Receive free Cryptocurrencies updates
We’ll send you a myFT Daily Digest email rounding up the latest Cryptocurrencies news every morning.
The goal of Worldcoin, a cryptocurrency co-founded by OpenAI head Sam Altman, sounds reasonable enough. It is to create a global network in which users feel able to trust strangers on the internet. The method — scanning eyeballs to create digital IDs — is misguided.
Channelling wider unease, the Kenyan government has ordered a halt to sign-ups. People had been queueing round the block for iris scans in the east African country.
Iris scanning could allow the San Francisco and Berlin-based start-up the opportunity to amass a centralised biometric database. It has been dishing out tokens, ostensibly worth a few dollars each, in return.
Participants clearly have no idea what their personal data is worth to tech companies.
They also have a worrying level of faith in the value of the tokens. Tokens trade at $2.31 apiece, according to data site CoinGecko. That means a market worth of just under $270mn for the tokens in supply.
But this is a small, highly illiquid market in which price moves may be driven by bad data. And if tokens are free, they lack the scarcity that propelled bitcoin’s price. Parent company Tools for Humanity has yet to present a convincing business model for Worldcoin.
Fluctuating prices go against the start-up’s original plan, which was to provide tokens that could act as global currency for a universal basic income.
Altman is riding high on the success of OpenAI, the generative artificial intelligence start-up he co-created. Worldcoin’s iris scan is designed to verify humans, acting as a countermeasure to the proliferation of AI that OpenAI is part of.
Altman is therefore trying to solve a problem he helped create.
OpenAI has raised more than $11bn in funding. Worldcoin has received far less. Crypto start-ups fell out of favour after the price of digital assets crashed last year. But Worldcoin investors are well regarded, including venture capital firm Andreessen Horowitz.
The same concerns that hobbled Meta’s digital token project could stymie Worldcoin. Regulators have already raised alarms. Tokens are unavailable in the US, where regulators are still deciding on definitions for securities. This will deter users.
Even if demand is high, Worldcoin’s chance of worldwide success is slim. Global governments have no intention of allowing a private company to challenge fiat currency.
The Lex team is interested in hearing more from readers. Please tell us what you think of Worldcoin in the comments section below.
Be the first to comment