What is Worldcoin and How does it Work?

Worldcoin is an ambitious project to build the world’s largest identity and financial network as a public utility. Its goal is to make access to the global economy easier for everyone by welcoming people from all backgrounds and countries and speeding up the move toward a more inclusive economic future.

Worldcoin comprises three main parts: the World ID, the World App, and the Worldcoin Token (WLD). World ID is a digital identity that proves you are a unique person while keeping your privacy completely safe. Using the Worldcoin token, the World App lets people pay, buy, and send money worldwide. Lastly, the Worldcoin token (WLD) is the first of its kind to be given to people all over the world for free. It can be used and has the potential to be governed.

History of Worldcoin, Origins and Key Persons

In the whirlwind of the COVID-19 pandemic, a bright light emerged in the cryptocurrency landscape, Worldcoin. Its founding fathers are Sam Altman, the CEO of OpenAI, and two other intellectuals, Alex Blania and Max Novendstern. Their main goals are to democratize access to the global economy and to introduce Worldcoin as a component of Universal Basic Income (UBI), particularly for those whose livelihoods were in danger due to AI advancements.

Let’s delve deeper into the personas behind Worldcoin, which is important to understand the project’s idea. Sam Altman, credited with catalyzing the significant media interest around Worldcoin, is no stranger to the limelight. He gained fame as the former president of Y Combinator, a startup accelerator that has been the launchpad for over 3,000 companies, some of which you probably use daily, like Twitch, Reddit, and Airbnb. Y Combinator has also fostered crypto ventures like Coinbase, as well as other crypto projects like Filecoin and OpenC, during Sam’s tenure. In 2015, Sam was one of the board members of OpenAI with Tesla’s visionary CEO, Elon Musk. In 2019, Sam decided to part ways with Y Combinator to commit fully to OpenAI, where he presently holds the CEO position.

Alex Blania, a theoretical physicist, brings his experience in neural networks from his master’s work at the renowned Caltech Institute of Technology. Max Novendstern, a Harvard graduate, has a brief history with Bridgewater Associates, the renowned hedge fund run by Ray Dalio.

According to Bloomberg, Sam conceived the idea of Worldcoin in late 2019 and saw in Alex and Max the right partners to bring his vision to fruition. Sam sees Worldcoin as a testing ground for UBI, which he considers inevitable due to the swift proliferation of artificial intelligence. In a provocative essay, Sam proposed that AI could foot the bill for UBI, a viewpoint that stirred some disagreement amongst AI experts.

The official founding date of Worldcoin is somewhat murky, as Alex and Max’s profiles offer differing timelines. It is well known that Tools for Humanity Corporation, a for-profit software company, is in charge of Worldcoin’s development. Registered in Delaware but based in San Francisco, the corporation was founded in August 2019. The project also has a foot in Berlin, Germany, and plans are underway to incorporate the non-profit Worldcoin Foundation to supervise the project. Despite its initial intent to remain under the radar, Worldcoin splashed when it successfully raised $25 million from some of the biggest names in the crypto sphere in June. According to Forbes, Worldcoin’s initial investors encompassed Andreas and Horowitz, Coinbase Ventures, and angel investors like Sam Bankman-Fried, the founder of FTX, and the founders of Solana and Polkadot.

Sam’s celebrity status coupled with Worldcoin’s high-profile investors created an expected buzz in both crypto and mainstream media when Sam announced the project on Twitter. However, what really made waves was Worldcoin’s tantalizing promise of free crypto in return for gazing into one of Worldcoin’s orbs (we will explain what an Orb is later in the article), a unique method to say the least.

A global community of programmers, economists, and technologists dedicated to enhancing accessibility to the global economy powers Worldcoin. The Worldcoin Foundation, soon to be incorporated, will act as a caretaker, fostering and expanding the Worldcoin community until it reaches a stage of self-sustainability.

And that’s the story behind Worldcoin - a fusion of technology, economics, and ambition, led by a triumvirate of forward-thinking leaders, all working towards a more inclusive global economy.

How does WLD Work?

