Worldcoin – Proof of Personhood, World ID, and the Future of Crypto Onboarding

Over the past decade of assessing crypto opportunities, we have seen thousands of ambitious and inspiring projects, but Worldcoin is amongst the most ambitious and credible efforts to onboard over one billion people to crypto.

By leveraging a novel distribution strategy, Worldcoin has a unique opportunity to become the biggest onramp to crypto, complemented by the most widely adopted crypto wallet, and, most importantly, to establish a new primitive for the Internet — Proof of Personhood.

Given recent advancements in AI, Proof of Personhood will be particularly useful for distinguishing between humans and bots on the Internet. More on that in a moment.

Notably, it’s working: Despite an extremely limited footprint in initial testing, limited awareness and no marketing, Worldcoin has already onboarded nearly 2 million people. This is only the beginning: Co-founders Sam Altman and Alex Blania have a singular focus on scaling to the global population.

Initial Reactions

Historically, contributors to the Worldcoin protocol have done a poor job getting their story out there.

Like most people, we had a negative initial reaction to Worldcoin. It seemed Orwellian in nature and, at first glance, appears to be a noxious combination of hardware, biometrics, and crypto — a grab bag not for the faint of heart.

The negative press coverage practically writes itself.

Even Edward Snowden chimed in with criticism: ”don’t catalogue eyeballs…”

But the critiques are wildly off the mark.

To evaluate Worldcoin from first principles, our team invested hundreds of hours into poring over Worldcoin’s extensive documentation, talking to dozens of contributors to the project’s hardware and software, and debating everything from the underlying tech to the project’s GTM strategy.

What at first appeared to be a dystopian attempt to create a global currency with privacy violating (and capital intensive) hardware was actually something else altogether: an entirely privacy preserving solution to an increasingly pervasive problem. Moreover, our evaluation concluded that Worldcoin has the contributor community (including its initial development team at Tools for Humanity, “TFH”), tech (software and hardware), and strategy necessary to support billions of users at global scale.

So, what is Worldcoin doing?

To onboard and verify users, Worldcoin scans each person’s iris (the colored part of your eye that surrounds the pupil). This scan verifies that the person is indeed a real, live, and unique human. The scan is conducted via a custom hardware device called an “orb.”

For good reason, folks get concerned and sensitive when it comes to biometrics— particularly so when you add a dose of crypto. Several sci-fi films and novels even feature some notion of “eyeball harvesting.” Naturally, the dystopian view quickly comes to mind.

However, what’s actually happening under the hood is that the orb takes a picture of an iris and the device subsequently generates a unique encoding of the randomness of the iris (an “iris code”). Per default the original biometric is immediately destroyed and the iris code is the only thing that leaves the orb.

Within TFH’s World App, the first wallet for the Worldcoin ecosystem, verified users are issued a World ID that enables them to privately attest to whomever they choose that they are indeed a unique human. These onchain identity commitments are fully cryptographically secure. Even if the iris code were perfectly reversible, there would be no way to know how anyone is using World ID, and there is no way to track individual users.

Said differently, World ID is a privacy-preserving identity protocol that does not collect or store anyone’s biometric information.

As part of the process, users also create their own crypto wallet within World App. Given the sybil resistance of World ID, World App is the world’s first self-custodial wallet with a known user base -– all others rely on guesstimates at best for metrics such as DAU/MAU.

Okay…but why?

At first glance, it’s difficult to appreciate the value that can be created from a proof of personhood protocol. This is a fundamental reality of “category creators” — as a novel primitive, it is inherently difficult in early stages to quantify the utility and value of proof of personhood.

However, at the highest level, it’s easy to recognize that with recent advancements in AI, it is becoming both increasingly difficult and increasingly important to distinguish between humans and machines (“bots”) on the Internet.

More specifically, we can think about applications with obvious utility today. One such opportunity within Web3 is airdrops: many token-based projects would like to provide token rewards to each unique user (e.g. for onboarding, conducting a transaction, or any other distinct action that a token-based project may wish to incentivize).

Unfortunately, identifying unique users is difficult. For example, users could be asked to provide a government-issued ID as a sybil-defense mechanism–but this i) this excludes more than half the global population that lacks a suitable ID ii) drastically increases friction and iii) given a long track record of data security vulnerabilities, many users are rightfully skeptical about providing such information. As a result, a reward intended for unique users is instead disproportionately distributed to people that sybil attack the mechanism and spin up thousands of wallets to collect an outsized share of free rewards.

Instead, airdrop issuers could supplement their airdrop criteria with World ID as a proof of personhood mechanism to reward unique users.

But the applications of proof of personhood extend far beyond crypto. In an effort to distinguish between users and “bots,” significant friction has been introduced to basic Internet services — we’ve all become so accustomed to the friction that we barely give it a second thought.

