Original article: "Worldcoin, invested by OpenAI CEO and a16z, enters the identity protocol layer today"

Author: Nian Yin Si Tang

With the popularity of ChatGPT, Sam Altman, CEO of OpenAI, the company behind it, has become famous. A cryptocurrency project he co-founded in 2021 has also become active again recently, and announced its latest progress today.

First appearance, aiming to achieve "universal basic income"

This project, called "Worldcoin", was first unveiled to the public in June 2021, and announced the completion of US$25 million in financing, with support from many well-known investors including a16z, Coinbase Ventures, LinkedIn founder Reid Hoffman, Day One Ventures, etc.

According to reports, Worldcoin plans to issue a global digital currency that uses a silver basketball-shaped device (Orb) to scan the iris to form a unique personal identification code to determine personal identity. It is reported that iris scanning can prevent users from registering repeatedly, but in order to ensure privacy, Worldcoin will try to make the use of data transparent, and the relevant images will be permanently deleted after the scan is completed.

At that time, Worldcoin had begun testing the device on a small scale in multiple cities. Because it had not yet been officially released, Worldcoin paid volunteers with cryptocurrencies such as Bitcoin in exchange for some usage feedback. It is said that there are less than 20 prototypes of the device, and the current cost is $5,000, but as the process improves, the cost will drop significantly.

Altman said in an interview that he came up with the idea in late 2019 after being inspired by the popular economic theory of universal basic income (UBI), which uses cryptocurrency to fairly distribute money. Altman is the first investor in Worldcoin, but he said he does not participate in the company's day-to-day operations, mainly serving as an advisor to the company when needed.

The de facto leader of the project is Alexander Blania, who co-founded Worldcoin with Altman and Max Novendstern, who previously worked at Ray Dalio’s investment firm Bridgewater Associates LP and money-transfer startup Wave. Blania said the company is evaluating how to one day make cryptocurrencies accessible to as many people as possible: “There are still a lot of people in the world who don’t have access to the financial system, and cryptocurrencies have the opportunity to allow us to do that.”

In October of that year, Worldcoin said it was conducting field tests in some areas and that the project's valuation had reached $1 billion.

Ideals are full of hope, but reality is skinny, and subsequent development is full of difficulties

However, the subsequent development of the project was not smooth. In March 2022, after local contractors left and regulations prohibited operations, Worldcoin suspended its operating plans in several countries and repeatedly postponed its target launch date.

The company had already collected eye images of hundreds of thousands of people in about 20 countries, but the process had been plagued by uneven smartphone usage, user confusion and fraud attempts.

Despite this, Worldcoin still attempted to raise more funds to advance its plans. Reports said the company was in the process of raising $100 million in token funding at a $3 billion valuation.

In August of the same year, Worldcoin co-founder and CEO Max Novendstern resigned and founded the startup Mana, which aims to build an AI venture capital protocol that operates autonomously on the chain.

Since then, Worldcoin has remained silent - both on the project development progress and the financing process.

Almost forgotten, Worldcoin has made a comeback this year. In early February, it was reported that it was in discussions with investors, including sovereign wealth funds, for a new round of funding. Worldcoin hopes to raise up to $120 million at a valuation of $3 billion - the same valuation as last year, and this round will include equity and token financing. In the current market environment, this amount of financing is undoubtedly impressive.

Set sail again and take root in the protocol layer

A month after revealing its fundraising push, Worldcoin has released an update on the project, including the World ID protocol and software development kit (SDK).

Described as Worldcoin’s “underlying identity protocol,” World ID is powered by zero-knowledge cryptography and is a mobile tool that people can use to prove their identity without sacrificing anonymity. Iris scanning hardware Orb is the primary method for users to get verified, though they can also use tools such as phone number verification, which is less accurate.

“This is a decentralized and privacy-first protocol,” Tiago Sada, head of product, engineering and design at Tools For Humanity, a major software contributor to Worldcoin, said in an interview. “Just like people can have self-custodial wallets, with this, people can have self-custodial IDs, and any information is on the device, and it verifies itself through zero-knowledge proofs.”

Users can get a World ID on any compatible mobile wallet. One option is the World App, which is still in beta.

Orb Authentication is currently limited to Argentina, Chile, India, Kenya, Portugal and Spain, with a wider rollout coming later this year. In the meantime, mobile authentication is available in most countries.

The simplest use case for World ID is login (aka identity verification). Other potential use cases for the technology include bot protection and moderation in social networks, voting in DAOs, enabling uncollateralized loans, loyalty programs and coupons, marketplace reviews, and benefits distribution. The first demonstration of the technology will focus on verification for Discord.

“It probably takes more people’s imagination to think about what you can do with it. When the iPhone came out, you couldn’t even think of Uber,” Sada said, adding, “It’s a fundamental primitive. It’s here to stay. And Worldcoin is about making sure it does so in a decentralized and privacy-preserving way.”

As for the SDK, developers are invited to sign up for a wait list for early access to the product’s beta, which is open to anyone and includes a widget, developer portal, development simulator, samples and guides.

Marching through controversy

Once a user's identity is involved, privacy is bound to become the number one concern. Orb's launch in June 2021 drew strong opposition from major privacy advocates, including Edward Snowden, who warned people not to use biometric data for anything, adding that the human body is not a "vote-stamping machine."

Worldcoin later sought to alleviate these concerns by using zero-knowledge proof technology to eliminate the connection between the biometric registration phase and the wallet. However, Sada believes that concerns about the project still exist.

“There’s still a lot of misunderstanding,” he said. “A lot of people don’t know that your biometric data is destroyed in the Orb.” That is, unless users choose to store their biometric data — something Worldcoin doesn’t encourage users to do, even though it would help improve the protocol.

“The iris code is the only thing that leaves the device,” Sada continued. “While that may sound a little suspicious, World ID is truly the most private identity. I think it’s also the most inclusive and scalable in many ways.”

Sada also said that if there were better tools to prove a person’s uniqueness, Worldcoin would not hesitate to abandon the Orb, given the limitations of manufacturing hardware. In fact, Tools for Humanity has a team actively looking for such a solution.

But for now, development of Orb continues. Worldcoin is increasing the distribution of Orb through a program that offers incentives to operators. According to an official announcement released today, Worldcoin now has 1.3 million registered users.

However, Sam Altman, the biggest "halo" of Worldcoin, has not yet made any statement. As mentioned earlier, Altman has stated that he will not participate in the company's daily operations, and will mainly serve as a consultant to the company when needed. But his presence still makes people look forward to it: once Worldcoin is combined with AI, new sparks will surely burst out.

With the announcement of major progress in this project, we might as well wait and see whether Worldcoin can successfully complete financing and even be officially released - the current crypto industry urgently needs such good news.