What is Worldcoin? An In-Depth Look at the Cryptocurrency Promising Universal Basic Income

Worldcoin, a groundbreaking cryptocurrency platform co-founded by OpenAI CEO Sam Altman, has officially launched after three years of development. The platform aims to provide users with a verified digital identity, a cryptocurrency token named Worldcoin (WLD), and a crypto wallet app. The goal is to create a global financial and identity network based on proof of personhood, a concept that has gained importance in the era of artificial intelligence (AI).

Understanding the Concept of Worldcoin

Worldcoin is a digital identification platform that uses advances in AI and blockchain technology to verify the identities of its users. The platform aims to provide a solution to the problem of distinguishing between real human activity and AI-generated content on the internet.

The company has developed a digital passport system that uses iris scanning to create unique identification codes for each user. These codes are stored on a decentralized blockchain, making it difficult for them to be duplicated or used fraudulently.

Worldcoin’s platform has already signed up more than 2 million users during its beta testing stage and plans to expand its operations to dozens of cities in 20 countries worldwide.

How Does Worldcoin Work?

Worldcoin operates on three main components: World ID, World App, and WLD Cryptocurrency Token.

World ID

World ID is the core of the platform. It uses an iris-scanning device called the Orb to create a unique identification code for each user, verifying their “humanness” while maintaining their privacy. The Orb scans a user’s iris, uses its structure to create a unique identification code, and then issues a World ID. The system does not store any personal information and does not require repeated iris scans for identity verification.

World App

The World App is a secure repository for the World ID. It also functions as a crypto wallet and can store Bitcoin, Ethereum, and USDC, with plans to support more cryptocurrencies in the future.

WLD Cryptocurrency Token

Once users create a World ID and download the World App, they gain access to the WLD cryptocurrency token. The token was initially issued to users who participated in the beta program, and a large quantity was airdropped to users as part of the platform’s official launch.

Worldcoin and Universal Basic Income

Worldcoin’s founders envision the platform as a tool for combating financial inequality and exclusion. They propose that Worldcoin could serve as a form of universal basic income (UBI), distributed unconditionally to anyone who agrees to have their iris scanned.

The idea of UBI has gained traction in recent years as a potential solution to economic inequality. By providing everyone with a basic income, regardless of their employment status or wealth, proponents argue that UBI could reduce poverty and increase financial stability.

However, the introduction of UBI could have significant societal implications. It could potentially reduce the incentive to work, leading to labor shortages in certain sectors. On the other hand, it could also free people to pursue education, start businesses, or engage in other productive activities without the pressure of immediate financial need.

Challenges in Implementing Universal Basic Income (UBI) with Worldcoin’s WLD Token

Many view Worldcoin’s token distribution as a form of “Universal Basic Income” (UBI). However, due to the lack of long-term sustainability, Worldcoin prefers to use the term “user grant”. The platform does not have an explicit plan to generate profits and redistribute them via UBI. Instead, it suggests that UBI would require a separate funding source, such as a share of the profits generated by an AI Lab.

While the idea of funding UBI through an external source or AI Lab is mentioned, it is not explicitly guaranteed in Worldcoin’s whitepaper. The platform’s main goal is to provide globally accessible digital financial services while solving the problem of a single human claiming multiple identities or an AI claiming one or multiple human identities.

However, if implemented, there is the possibility of setting an annual inflation rate of 1.5% and, thereby, essentially taxing existing WLD token holders to pay for the UBI. Ignoring all other protocol influences, such as internal growth or external fiat inflation rates, the existing token holders lose 1.5% of their value to fund the UBI.

Privacy and Security in Worldcoin

To ensure privacy and security, Worldcoin uses a technology known as “zero-knowledge proofs”. This technology allows the platform to verify a user’s identity without storing or transmitting any personal data. Instead, the zero-knowledge proof creates a digital fingerprint of the user’s data, which cannot be used to reveal personal information.

This means that users can verify their humanity without revealing any personal information, such as their biometric data. This approach to privacy is a significant feature of Worldcoin, as it allows the platform to provide a secure and private digital identity solution.