The Worldcoin token, WLD, holds a prominent place within the Worldcoin ecosystem and is integral to its functioning. As an ERC20 token, WLD is built on the robust Ethereum platform, giving it versatility and compatibility with a wide range of exchanges and wallets.

The tokenomics of WLD are structured to mirror global demographics, with a capped supply of 10 billion tokens, symbolically representing the world’s population. This strategic allocation ensures a broad and equal distribution, paving the way for inclusivity in the global financial landscape. From this supply, 2 billion tokens were earmarked for the initial phase of protocol development and orb production. The allocation included the founding Worldcoin team and early backers, fueling the project’s foundational infrastructure.

The remaining 8 billion tokens are dedicated to the Worldcoin community, and distributed to both orb operators and users of Worldcoin. The distribution strategy is designed with a tapering mechanism in mind, where the quantity of tokens orb operators can earn, and users receive upon signup decreases over time. This mechanism incentivizes early adoption of Worldcoin and nurtures healthy growth in its user base.

The primary use of WLD has been within the World App as a form of grant. These grants, provided to users in eligible countries verified through World ID, represent an innovative approach to equitable cryptocurrency distribution. However, WLD’s potential extends beyond that. In the governance aspect of Worldcoin, WLD has a pivotal role. WLD holders can determine the future course of the Worldcoin protocol, granting them significant influence over its development. This democratic model empowers community members, fostering a sense of ownership and participation.

Furthermore, WLD is expected to be utilized as a payment method within the World App for certain services, making it a versatile digital asset within the Worldcoin ecosystem.

It’s also worth noting that the Worldcoin team has considered preventing potential market volatility. They plan to implement measures preventing users from liquidating their entire signup reward immediately, likely in the form of vesting schedules for different WLD token holders. This measure aims to ensure the stability and longevity of the WLD token.

Main Features of Worldcoin

ORBS

Source: Worldcoin Website

The Orb is a central element of Worldcoin’s unique verification process. It is a biometric imaging device meticulously designed to securely and privately validate an individual’s unique personhood. This distinctive device’s foundation lies in the principle of biometrics, specifically the scanning of irises, which are strongly resistant to fraud and data-rich, making them ideal for distinguishing billions of unique humans.

To receive a share of Worldcoin tokens and sign up for World ID (follow the article for more details), an individual must verify their unique personhood at an Orb. The device utilizes a range of camera sensors and machine learning models to assess facial and iris features, ensuring the user is a genuine living person. It then creates an iris code, a numerical representation of the most crucial features of an individual’s iris pattern, subsequently used to confirm uniqueness.

Source: Worldcoin Website

Contrary to some concerns about biometrics, the Orb is designed with privacy and security in mind. The images collected are immediately deleted unless the individual explicitly chooses otherwise. No additional personal data such as name, address, or email is required. By default, the only data leaving the Orb is a message containing the iris code to validate uniqueness. Worldcoin assures users that it will never sell anyone’s personal data, including biometric data. Check the next chapter where we delve into Proof of Personhood!

Moreover, the Orb includes a robust monitoring system to prevent fraudulent activities. Each orb is equipped with a machine learning algorithm that can detect attempts to manipulate the verification process, such as using colored contact lenses or scanning a pet’s eye. If an anomaly is detected, the affected orb automatically shuts down.

Source: Worldcoin Website

The orb also exemplifies Worldcoin’s commitment to open sourcing. As much of the technology they create and use as possible is open-sourced, enabling others to develop, build, and operate similar devices that integrate with the World ID protocol. This aligns with the ultimate goal of fully decentralizing every part of the project.

A set of founding principles based on privacy, trust, and transparency serve as the foundation for Worldcoin’s ambitious mission, with the Orb serving as a physical representation of these principles. With ongoing development and continuous R&D, the Orb has evolved to maintain a fine balance between development speed, user experience, cost, compactness, security, and imaging quality. This makes it a key component in the quest for universal access to the global economy.

