What is Worldcoin Crypto? Working, Applications, Privacy Concerns, Expert Comments

Worldcoin is a cryptocurrency released by Sam Altman, the co-founder of OpenAI and the ChatGPT with an aim of creating an global identity and financial network.

Worldcoin is a cryptocurrency released by Sam Altman, the co-founder of OpenAI and the ChatGPT with an aim of creating an global identity and financial network. This network is supposed to be controlled by only humans and will have features which will prevent bots from taking part in it.

We have gone through the complete whitepaper of Worldcoin along with its mobile application for Android and iOS. And therefore we bring you this comprehensive article which has almost all information that you need to know.

1. About Worldcoin

OpenAI saw a lot of success with its GPT-3, GPT-3.5, and the latest GPT-4. However, all of these innovations, though useful, posed a lot of ethical questions about AI taking over human jobs, slowing down human creativity and a lot of other dilemmas.

The Worldcoin project is something that morally answers and seeks to reverse the fear of AI control on the internet.

The project is a digital identity and financial system centered around two things:

  • Worldcoin, The Cryptocurrency
  • Anti AI Features like Captcha
  • World ID, a privacy focused digital identity on the blockchain. This ID can be accessed by World App, the frontend to Worldcoin ecosystem.

Together, they seek to promote human dominance over the internet while creating a global identity.

2. Launch Timeline

  • May 5, 2021: First User Signup.
  • July 13, 2023: 2 Million Signups
  • July 24, 2023: Launch

3. How Does Worldcoin Work?

The central figure of Worldcoin is the World ID. This is a blockchain based digital identity system that will help verify your interactions with Worldcoin protocol as human. Currently, it is only focused on Worldcoin, but it sees a much larger role for itself in digital identity verification and global cross-border finance.

3.1. Technology

Worldcoin is an Ethereum based token that will probably exist on the Optimism Chain, a L2 scaling solution of Ethereum. This is because the WLD Token uses Optimism(OP) Wallet or an OP-based wallet to store tokens. These OP wallet will be accessed using the World App.

3.2. Biometrics

The world ID uses biometrics to detect if the current users is a human or a robot. This is possible through biometrics like iris scan. A device called the Orb is used to scan biometrics and capture some QR codes.

Worldcoin Orb

3.3. Proof of Personhood

The concept seeks to prove that a user in the Web3 is a person and not an automated robot or AI-based engine. An interesting feature used in this concept is the mechanism of recovery in situations of lost or compromised credentials.

This protocol uses zero knowledge proof and a modified version of account abstraction that we see in Ethereum.

How does it work?

Worldcoin's Proof-of-Personhood

A user provides evidence of their identity and gets a identity token issued from Worldcoin. This identity token is used to verify their credentials on a platform (verifier) which then grants login and/or recovery access to their profile.

The complete process takes place in 4 basic steps:

  1. You use your unique credentials to apply for World ID. At this stage it is not clear which are these credentials but they can be government IDs, soulbound tokens, or any other type of identity proof.
  2. Based on the credentials, you could be given a World ID.
  3. You can use the World ID to access platforms that are integrated with the Worldcoin and World ID.
  4. Your platform will give you access to your account based on the above ID.

3.4. Gas-free Transactions

Worldcoin allows gas free transactions for users who have completed the KYC. The company notified this via a tweet on May 09, 2023, much before its launch.

Gasless transactions enables users to send and receive crypto without having to pay transaction charges. Gas-less protocols usually has a wallet from where it pays for all the transactions that its user do on its platform.

4. Applications

The Worldcoin is optimistic about its future and thinks brightly of the following applications of its ID, Cryptocurrency and ecosystem.

1. Global Finance

Worldcoin seeks to play a central role in the world finance by being the preferred mode of international cash transfers. The whitepaper does not give much details about it and talks more about the benefits of digital cash.

2. Blockchain Based ID Verification

World ID will help users verify their digital identities using the blockchain. These verification methods can be used in platforms that seek to integrate with the Worldcoin. The whitepaper talks especially about Twitter and similar platforms.