Worldcoin’s Token Distribution and Inflation Plan

The Worldcoin Foundation plans to distribute 10 billion WLD tokens within the first 15 years. After that, they plan for an annual inflation rate of 1.5%. The foundation controls all 10 billion tokens, but to spur initial growth, they plan to distribute 7.5 billion tokens to the Worldcoin Community, keeping 25% of all the tokens for the team and investors.

However, it’s important to note that the Worldcoin Foundation has the power to change this token distribution plan at any time. This flexibility allows the foundation to adapt to changing market conditions and user needs.

Global scope of the launch

In the past six months, during its beta phase, Worldcoin has been successful in verifying the uniqueness and humanness of over 40,000 individuals weekly. With the deployment of 1,500 Orbs, the project is set to increase its global sign-up capacity by more than five times, enabling millions more to join the 2 million individuals who have already registered for a World ID.

In countries like Spain, where over 150,000 people have already verified their World IDs, Worldcoin plans to triple its operations in the coming months. Meanwhile, in countries like France and Brazil, temporary pop-up locations will be set up to allow people to find a nearby Orb and register for a World ID.

The Orb, a product of Tools for Humanity (TFH), is a custom biometric imaging device designed specifically for the Worldcoin project. It verifies the humanness and uniqueness of each user in a secure and privacy-preserving manner. Anyone with a World ID-compatible wallet, such as TFH’s World App, can register for a World ID at an Orb by visiting a Worldcoin Operator location or meeting with a community specialist who has access to an Orb.

Locating a Worldcoin Orb: How do I find a Worldcoin Orb near me?

To locate a Worldcoin Orb, you will need to download the World App and proceed with the verification process. During this process, you will be given the option to find an Orb near you.

Where will the new Orbs be available?

Worldcoin Orbs will be available in over 35 cities across more than 20 countries spanning five continents by the end of 2023. The list below includes cities where Orbs are currently available and those that will have Orbs available by the end of the year. Additional cities may be added in the future.

Africa/Middle East

• Dubai
• Kampala
• Nairobi

Americas

• Bariloche
• Bogota
• Buenos Aires
• Cordoba
• Los Angeles
• Mar del Plata
• Mexico City
• Miami
• Monterrey
• New York
• Rio de Janeiro
• Santiago
• San Francisco
• São Paulo

Asia

• Bangalore
• Delhi
• Ho Chi Minh City
• Hong Kong
• Manila
• Seoul
• Singapore
• Tokyo

Europe

• Barcelona
• Berlin
• Bilbao
• Lisbon
• London
• Madrid
• Munich
• Palma de Mallorca
• Paris
• Porto
• Sevilla
• Valencia
• Warsaw

Information on locations and reservations, where necessary, will be available via the World App. This information will also often be shared on the official Worldcoin Twitter account.

Long-Term Prospects of Worldcoin

The long-term success of Worldcoin is uncertain. A good way to analyze every crypto project is to examine the “steady-state” scenario where all tokens are distributed. In this scenario, either the UBI will be paid by an external funding source or by infinite inflation.

If there’s external capital available for the UBI, there’s no need for the WLC token in the first place because we could also pay the token out using Bitcoin rails that are already proven and efficient using second-layer technologies without introducing an inflation rate.

However, if the UBI is funded by inflation, the monetary unit of WLD will be inferior to BTC, and capital will naturally flow from WLD grants to Bitcoin as people sell WLD to buy Bitcoin. This could lead to the protocol quickly dying out.

Despite these potential challenges, the hype for free money and the decade-long incentive scheme of Worldcoin could carry the protocol a couple of years into the future, paid for by retail investors who purchase the WLD token for speculation.

Conclusion

Worldcoin represents a bold attempt to merge the worlds of cryptocurrency and digital identity. Its potential to provide a form of universal basic income could have far-reaching implications for society. However, the platform also raises important questions about privacy, security, and the ethical use of personal data. As with any new technology, it will be crucial to monitor its development and impact closely.

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