Worldcoin
Fifty Years partners with Worldcoin to create a new egalitarian global currency
The first recorded use of currency was 3,200 years ago. Ancient Chinese societies used cowrie shells as a replacement for bartering. Being part of this “shell network” was really helpful, since bartering required having the perfect number of sheep to trade for rice at the same time the merchants were meeting. This original currency had regional network effects. If every merchant in your town was using shells, you could easily go to a marketplace and get your shopping done without needing the perfect barter match. And the more buyers using shells, the better it would be for merchants to accept the shells. This meant every additional person in the shell payment network added value to the shells.
Early currencies also facilitated the accumulation of wealth. Managing value was easier, so merchants, lenders, and governments could more easily accrue wealth and have a predictable medium to pass on that wealth to their children. Whereas a farmer couldn’t pay a piece of his cow in taxes, he could pay in shells. One African king collected 30 million shells a year, by taxing each ox at 1,000 shells (~$17, inflation-adjusted for 2021).
Fast forward 3,200 years. Currency systems have grown more complex but the basic principles that began in ancient China still remain. Popular currencies like the US dollar or the Euro have a ton of utility, partially because you can go to almost any bank in the world and trade your USD for the local currency. Central banks hold 59% of their currency reserves in USD and have held dollars as a reserve currency since 1944 as a result of the Bretton Woods agreement. Since then, businesses have found it useful to own and use dollars, no matter who you are. E-commerce has created a global network of vendors online, so now it’s useful for every vendor to sign up to services like Stripe to accept USD.
Despite this proliferation of entities accepting USD, billions of people around the world don’t have access to bank accounts to store dollars and it’s not always easy to transact with USD person-to-person. When cryptocurrencies were first created, part of their promise was to change this by creating an open, fair, and inclusive global financial system. Proponents insisted that with this new kind of payment on the internet, the unbanked could be reached. Moreover, they could benefit from a modern user experience and an automated, lower cost infrastructure. An incredibly exciting idea! So far, however, cryptocurrencies have not lived up to that promise.
Only 1.5% of people on earth own Bitcoin (BTC), the most widespread cryptocurrency, and no more than 3% have ever owned any form of cryptocurrency.1 So it’s usually not easier to transfer money to someone using cryptocurrency than using USD. Because so few people have ever interacted with a cryptocurrency, the network of users is small and therefore the usefulness as global currency is extremely limited.
It’s also hard to get any cryptocurrencies in many parts of the world. In some countries, you have to use the equivalent of Craigslist to find someone who is willing to meet up and trade your local currency for cryptocurrency -- a risky and antiquated method for a digital currency. In others, distribution is largely accomplished through centralized exchanges (e.g. Coinbase, Square). But nearly half the world’s population has no internet connection! Because so few people have cryptocurrencies -- and since this is so hard to fix -- their promise of widespread financial inclusion has not been realized.
It’s increasingly likely that intercountry wealth inequality may actually destabilize free and stable societies. The EU nearly broke over relocating and integrating 7 million refugees. An order of magnitude more climate refugees, driven by worsening local conditions and the large disparity in economic outcomes, could strain global governance to the breaking point.
While some hoped that cryptocurrencies would help alleviate this inequality, they’ve almost certainly exacerbated it. The only way to distribute a cryptocurrency equally is at its inception. This is because of the massive value widely adopted currencies accrue over time. For example, if you wanted to distribute bitcoin evenly now, you’d have to purchase it from the owners, and with a $700B+ market cap it would be prohibitively expensive.
Enter Worldcoin. Worldcoin is a new cryptocurrency that began with a simple question: How might we rethink money, using network effects, to embrace economic inclusion and address inequality?
To do that, Worldcoin is creating a new, collectively owned global currency designed to be distributed fairly to as many people as possible. This will create a payments network, far larger than any existing cryptocurrency, that sidesteps the friction of local exchanges and brings humanity together. For the first time in human history, anyone in the world will be able to buy goods from a vendor anywhere in the world in a single currency. The vendor will be able to pay their suppliers in that currency, all the way down the chain. This will smooth out the process of international trade, bringing people across borders closer together.
This requires two steps:
Create a new cryptocurrency that’s easy to send digitally and easy to build on.
Give billions of humans their free share of the currency while protecting their privacy.
The first of these steps has been enabled by the rise of Ethereum and its developer ecosystem. It’s now possible to spin up new currencies that build on this existing infrastructure. Worldcoin takes best-in-class crypto infrastructure and builds on top of it to a final product that is fast, secure, and scalable. This new coin is called WLD.
The second step is a massive undertaking and difficult for three reasons.
First, conventional distribution won't allow for reaching every human. Right now, there are roughly 7.9 billion people. To put that in perspective, most hardware startups are happy to get 100s of users in the early days, and even Apple -- the world’s largest company -- only has 1.65 billion devices in the world. It’s also difficult to reach every person on earth, since more than 3 billion people don’t have internet access. To reach those people, Worldcoin is designing and manufacturing an ‘Orb’, a physical device that can be shipped around the world to meet users where they are.
Orbs are given to entrepreneurial individuals around the globe to onboard new Worldcoin users. Each of these individuals runs their own operation -- hiring and managing teams, marketing, and partnering with local organizations. In Chile, the world’s top Orb operator manages a team of twenty who support sign-ups for 8 hours a day. In a simple thought experiment, assuming 700 sign-ups per week per Orb and a realistic Orb production and distribution of 4,000 devices per month, Worldcoin could reach 2 billion users 2 years after launch.
