Worldcoin, an encryption project co-founded by ChatGPT founder Sam Altman, has just announced the completion of a $115 million Series C round of financing. Why did the hottest figure in the AI field start this encryption project? Is this part of his AI vision?
Blockchain Capital led the latest round of financing for Worldcoin, and its partner Spencer Bogart issued a document explaining why the institution invested in Worldcoin, what they think Worldcoin will bring, and the impact of this project.
Original: Blockchain Capital
Over the past decade of evaluating the crypto opportunity, we have seen thousands of ambitious and inspiring projects, but Worldcoin is one of the most ambitious and credible efforts to engage over a billion people in the crypto industry .
By utilizing a novel distribution strategy, Worldcoin has the unique opportunity to become the largest onramp to the crypto space, complemented by the most widely adopted crypto wallet, and most importantly, establish a new primitive for the Internet - Proof of Personhood .
Given recent advances in artificial intelligence, proof of personality is especially useful for distinguishing humans from bots on the internet. More on that later.
Remarkably, Worldcoin is starting to work: Despite extremely limited numbers in initial testing, limited awareness and no marketing, Worldcoin has attracted almost 2 million people. This is just the beginning: Worldcoin co-founders Sam Altman (founder of OpenAI) and Alex Blania are focused on scaling to the global population.
01
See the first reaction of Worldcoin
Historically, contributors to the Worldcoin protocol have done a poor job of spreading the word about their startups.
Like most people, our initial reaction to Worldcoin was negative. The project seemed Orwellian in nature, and at first blush, it seemed like a pernicious mix of hardware, biometrics, and encryption — not for the faint of heart.
The negative press coverage on this front is practically self-evident.
Even Edward Snowden echoed the critique: "Don't categorize eyeballs..."
But these criticisms are beside the point.
To evaluate Worldcoin from first principles, our team invested hundreds of hours poring over Worldcoin's extensive documentation, talking to dozens of contributors to the project's hardware and software, and discussing everything from the underlying technology to the project's GTM Everything about the policy.
What initially appeared to be Worldcoin was a dystopian attempt to create a global currency using privacy-invasive (and capital-intensive) hardware, but it was actually something else entirely: it was a completely privacy-preserving Solutions to address increasingly common problems. Additionally, our assessment concluded that Worldcoin has the community of contributors (including its initial development team at Tools for Humanity, "TFH"), the technology (software and hardware), and the strategies necessary to support billions of users around the world.
02
So, what is Worldcoin doing?
To register and authenticate users, Worldcoin scans each person's iris (the colored part around the pupil). This scan verifies that the person is indeed a real, live and unique person. Scanning is performed through a custom hardware device called an "orb".
When it comes to biometrics, there are concerns and sensitivities for good reason — especially when encryption is involved. Several sci-fi movies and novels even have some concept of "eyeball information harvesting". Naturally, a dystopian perspective quickly comes to mind.
However, what actually happens behind the scenes is that the orb takes a picture of the iris, and the device then generates a unique code for the randomness of the iris (the "iris code"). By default, raw biometrics are destroyed immediately, with iris codes being the only information leaving the orb.
In TFH's World App, the first wallet in the Worldcoin ecosystem, verified users are issued a World ID, allowing them to privately prove to anyone they choose that they are indeed a unique person. These on-chain identity promises are fully cryptographically secure. Even if iris codes were completely reversible, there would be no way of knowing how anyone used World ID, and no way of tracking individual users.
In other words, World ID is a privacy-preserving identity protocol that does not collect or store anyone's biometric information.
Users can also create their own crypto wallets within the World App as part of the process. Given World ID's Sybil resistance, the World App is the first self-hosted wallet in the world with a known user base - all other wallets rely at best on guesswork for metrics like DAU/MAU.
03
Well...but why?
At first glance, it can be difficult to appreciate the value that a proof-of-personality protocol can create. This is a fundamental reality of "category creators"—as a novel primitive, it is difficult to quantify the utility and value of personality proof at an early stage.
At the highest level, however, it's easy to recognize that with recent advances in artificial intelligence, it's becoming harder and more important to distinguish people from machines ("bots") on the internet.
More specifically, we can consider applications of obvious utility today. One such opportunity in Web3 is airdrops: many token-based projects want to reward each unique user with tokens (e.g. for onboarding, making transactions, or any other unique behavior a token-based project might want to incentivize ).
Unfortunately, identifying unique users is difficult. For example, users may be asked to provide a government-issued ID as a sybil defense mechanism - but i) this excludes over half of the world who lack a suitable ID ii) dramatically increases friction and iii) given the historical frequency of data security breaches , many users are skeptical about providing such information. As a result, rewards intended for unique users were disproportionately distributed to people who Sybil hacked the mechanism and made thousands of wallets to collect massive amounts of free rewards.