Friction, sustainability, and trust

One example of this creeping friction is the increasing difficulty of CAPTCHAs. Intelligence tests like CAPTCHAs exist to mitigate risks and costs stemming from sybil and DDoS attacks. However, CAPTCHAs have become so challenging that most real users have a difficult time providing the correct answer.

More than that, it’s frustrating for users and for web-service providers alike. Fun fact: humans around the world collectively spend somewhere between 200-500 years each day solving CAPTCHA puzzles (4.6 billion Internet users encounter a CAPTCHA once every 10 days and take 15-35 seconds to solve successfully). All this, just to prove our humanness!

But this isn’t really about CAPTCHAs; they’re just one familiar symptom, not the underlying problem. The problem is our inability to quickly and reliably distinguish between machines and humans online—a challenge that is becoming more pervasive and pernicious given recent advancements in AI.

The potential implications of this inability are significant: The vast majority of the web depends on ad-based revenue to cover infrastructure costs. However, at an elevated bot-to-human ratio, the costs of servicing that (bot-heavy) traffic will exceed the revenue from serving ads to humans. Many websites and web-based services would become economically unsustainable. These are the web-based services that may cease to exist. It’s hard to imagine the others that were never created because the current state (let alone further growth) of the issue rendered them economically unsustainable from the outset.

The problem also extends beyond those of a technical or economic nature and into the cultural realm. Our inability to distinguish between bots and humans has drastically eroded trust in digital communities. Human users have an increasingly tough challenge of filtering signal (humans) from noise (bots) in the digital communities where they interact.

In all cases, it’s clear that intelligence tests like CAPTCHAs will not suffice as a solution to the problem as we continue to advance with AI. That’s where a Proof of Personhood protocol like World ID comes into play.

World ID and Proof of Personhood

By providing the tools to easily distinguish between bots and humans, a Proof of Personhood protocol like World ID would improve user experience, preserve economic sustainability of existing web services, open the design space for new web services, and provide a foundation for improved trust in digital communities. We believe a privacy-preserving Proof of Personhood protocol will become a fundamental primitive for the Internet. Specifically, World ID empowers individuals to verify their humanness online while maintaining anonymity through zero-knowledge proofs. Verification is as simple as clicking a button to sign a transaction.

What’s happening behind the scenes? Under the hood, the World ID set is maintained as a collection of identity commitments in the form of a Merkle tree. Leveraging zero-knowledge proofs, users can demonstrate their inclusion in the Merkle tree without disclosing their specific identity. Essentially, this allows World ID users to confirm their status as verified humans without revealing who they are, thus ensuring user activity remains truly private.

• While the exact types of new web services that can be created remains to be seen, some of the low-hanging fruit (as outlined by some of the developers building World ID) include:
• Advanced spam filters: obviate the need for browser DDoS protection and CAPTCHA-like intelligence tests
• Reputation systems: By preventing the creation of multiple accounts, reputation systems are radically more effective. For example, they could unlock under-collateralized lending in DeFi
• Governance: One-person, one-vote (or similar) become feasible in a privacy preserving way with World ID
• Authentication: Biometric based authentication can be part of a solution to digital identity theft
• Equitable distribution of scarce resources: With a proof of personhood protocol like World ID, it becomes possible to distribute scarce or valuable resources directly over the Internet without the risk of sybil attacks.

These are all just initial, low-hanging ideas of how World ID and Proof of Personhood can be used online. It’s likely that the biggest use-cases and opportunities are things we have not yet imagined. We’re excited to see the creative ways others implement and leverage World ID.’

Team, track record, and traction

A core reason we’re excited to partner with TFH, the team supporting Worldcoin’s early development and growth, is the quality of the team and their track record of solving hard problems and generating real traction.

Sam Altman and Alex Blania are TFH’s co-founders and originally conceived of Worldcoin. As co-founder and CEO of OpenAI, Sam brings a unique perspective from the forefront of AI and, as the former President of Y Combinator, he also brings direct insight into startup scaling and success. Alex Blania is the perfect complement to Sam: Alex is a uniquely detail- and execution-oriented founder whom we strongly suspect will become a household name over the next decade. Together they embody the delicate balance between vision and execution.

Perhaps most importantly, Alex and Sam have recruited proven talent to help make their bold vision for TFH a reality. Together, the team has already established an early track record for solving hard problems. Specifically, the team has designed and produced custom hardware that many previously considered to be either impossible or infeasible (more on the orb and scaling to billions of people here and here).The team has already successfully onboarded nearly 2 million users, despite being in early beta release with little to no marketing or awareness.

Ultimately, we believe that TFH has a unique opportunity with the right tech, team and timing to scale a privacy-preserving identity primitive for the Internet—and that, in doing so, Worldcoin may become the biggest onramp to crypto and World App the most widely adopted crypto wallet.