Another application of this crypto will be in Governance mechanism that controls the Worldcoin ecosystem. The system discussed in the whitepaper is token based governance which is seen in several other public cryptocurrencies.

3. Crypto Based Rewards

This cryptocurrency can also be used to distribute rewards such as coupons, loyalty program benefits, referrals and airdrops. All of these centered around World ID which will help get rewards in an efficient manner.

5. Privacy Concerns

Though the developers and the decision makers have stated that iris scan is the only method to prove personhood, we must state that there are other non-invasive methods based on private data or data created during the activation time.

We suggest these alternative methods to Worldcoin.org:

  • voice commands,
  • security questions,
  • 2FA via SMS

Iris data is a very sensitive data and cannot be alienated from the owner of those eyes. We voice our strong concern for using such data verification methods.

Edward Snowden, the infamous CIA executive that exposed massive surveillance in the USA, has commented on Worldcoin being a bad idea. He advised the platform that collecting “hashes” of eye-scans is risky even if the eye scans are deleted because those “hashes” can match future eye scans putting privacy at risk.

Hashes are derived data that is obtained by running that data into al algorithms which converts it into a digital signature.

Lately Worldcoin made a lot of claims regarding how it enables user privacy. The first claim was with using ZK Rollups, there was no data stored. Secondly, with an on-board computer on its orbs, there could be instant verification of human-ness without having to store, upload or send iris scan images. And finally, with World ID, there was no risk for third party issues because World IDs are anonymized and cannot be attributed to any person.

Actions Taken by Authorities

These privacy concerns alarmed data regulators in UK, France, Kenya and Germany. UK’s ICO said it would investigate the matter while France’s CNIL questioned the legality of this data collection. Kenya took a step further and banned the operation of Worldcoin in the country. German data protection agency for Bavaria, the Bavarian State Office for Data Protection Supervision was already probing Worldcoin, states Reuters.

6. Concerns

The wider adoption of Worldcoin seems like a dream currently because of several concerns.

Individual Adoption

On an individual level, it might hardly see adoption of the World App because of the above privacy concern. However, people may still buy WLD token based on OpenAI’s success and speculation. WLD tokens also gives token grants from Worldcoin foundation.

Further, the need of custom hardware to scan iris will also hamper its adoption. Most smartphones don’t have such capabilities and no one wants to carry a bulky scanner around.

Global Financial Adoption

Bitcoin, Ethereum, USDT and Ripple have much greater success than any other cryptocurrency. Bitcoin and Ethereum are already facing adoption concerns due to high on-chain transaction charges.

Ripple has already been used for several cross-border payments. Further, USDT and USDT are already widely used for settling small scale cross-country payments between freelancers and business owners.

Bigger institutions like JP Morgan already have developed their own coins such as the JPM Coin.

Social Media Adoption

Its far more economical and profitable for platforms like Twitter, Meta and Reddit to create their own cryptocurrencies or adopt a widely available one like Dogecoin.

Twitter’s Elon Musk has already dropped hints on adopting Dogecoin.

7. Alternate Methods for Proof of Personhood

Source: Dhirendra Das

1. Generalized Predictions

Something which no bot, chatbot or AI program can do is to predict the future. They are programmed to make predictions based on statistical data and cannot make generalized predictions like who will be the US President in 2028.

2. Slider Captcha

Slider Captcha, Site Jquery
Slider Captcha, Site: JQuery

Another innovative method is the slider captcha which several known companies such as Binance and KuCoin have used. Verification methods like this are pretty hard to guess for AI and bots because they cannot expect what would

We also have found blogs which tell you how to bypass them. Though they require much high programming skills than a regular individual possesses.

How to make Slider Captcha more effective?

However, we expect making the edges blur would boost its effectiveness against bots and AI-powered programs. The edges currently give up pretty much everything that would make it easy well-fed computer vision program.

Dhirendra Chandra Das
Dhirendra Chandra Das

Dhirendra is a professional with dual degree MBA specializations in Finance and Marketing. He has a keen interest in finance and crypto. Starting his investment journey in Finance since 2015, Dhirendra has more than 8 years experience in Traditional Finance and 3 years experience in Decentralized Finance.

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