO of OpenAI. At the heart of WorldCoin lies the World ID, a privacy-preserving digital identity system built on the Ethereum blockchain. This system validates individuals as unique entities while safeguarding their personal data. World ID serves as a passport for accessing online services, allowing users to sign into various platforms without sharing sensitive information. To verify an individual's real and unique identity, WorldCoin employs a proprietary device called the Orb. The Orb captures and processes images of an individual's iris pattern, which is unique to each person and nearly impossible to fake. This approach ensures privacy and effectively distinguishes individuals from one another without compromising personal information.



The Orb, Source: worldcoin.org



The WorldCoin token, WLD, is freely distributed to users solely for their uniqueness. Beyond its practical applications, WLD plays future governance roles within the WorldCoin ecosystem. Users receive WLD as an airdrop upon successfully passing the Orb verification process. The current circulating supply of WLD is approximately 110 million, with a predefined maximum supply of 10 billion tokens. The token's performance has been impressive, reaching a price of $3.30 on its debut day. Currently trading at $2.30, the token's fully diluted market cap sits at approximately $23 billion, which would position it among the top 10 most valuable crypto assets if that total supply were to be fully circulating in the market. 

Worldcoin has a unique opportunity to establish a new primitive for the Internet - Proof of Personhood. Given recent developments in AI, Proof of Personhood will probably be very useful for distinguishing between humans and bots on the Internet. Also, it will have the chance to unlock various new web services across different sectors:


  • Social Networks: Bolstering bot protection, community moderation, and content attribution.

  • Voting: Empowering decentralized autonomous organization (DAO) governance, government elections, online polls, and censuses.

  • Financial Services: Enabling undercollateralized lending, fraud prevention, and regulatory compliance.

  • Customer Incentives: Facilitating loyalty programs, coupons, referrals, and free trials.

  • Marketplaces: Enhancing reputation systems, combating fake reviews and transactions, and preventing scalping.

  • Money Distribution: Streamlining government welfare, non-profit aid, scholarships, crypto airdrops, and universal basic income (UBI) programs.


Concerns and Challenges 


Despite its ambitious vision, WorldCoin has faced some pushback, with concerns primarily revolving around privacy and scalability. Some experts, including Ethereum co-founder Vitalik Buterin, have raised concerns about potential data leakage during the scanning process, such as capturing sensitive information like a person's sex, ethnicity, or medical conditions. WorldCoin's team has been proactive in addressing privacy concerns, emphasizing their commitment to privacy preservation and noting that the Orb only generates a unique code from an individual's iris scan and the original image is promptly destroyed. Additionally, scaling the project to reach the world's eight billion people poses a significant challenge, given the limited number of Orbs available. Beyond these challenges, there are a number of other obstacles to adoption that include: 


  • Trust: Erosion of trust in the Orb or the sign-up process can hinder future adoption.

  • Regulation: Navigating regulatory challenges in different countries.

  • Logistics: Overcoming logistical hurdles during mass manufacturing/distribution of Orbs.

  • Tokenomics: Ensuring the tokenomics design of WLD remains incentivizing for the community.

  • Marketing: How to convince billions of people worldwide to embrace WorldCoin.

  • Security: Users' phones could be hacked, users could be coerced into scanning their irises while showing the public key that belongs to someone else, or other creative ways of fooling people may surface.


So why does WorldCoin matter?


Despite the challenges and it being in the very early stages of adoption, WorldCoin's potential impact is immense. For example: 


  • WorldCoin could become one of the largest onramps to crypto, introducing billions of people to the world of blockchain-based applications and financial services.

  • The concept of Proof-of-Personhood established by World ID will be crucial in distinguishing humans from internet bots, especially as AI advances.

  • WorldCoin can reduce friction in internet and blockchain services, enhancing trust and security by identifying bots and humans with precision.


Our team at Hashdex believes that WorldCoin is a first-of-its-kind crypto project that deserves investors’ attention. While the project, at its current stage, faces many pressing challenges ahead, its global ambition, the attempt to bridge the gap between AI and crypto and its indirect relationship with OpenAI—the company behind ChatGPT—makes it a project to follow closely. While it currently lacks the criteria to be included in our investment products, we will monitor its development and potential to unlock new web services, boost global crypto adoption, and improve internet security. 


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