On July 24th, a new cryptocurrency called Worldcoin (WLD-USD) hit the market, and it’s been stirring quite the buzz. The project was developed by Tools for Humanity, a US-based organization, and is governed by the Worldcoin Foundation, a non-profit based in the Cayman Islands. Notably, the founders of Tools for Humanity include Alex Blania and Sam Altman, the CEO of OpenAI.

Worldcoin’s main goal is to create a “proof-of-personhood” Digital ID system that is both borderless and privacy-preserving. The idea behind this is to tackle the potential issue of AI-generated deep fakes, which could cause significant problems in the future by distinguishing humans from bots online while protecting privacy. Additionally, the founders foresee Worldcoin enabling global democratic processes and eventually paving the way for AI-funded Universal Basic Income (UBI).

To create a Digital ID, users need to download the World App and locate a physical Worldcoin orb operated by contractors. However, this process has sparked controversy within the crypto community and privacy groups due to its use of biometric data. Users undergo an iris scan with the orb to generate a unique proof of personhood ID, which is linked to a secret key stored on their devices. After creating the Digital ID, users become eligible to receive Worldcoin tokens through airdrops directly to their wallets.

Currently, Worldcoin stands as the sixth largest cryptocurrency in terms of fully diluted market capitalization, amounting to a staggering $23 billion. However, its circulating market cap is ranked below 100, at just over $255 million. This is because only a small fraction of the total supply of 10 billion Worldcoin tokens, about 1%, is currently in circulation.

One significant concern raised about Worldcoin is its tokenomics. The vesting schedule shows a substantial unlocking of tokens over the next three years, which could lead to significant price volatility if adoption doesn’t keep pace with issuance. Moreover, the allocation of tokens to founders, team members, and private investors poses a potential risk.

Privacy is another major issue with Worldcoin. The collection of biometric data through iris scans raises concerns about security and potential misuse. Although Worldcoin claims to use zero-knowledge proof technology to verify proof-of-personhood without compromising privacy, the potential storage of biometric data still poses a risk.

Additionally, the model faces challenges with verification, as it currently only happens during enrollment. This leaves room for fraudulent behavior, where users can pass their Digital IDs to others, potentially undermining the network’s purpose.

Despite the skepticism surrounding Worldcoin’s viability, some optimistic factors remain. If Worldcoin succeeds in becoming an effective authentication system to distinguish human actions from bot actions online, investing in the native assets of blockchain networks may be more worthwhile than betting on the protocol coin with its current token economic structure.

Worldcoin faces significant hurdles to succeed as a Digital ID system. Concerns over privacy, scalability, and the coin’s economic model raise doubts about its long-term prospects. While some remain optimistic, investing in the native assets of blockchain networks might be a safer bet for those interested in this space.

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