Cryptocurrency's latest ego

Whatever one thinks of cryptocurrencies, one can't fault the ambition of some of their founders. Take the latest, Worldcoin. The name is a giveaway. Its founder, Sam Altman, is a serial entrepreneur who co-launched OpenAI, the company behind ChatGPT, in 2015. Fundamentally Worldcoin is a dystopian project, driven by the belief that artificial intelligence (AI) will soon surpass human intelligence, and this is regarded by Altman as a worrying development. Distinguishing between humans and robots will become extremely difficult if not impossible, he believes; if this comes to pass it will destroy confidence and trust in cryptocurrencies and many other things.

So Altman and Alex Blania, the CEO and co-founder of Tools For Humanity, the private company behind Worldcoin, have come up with what sounds like a neat idea - if you give Worldcoin an eye-scan and prove you are human and not a robot, you will be issued with a kind of digital passport called a 'World ID'. And you also stand to receive from Worldcoin some of its digital tokens, each worth around $0.0142, down by about 13% at time of writing. A kind of incentive to sign up. Worldcoin claims it wants to provide a universal basic income (UBI) in response to what it expects will be a mass decline in jobs as a result of the spread of AI.

Altman is a 'prepper', someone who thinks that civilization is on the brink of collapse and prepares accordingly for such a disaster. In 2016 he told the New Yorker magazine "I have guns, gold, potassium iodide, antiobiotics, batteries, water, gas masks from the Israeli Defense Force, and a big patch of land in Big Sur that I can fly to."

"I have guns, gold, potassium iodide, antiobiotics, batteries, water, gas masks from the Israeli Defense Force, and a big patch of land in Big Sur that I can fly to."

Worldcoin vs. Bitcoin

Apart from the fact that Worldcoin is an answer to a problem that doesn't yet exist - and may never exist - it seems like a belated attempt to challenge Bitcoin, the dominant cryptocurrency which has about half of the crypto world and was a very clever idea that challenged a really existing problem. When Bitcoin was launched in January 2009 we had just escaped a meltdown of the global financial system; the world's central banks and governments were embarked on a massive multi-billion bailout of commercial banks and industries; and trust in fiat money was even lower than it is today. Bitcoin creation and use does not depend on banks, but the blockchain, an anonymous, decentralized public ledger used to record transactions across many computers. Bitcoin's fans tout it as a challenger to government-issued currencies, but it has yet to achieve the kind of universal acceptance and use that would elevate it to the status of money.

Worldcoin is more like a Central Bank Digital Currency (CBDC) than Bitcoin.; it's a solution in search of a problem. Worldcoin is copying Bitcoin in many ways. Bitcoin had a white paper explaining how it works and why it should be adopted; so does Worldcoin. Bitcoin (and all its 20,000-plus imitators) is a rejection of centralized finance, and aims to prevent governments gathering personal data. But here the two cryptos differ; Worldcoin is harvesting irises. An iris is unique, no one else has precisely the same. Gathering this personal data - even though Worldcoin says the data is immediately deleted after verifying you are human - goes against one of the major principles of cryptocurrency. Beliefs at the heart of cryptocurrency - privacy, limited government, financial freedom - seem threatened by Worldcoin. Is it an attempt to create a world currency? Or is it a proof-of-humanity mechanism? Worldcoin believes the two go together.

Altman and Blania say they want to have eight billion users of Worldcoin; that ambition borders on megalomania.

Should it work?

The Massachusetts Institute of Technology (MIT) Review published a hostile open-access assessment of Worldcoin in April 2022. Among the many criticisms it highlighted how 20% of Worldcoin's 'tokens' had already been allocated - 10% to full-time employees and the other 10% to investors. This, claimed MIT, sat uncomfortably with Worldcoin's claims to 'fairness'. It questioned the "underlying premise of what Worldcoin was trying to build", the creation of "one identity" would seem to run counter to the raison d'etre of cryptocurrencies - privacy and anonymity. There is something discomforting about Altman having created both the problem - open AI - and a solution to it - Worldcoin.

As yet we don't know what Worldcoin's definition of success is. Nor do we know how it will move from being an interesting early-stage and hugely ambitious experiment to a company that makes money, which presumably is an aim of Altman's. We don't know how Worldcoin could become a provider of a UBI, although if its technology is proved to work one could imagine it being deployed on behalf of a CBDC. There are too many questions and too few answers. The biggest question was posed in a recent comment by the Financial Times: "even if you feel comfortable giving up your biometric data to a Silicon Valley start-up whose founder is working to bring about robot super intelligence, should you?"