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What is Worldcoin? Will It Really Provide a Universal Basic Income?

There’s a saying in the media and technology industry: if you’re not paying for the product, you are the product. Well, this decades-old proverb has found yet another case study, in the form of new cryptocurrency Worldcoin, which the globe’s population can claim for ‘free’ by having their eyeballs scanned (in order to prove they’re human and haven’t signed up already).

Could Worldcoin save the world?

The company behind Worldcoin, Tools for Humanity, have so far presented the currency as a means of combating inequality and financial exclusion. It will become crypto’s equivalent of a universal basic income, or so they say, delivered unconditionally to anyone who accepts having a scan of their iris converted into a cryptographic hash.

Of course, sharp-witted readers will have already realized that scanning your eyes before receiving Worldcoin amounts to a condition of entry, and the thing is, it’s likely that the currency will impose a number of other conditions on users as time passes. That’s because use/spending of Worldcoin will undoubtedly require signing up for some kind of wallet or exchange service (and whatever else), something which would ultimately deliver the world’s population to profit-seeking corporations.

Worldcoin is Here to Save the World

Worldcoin is a “new, collectively owned global currency that will be distributed fairly to as many people as possible,” or so reads the introduction on Worldcoin’s website. Put simply, Tools for Humanity are planning to create 10 billion worldcoin tokens, with 20% (two billion) being reserved for developers/production, and the rest going to users and also operators of Worldcoin’s Orb devices, which scans users’ irises.

Worldcoin plans to sign up as many as one billion users in just under two years. To this end, it has distributed around 30 Orbs to operators around the world, with the best-performing ‘Orb Operators’ currently managing a weekly signup tally of just over 1,000 people. This means Worldcoin has been able to scan the irises of about 120,000 people so far.

Source: Worldcoin

At the moment, Worldcoin has been able to entice signees through familiar promises of ‘banking the unbanked,’ and of creating something akin to a universal basic income for the Internet/Cryptocurrency Age.

“[Worldcoin] started with a discussion that universal basic income will eventually be something that is very important to the world, and in general, getting access to the internet economy will be much more important than is obvious at this point,” CEO Alex Blania told TechCrunch when Worldcoin was officially unveiled on October 21.

Depending on your viewpoint, this may all sound like pie in the sky or hokum, but Worldcoin does have some serious backing behind it. Its co-founder is former Y Combinator president Sam Altman, who is also CEO of OpenAI (which happens to list a certain Elon Musk as one of its co-founders). On top of that, it emerged from stealth with a $25 million seed round led by Andreessen Horowitz, with participation from Coinbase, Reid Hoffman, Day One Ventures, Multicoin, FTX’s Sam Bankman-Fried and Variant’s Jesse Walden, among others. This round has given it a valuation of $1 billion, which isn’t too shabby for a brand new startup.

Such a pedigree may help encourage more people to sign up to Worldcoin and have their irises scanned. Right now, the amount in worldcoin a new user receives is dependent on how early they signed up, with newbies currently receiving a sum of worldcoin worth anything between $10 and $200. Ka-ching!

10% of the sum users receive is immediately distributed to a wallet generated by one of Worldcoin’s Orb devices, with the rest being dispersed at regular intervals over a period of two years.

As of writing, there’s no formal signup process for Worldcoin. It simply appears that any would-be user has to have the good fortune of bumping into an Orb Operator on the street. That said, Worldcoin plans to distribute as many as 4,000 Orbs per month once it gains significant momentum (whenever that may be).

Oh, and in case you’re in the United States, you may have to wait a while before Worldcoin’s operators come lurking your way:

“While we are deeply committed to giving Worldcoin to everyone on Earth, legal uncertainty in some places — including the U.S. and China — means we will not deploy Orbs in these countries right away,” reads Worldcoin’s explainer on its launch process.

The Catch

Another well-known truism has it that there’s no such thing as a free lunch, and this will almost certainly be the case with Worldcoin.

While much of the media scrutiny has focused on potential privacy issues thrown up by the project, Worldcoin has arguably done a good job of addressing these. Significantly, it uses zero-knowledge proofs in order to separate the hash of a scanned iris with any wallets or accounts in which the corresponding users are storing their worldcoin.

“Crucially, Worldcoin accounts are never associated with any biometric data from the Orb,” reads the aforementioned explainer.

However, the real issue — or catch — with Worldcoin isn’t any hypothetical privacy problem, even if using and spending worldcoin will most likely require you to sign up to other services which demand that you verify your identity and hand over significant amounts of personal data. The real catch is simply the fact that Worlcoin will inevitably seek to create an ecosystem of associated services (e.g. exchanges, merchants, wallets) which in turn will seek to extract profit from you.

Yes, just as social media and even TV/radio before it sought to feed you to advertisers, there’s a very good chance that Worldcoin will also seek to feed you third-parties, so that you become their customers and dutifully hand over your funds (be it worldcoin or any other (crypto)currencies you may own). Here’s the telltale paragraph in Worldcoin’s launch material:

“In addition to the wallet, we are developing a collection of open-source Software Development Kit (SDKs) to help developers build products around Worldcoin — things like alternative clients, tools for niche use-cases, digital tipping, in-store payments, and professional interfaces. These SDKs, coupled with pre-existing decentralized financial protocols, will allow anyone to serve the needs of local, regional, and global markets.”

Let’s translate that final sentence: ‘These SDKs will allow any business to serve the needs of their shareholders, by connecting said businesses to people with (virtual) cash in their (virtual) wallets.’

Basically, Worldcoin is a scheme to supply businesses with customers, a scheme to plug as many as people as possible into the increasingly digitalized economic system. This is why it’s being backed by Andreessen Horowitz and Coinbase, and not by the kinds of left-wing groups you might ordinarily expect to back a universal basic income (which Worldcoin is not and will never be). These companies expect that supplying businesses with customers will be very lucrative for Worldcoin/Tools for Humanity.

Lastly, a very basic economic question needs to be asked: if worldcoin is distributed to every single person on the globe, just how valuable can it ever be? In a sector (crypto) defined by scarcity (e.g. Bitcoin’s hard supply cap), how can a coin distributed to everyone be worth enough to make a difference to people’s lives? How can $10 over two years suffice as a universal basic income?

The answer is that it can’t, and that Worldcoin’s real product is you.

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CryptoVantage Author Simon Chandler

About the Author

Simon Chandler

Simon Chandler is a journalist based in London. He writes about technology, markets and politics, and has bylines for Forbes, Digital Trends, CCN, Wired, TechCrunch, the Verge, the Sun, the New Internationalist, and TruthOut, among many others. His Twitter handle is @_simonchandler_

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