Worldcoin: A Grand Vision Backed by Sam Altman

Worldcoin, a striking project co-founded by Sam Altman, the CEO of #OpenAI , has recently made headlines in various newspapers following the introduction of its ecosystem token.

From its birth on March 14th, this venture has stirred both admiration and doubts within the crypto community as well as Silicon Valley.

Worldcoin's Introduction

Worldcoin's main ambition is to tackle income inequality and bring a revolution in online identity verification. Thus, the project introduced World ID, a global digital passport crafted for users to store on their smartphones.

Through World ID, individuals can validate their "humanity" on websites without having to divulge personal details, such as their phone number. This move is aimed at lessening the dependence on conventional identification methods.

On May 8th, #Worldcoin unveiled a cryptocurrency wallet for verified users. After registering their World ID, users can benefit from fee-less (gas-free) transfers, which require just a phone number or an iris scan for verification.

To dispel privacy concerns, the developers reassured that the project does not retain the provided user data. Instead, it creates a so-called zero-knowledge proof, which confirms their "humanity" without exposing sensitive details.

In response to Worldcoin's debut, several prominent crypto exchanges, including #Binanceturns6 , Bybit, OKX, Gate, and Huobi, announced plans to incorporate the Worldcoin token into their platforms. This indicates the growing industry acceptance of the project.

Not Everything Is As Rosy

However, not everything is going smoothly. The security firm PeckShield, which monitors blockchain activities, has already identified a counterfeit Worldcoin token. This token exhibits clear signs of a rug-pull, a scam where anonymous founders deceive people in an attempt to get them to invest money in a project that is then abandoned.

Despite the support Worldcoin has received from various quarters, it has also faced resistance from some key community members. Notably, from the former Twitter CEO and a big Bitcoin (#BTC ) enthusiast, Jack Dorsey. Dorsey expressed concerns over the idea of corporations or states owning a global financial system.

Yet, the project witnessed significant interest, as evidenced by over 2 million sign-ups for the World ID initiative as of July 14th.

Sam Altman himself expressed optimism and tweeted his ambition to increase the number of registered users to a staggering 2 billion. To bolster and develop its decentralized identification system and the crypto wallet named World App, the project secured funding of $115 million on May 25th.

Several individuals in the crypto sphere are raising eyebrows over Worldcoin's tokenomics structure. This strategy plans to roll out the bulk of its 10 billion WLD tokens in the coming 15 years.

"Tokenomics" blends the terms "token" and "economics", detailing the financial strategy behind individual tokens or coins.

Setting privacy concerns aside, one Twitter user, @ethacct, opined that Worldcoin's tokenomics are distinctly crafted to take advantage of the average retail investor by establishing an inflated valuation early on, thanks to a restricted trading supply. This could then allow venture capitalists to cash in on these unsuspecting investors next year when their tokens become accessible. The user further stated, "Just for that reason, I'm firmly against it."

Ari Paul, the founder of BlockTower Capital, highlighted a recurring scheme in the crypto market that artificially boosts start-up valuations to over $10 billion. He explained, "The common manipulation tactic involves giving the majority share of tokens to founders and investors with a lock-up period. Then, only a minuscule percentage is distributed to regular investors as an 'airdrop'. On top of that, market makers are granted an amount that's multiple times the airdropped amount and are incentivized to maintain a minimum price with options."

He emphasized the illusion this creates: "What ends up happening is that the general public sees a price and liquidity on exchanges, but this only represents a tiny fraction - often less than 1% - of the actual tokens. The media then eagerly reports on this 'success'. Consequently, venture capitalists increase their portfolio value and can then gather more funds based on these inflated values."

Paul further cautioned, "Between 3 to 18 months later, when these locked tokens are released, the previously accepted project's price and liquidity are deemed 'authentic' by the average investor. This is when 'insiders' offload their tokens, usually at the expense of these average investors." He commented on the legal nuances, saying they can vary depending on the region. Yet, when it comes to the ethics of such a practice, he believes it's quite straightforward: it's questionable at best.

A Twitter user by the handle @oxydotsol criticized Worldcoin's tokenomics model, stating: "Worldcoin's financial structure is concerning. Out of a total of 10 billion coins, a mere 43 million will be available to users at the outset. Moreover, an additional 100 million are slated to be lent to market makers. A significant chunk, 25%, is reserved for insiders. The troubling part? These insiders can begin offloading their share after just one year."

Conclusion

The project harnesses advancements in artificial intelligence and offers a decentralized solution that safeguards privacy. This grants individuals enhanced control over their online identity and amplifies cyber security.

Worldcoin persists in its endeavors to address income disparity and shape the future of digital identity verification. It's worth noting that not just its proponents, but chiefly its critics, are keeping a vigilant eye on its progress and conduct. The project's tokenomics currently emerge as the most pressing concern. However, with global adoption, this might not be as significant an issue as it appears now.