Second, giving every person their share means no one gets more than that (e.g. by putting on makeup or a wig) -- a difficult problem to solve. This means the Orb has to tell people apart perfectly at a glance, something that even humans often fail to do.
This type of protocol is called proof-of-personhood. Worldcoin requires a scalable proof-of-personhood protocol that guarantees uniqueness. CAPTCHA, a system to confirm that a human is checking a website, proves personhood but doesn’t prove uniqueness. Other verification protocols which require other users to meet virtually or in-person or to provide a financial stake are difficult to scale.
One obvious proof-of-personhood protocol is biometric identification. A biometric system for humanity would need to create a detailed enough and immutable biometric record to be able to uniquely identify against the entire human population. Facial recognition technology doesn’t provide enough information to differentiate among billions of users. Fingerprints work -- but are easily changed. DNA isn’t currently scalable.
Worldcoin has solved their proof-of-personhood protocol by developing state-of-the-art hardware that enables a new Worldcoin user to scan their iris, generating a unique hash that enables the user to receive their WLD. The iris is hard to modify and can be checked for liveness -- not so for faces or fingers 😲. This iris scanner can uniquely identify people with an extremely low failure rate, and may enable digitization of systems like voting and passports in the future. It is also easy for a user to scan their iris -- they simply hold the Orb up to their eyes.
Third, the Worldcoin team has to prevent any fraud that could bring down the network, and uphold user privacy. While Bitcoin and Ethereum have built confidence in blockchains as predictable platforms that are hard to attack, the Orb adds another dimension to the system. Orb design must make fraud difficult, and ensure no one prints a ton of WLD for themselves, or steals WLD from users. Spoofing attacks -- presenting a fake or non-human iris -- are prevented by employing multispectral imaging and anti-fraud algorithms. Tampering attacks are prevented through ground-up software and chip designs to detect tampering. To add an additional layer of security, Orbs will be constantly monitored and compared to other Orbs -- any anomaly or unexpected deviation will trigger a remote deactivation.
Worldcoin is built with user privacy at the core. First, iris scans pass through a one-way function, like a trapdoor you can’t climb back up. This means there’s no generating an image of someone’s iris from the trapdoor function’s output (the iris code). Second, the iris code causes the user’s Worldcoin wallet app on their phone to activate, but the code doesn’t actually get saved in the app or on the Orb, and there’s no way to know which code is linked to which app. This means that users don’t have to worry about their iris being linked to their wallet, while also ensuring that new iris codes can be checked against the central blockchain, to make sure that no one is able to register twice.
Worldcoin’s vision is extremely ambitious and there will be many challenges along the way, but this isn’t theoretical. As of today, Worldcoin has signed up 136,000 people, over half of whom signed up since September, with only 30 devices in the field!
They’ve also come far on the hardware engineering side, from the first v0 Orb used to sign up humans...
...to the current v1 Orb in the field now.
Our eyes are windows to our souls. A company asking you to scan your eyes can feel emotionally intimate in a way that’s hard to articulate. Worldcoin reaffirms our humanness via technology. The share of Worldcoin we each receive is a symbol of our shared humanity that reaches beyond borders, race, gender, age, language, and all the other things that keep us apart. Worldcoin says “Because you are a human, you are entitled to this token, this unit of monetary value.” It says, “Welcome to the human network.”
There is no one better positioned to pull this off than the Worldcoin founders, Alex Blania and Sam Altman. After studying physics and computer science in undergrad, Alex went on to study the application of AI on quantum systems at the Max Planck Institute, and spent time at Caltech researching deep learning to predict quantum systems. He’s been a hardware entrepreneur since high school, when he founded a vertical farming company. Sam is the co-founder & CEO of OpenAI and has been at the cutting edge of technology entrepreneurship for more than 17 years. He’s led companies across the technology stack, from social networking software to nuclear energy. The founders have recruited a world class team, with expertise in regulation, blockchain, hardware, and cryptography.
At Fifty Years, our sweet spot is supporting founders at the earliest stages who are building deep tech companies that can create massive positive impact and generate huge financial outcomes.
Deep tech: The Worldcoin Orb represents state of the art hardware and software engineering with incredibly difficult problems to be solved at every level of the stack, from cryptography to device security to blockchain engineering.
$1B yearly revenue potential: The value of the Bitcoin network is more than $740B. A payments network encompassing every person in the world that ushers in a new era of global trade could be worth substantially more than that.
Massive positive societal impact: Worldcoin has the potential to help the 1.7 billion people who are unbanked get access to a bank account. It will also enable any human to pay any other human, bringing more people into the modern financial system. And if successful, Worldcoin could make the largest dent in global wealth inequality we’ve seen in modern times.
Inspired by their vision for a more fair and more inclusive financial system, Fifty Years is excited to partner with Worldcoin alongside Andreessen Horowitz, Coinbase, 1Confirmation, Variant, Digital Currency Group, Sam Bankman-Fried, and other top Web3 investors. We’re looking forward to helping Alex, Sam, and team connect the world and make a massive dent in global wealth inequality.
https://crypto.com/images/202107_DataReport_OnChain_Market_Sizing.pdf