Using the orb for Worldcoin sign-up involves a simple sequence of actions. A user shows the Orb a QR code and gazes into the device. The Orb then generates a unique hash for both the QR code and the user’s iris and sends this hash to a sequencer node. This node checks if the hash has been registered before. If not, it is connected to the user’s crypto wallet address. Using zero-knowledge proofs (ZKP), Worldcoin ensures that there is no way for them to know to whom each wallet address belongs, maintaining the user’s privacy.

Orb Operators

Orb Operators play a crucial role in the Worldcoin network, responsible for operating and maintaining the Orbs. These operators facilitate capturing individuals’ iris data, an integral part of establishing proof of personhood within the Worldcoin ecosystem.

Orb Operators are incentivized to encourage as many individuals as possible to interact with their Orb. For each person they convince to use the Orb, operators are rewarded with Worldcoin tokens. Given the potential rewards, some operators even employ teams to ensure the Orb is operational round-the-clock. Becoming an Orb Operator isn’t a straightforward process. It involves a competitive bidding process where operators bid for the right to operate one or multiple Orbs for a defined period. Those who can sign up more users, and therefore generate higher monthly revenue, can submit higher bids. This makes them more likely to win the bidding process, hence fostering an environment of healthy competition among operators.

PROOF OF PERSONHOOD (PoP)

Source: Worldcoin Blog

Proof of Personhood (PoP) has become increasingly crucial in the era of rapidly advancing artificial intelligence (AI), particularly when differentiating between human and AI-generated content online. This concept is the foundation for creating a digital identity and offers mechanisms to establish an individual’s humanness and uniqueness.

Proof of Personhood addresses two significant challenges AI presents: preventing Sybil attacks and minimizing the spread of AI-generated misinformation. Sybil attacks, where a single attacker creates multiple pseudonymous identities, can be limited by PoP through account authentication, thus providing a natural rate limit. Additionally, PoP assists in filtering content or accounts to confirm or reject their human origin, thereby controlling the dissemination of AI-forged disinformation. While not a comprehensive solution, PoP is a critical initial step in establishing a global network of authentic, unique human identities.

WORLD ID AND SDK

Source: Worldcoin Website

World ID is an innovative privacy-first decentralized identity protocol, providing a seamless sign-in experience to various platforms while maintaining user anonymity. By allowing users to prove their uniqueness without revealing personal details, World ID functions as a digital passport on your phone. At its launch, World ID supports multiple types of personhood verification: phone number verification for accessibility, and Orb biometric verification for superior accuracy. This global digital passport can thus prove one’s authenticity using zero-knowledge proofs.

Obtaining a World ID is straightforward – download a compatible wallet such as the World App and verify your identity. With World ID, users can authenticate themselves as unique individuals across various platforms, and also establish multiple pseudonymous accounts under one ID. This level of privacy is maintained even when using World ID for actions needing extreme protection, such as voting, via the Anonymous Actions feature.

World ID is a permissionless protocol, and with its SDK, developers can easily integrate it into their web, mobile, and crypto applications. The SDK includes various tools such as a web widget, Developer Portal, and development simulator. Additionally, World ID supports existing open identity standards like OAuth 2.0 and OpenID Connect, and will soon support Verifiable Credentials, Decentralized Identifiers, and Sign in with Ethereum.

By offering global proof of personhood, World ID opens up possibilities for a range of applications, including social networks, voting systems, financial services, customer incentives, and marketplaces, promising a future where the digital world is both secure and privacy-centered. The private key of the user’s World ID remains on their device, enhancing security. When users verify their identities, a unique nullifier hash is returned, acting as a unique identifier for the application and maintaining the user’s privacy.

WORLD APP

Source: Worldcoin Website

“World App” is the inaugural wallet for the Worldcoin ecosystem, launching with the ambition of broadening access to digital identity and global finance. The app, developed with a focus on simplicity and inclusivity, provides users with the ability to prove their unique personhood via World ID, claim Worldcoin grants (where eligible), transact digital money, and explore cryptocurrency concepts.