Instead, airdrop issuers can supplement their airdrop criteria with World ID as a proof of humanity mechanism to reward unique users.
But the applications of proof of personality go far beyond encryption. Basic internet services introduce significant friction in order to distinguish users from “bots” — friction that we’ve all gotten so used to that we hardly even think about it anymore.
04
Friction, sustainability and trust
An example of this slow friction is the increasing difficulty of captchas. Intelligence tests such as CAPTCHA exist to mitigate the risks and costs of Sybil and DDoS attacks. However, captchas become so challenging that it becomes difficult for most real users to provide the correct answer.
More importantly, this frustrates both users and ISPs. Fun Fact: Humans worldwide spend a combined 200-500 years per day solving CAPTCHA puzzles (4.6 billion Internet users encounter a CAPTCHA every 10 days and take 15-35 seconds to successfully solve). All this is just to prove our humanity!
But it's not about captchas; they're just a common symptom, not the underlying problem. The problem is that we cannot quickly and reliably distinguish machines from humans online—a challenge that is becoming increasingly prevalent and pernicious given recent advances in artificial intelligence.
The potential impact of this impotence is enormous: the vast majority of networks rely on ad-based revenue to pay for infrastructure costs. However, at high bot-to-human ratios, the cost of serving (bot-intensive) traffic will outweigh the revenue from serving ads to humans. Many websites and web-based services will become economically unsustainable. These web-based services may cease to exist. It's hard to imagine other problems that were never created because the current state of the problems (let alone further growth) made them economically unsustainable in the first place.
The issue also goes beyond a technical or economic nature and extends into the cultural sphere. Our inability to distinguish robots from humans greatly undermines trust in the digital community. In the digital communities in which they interact, human users face the increasing challenge of filtering signal (humans) from noise (robots).
In all cases, it's clear that tests of intelligence like captchas won't be enough to solve the problem as we continue to advance AI. This is where identity proof protocols like World ID come into play.
05
World ID and proof of personality
By providing tools to easily distinguish bots from humans, proof-of-personality protocols like World ID will improve user experience, keep existing web services economically sustainable, open up design space for new web services, and increase trust in the digital community. We believe that privacy-preserving identity proof protocols will become a fundamental primitive of the Internet. Specifically, World ID enables individuals to verify their humanity online while remaining anonymous through zero-knowledge proofs. Verification is as easy as clicking a button to sign a transaction.
What's going on behind the scenes? Behind the scenes, the set of World IDs is maintained as a collection of identity commitments in the form of a Merkle tree. Using zero-knowledge proofs, users can prove their inclusion in a Merkle tree without revealing their specific identity. Essentially, this allows World ID users to confirm their identity as a verified person without revealing who they are, ensuring user activity is truly private.
While the exact types of new Web services that can be created remain to be seen, some low-hanging fruit (as outlined by some of the developers building World ID) include:
Advanced Spam Filter: No Browser DDoS Protection and CAPTCHA-like Smart Tests
Reputation System: By preventing multiple accounts from being created, a reputation system is fundamentally more effective. For example, they can unlock undercollateralized loans in DeFi
Governance: one person one vote (or similar) made possible in a privacy-preserving way by World ID
Authentication: Biometric-based authentication can be part of the digital identity theft solution
Fair distribution of scarce resources: With a proof-of-personality protocol like World ID, scarce or valuable resources can be distributed directly on the Internet without the risk of Sybil attacks.
These are just initial thoughts on how to use World ID and proof of personality online. The biggest use cases and opportunities are likely to be the ones we haven't yet imagined. We're excited to see other people implementing and utilizing World ID in creative ways.
06
Team, Past Record and Attraction
A core reason we are delighted to be working with TFH, the team that supported Worldcoin's early development and growth, is the quality of the team and their experience solving difficult problems and producing real appeal.
Sam Altman and Alex Blania are the co-founders of TFH, the original conception of Worldcoin. As co-founder and CEO of OpenAI, Sam brings a unique perspective from the cutting edge of AI, and as former president of Y Combinator, he brings direct insight into the scale and success of startups. Alex Blania is the perfect complement to Sam: Alex is a unique founder with attention to detail and execution, and we have a strong feeling he will become a household name in the next decade. Together they embody the delicate balance between vision and execution. Perhaps most importantly, Alex and Sam recruited proven talent to help realize their bold vision for TFH. The team already has an early experience of solving difficult problems together. Specifically, the team designed and produced much custom hardware that was previously thought impossible or infeasible. The team has managed to attract nearly 2 million users despite an early beta launch with little marketing or awareness.
Ultimately, we believe TFH has a unique opportunity with the right technology, team, and timing to scale the Internet's privacy-preserving identity primitives - and in doing so, Worldcoin could become the largest onramp to cryptocurrency and the World App the most widely adopted Crypto wallet.
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