Key features of the World App:

• World ID: With World ID, users can verify their identity privately using the Orb. This proof of personhood can be used to sign in to various online services, without having to share personal data like names or email addresses. The World ID lives on the user’s smartphone, each with a unique design to reflect individuality.
• Worldcoin Grants: Eligible users can claim Worldcoin Grants every month. The grants are recurring stipends available to any verified person with a World ID. The World App notifies users when a new grant is available for claim.
• Digital Money Transactions: The World App supports the storage of digital dollars, with multiple deposit and withdrawal options. Users can send funds to friends or family members globally using phone contacts or crypto addresses, for free.
• Crypto Education: Users can learn about cryptocurrencies like Ethereum and Bitcoin. The app provides balance tracking, and major change notifications, and enables trading via decentralized exchanges.

Source: Worldcoin Website

World App is designed with a focus on privacy. It does not require personal information, and any data shared within the app can be deleted at the user’s discretion.

Source: Worldcoin Website

The app, built on Ethereum and running on Polygon during beta, utilizes Ethereum’s composability to provide a global identity and finance solution. Features like account abstraction through SAFE contracts, peer-to-peer payments with ENS usernames, token trading via Uniswap, and Circle’s USDC are integrated into the app.

COMPOSABILITY ON WORLD APP

“World App” is the first wallet for the Worldcoin ecosystem. By integrating a range of open protocols and APIs, the app creates a comprehensive identity and finance solution that would typically require a significant amount of time and resources. Here are the key protocols used by World App:

• WalletConnect: This communication protocol enables web3 apps to connect and interact securely. It powers the World ID feature, allowing users to prove their unique human identity privately across the crypto world.
• Uniswap: This protocol facilitates decentralized crypto trading, letting users buy and sell crypto tokens like Bitcoin and Ethereum in a user-friendly manner without requiring a trusted middleman.
• Safe: The World App provides users with a self-custodial Ethereum wallet using Safe’s account abstraction stack, improving security and allowing granular management.
• Polygon: This protocol provides scalability and lower transaction costs compared to the main Ethereum blockchain. It currently hosts the World App beta.
• Optimism: This layer 2 rollup reduces costs and latency while maintaining Ethereum’s security. The World App plans to use Optimism’s mainnet as it scales.
• MoonPay and Ramp: These partners enable users to deposit and withdraw money from the World App wallet, facilitating the building of a crypto portfolio and conversion to fiat currencies.
• ENS (Ethereum Name Service): This service lets users send money to ENS usernames instead of complex wallet addresses or bank accounts, making digital transfers more user-friendly.
• Circle: This regulated entity powers World App’s access to digital dollars (USDC), which users can deposit, withdraw, and use to buy crypto.
• Alchemy: This web3 development platform handles interactions with the blockchain, processing all crypto transactions from the World App.

These protocols combined form the backbone of the World App, making it a powerful tool for private digital identity and the new financial system.

Is Worldcoin a Good Investment?

Determining whether WLD is a suitable investment for you depends on your individual situation and tolerance for risk. Cryptocurrencies are known for being high-risk assets, and it is recommended that you conduct your own research and assess the amount of risk you are comfortable with before investing. It is essential to only invest money that you can afford to lose.

How can you own WLD?

WLD is still in development and as of today the only way to obtain WLD coins is to participate in Worldcoin activities like scanning an Orb close to you.

News on Worldcoin

• October 2021: Worldcoin is introduced.
• April 2022: The Privacy-Preserving Proof-of-Personhood Protocol is introduced.
• November 2022: Worldcoin contributes to EIP-4844 development.
• January 2023: Worldcoin surpasses 1 million sign-ups and explains the use of biometrics in the Orb, their biometric imaging device.
• February 2023: Worldcoin provides a technical deep dive on privacy and surpasses 1% of sign-ups in Portugal.
• March 2023: Worldcoin introduces World ID and SDK and discusses biometric performance at a billion-person scale.
• April 2023: Worldcoin explains why irises are superior for proving personhood and discuss their journey to Tokyo with ETHGlobal.
• May 2023: Worldcoin introduces the World App, commits to Optimism’s Superchain vision, and launches a global tour for the Orb.
• June 2023: Worldcoin reveals its iris recognition inference system and hosts a meet-up in Seoul with Sam Altman and Alex Blania.