Sam Altman's Worldcoin Faces Orb Scarcity, Unforeseen Challenge or Calculated Move?

Worldcoin's Ambitious Journey

One of the most ambitious startups in the crypto sphere, Worldcoin, is encountering an unforeseen challenge: a scarcity of orbs. These orbs, integral to the Worldcoin cryptocurrency project founded by OpenAI's Sam Altman, scan individuals' irises in exchange for tokens. The surge in demand for Worldcoins underscores the rapid adoption of the project since its inception last July.

The World App, facilitating access to Worldcoins, boasts 10 million users across 160 countries and witnesses over seven transactions per second, cementing its status as a leading crypto wallet globally.

The Orb Scarcity Conundrum

Alex Blania, CEO of Tools for Humanity, the startup behind Worldcoin, highlights the intensified production of silver orbs to meet burgeoning demand. Currently, there exist between 300 to 500 orbs in operation. These devices, manufactured in Germany, boast sophisticated sensor technology aimed at thwarting fraudulent attempts to generate fake "World IDs," thereby ensuring the authenticity of digital identities.

Innovative Solutions and Open-Source Approach

Worldcoin's decision to open-source both orb designs and accompanying software has earned commendation within the crypto community. Recently, the project unveiled its proprietary blockchain, built atop the Ethereum protocol. This innovation enables free transactions for individuals authenticating their identity via World IDs. However, distribution excludes certain jurisdictions, like the U.S., due to regulatory uncertainties.

Business Model and Potential Revenue Streams

While Tools for Humanity refrains from disclosing a definitive business model, potential revenue streams include profits from Worldcoin itself or transaction fees. Blania anticipated the orbs' mobility globally; however, the reality sees individuals flocking to the orbs for iris scans, reflecting the unexpected logistical challenges faced.

Changing Perceptions and Positive Impact

Initially perceived as dystopian, the concept of a biometric cryptocurrency now garners more nuanced responses. The temporary orb shortage paradoxically signals openness towards the idea. Notably, individuals are embracing Worldcoin as a source of supplementary income, with anecdotes of purchases ranging from livestock to essential goods.

World ID: A Game-Changer in Blockchain Technology

Worldcoin's bespoke blockchain introduces the concept of World IDs, addressing a critical issue in crypto transactions. By verifying users' humanity, these IDs mitigate transaction costs, particularly benefiting individuals in developing regions facing economic volatility. The project aligns with the vision of providing a universal basic income amidst the rise of automation, emphasising the importance of identity verification to combat fraud.

Worldcoin to Launch New Blockchain Prioritising Human Users

Recently, Worldcoin announced the launch of its own layer-2 Ethereum blockchain called World Chain. The chain is designed to prioritise verified humans over AI bots and trading algorithms. Users who authenticate themselves via Worldcoin's retina-scanning "orb" device will get special treatment, such as priority blockspace and free gas.

World Chain will be built on the OP Stack, a blockchain-building framework that is popular among bootstrappers. The chain will bundle up transactions from users and pass them down to Ethereum where they get cemented permanently. This setup will allow World Chain to offer users cheaper fees than they'd get by transacting directly on Ethereum.

Worldcoin Seeking Improved Government Relations

Sam Altman and Alex Blania, the main proponents of the Worldcoin project, recently met with Malaysian leaders. This meeting appears to be part of an effort to improve relations with governments while assuring them about data privacy. Blania, CEO of Tools for Humanity, the developer of Worldcoin, met with representatives from Malaysia's digital ministry.

Additionally, both Blania and Altman attended a video call with Malaysia's Prime Minister.

Worldcoin Emphasises Data Privacy

These meetings follow a series of actions by Worldcoin that suggest a commitment to data privacy. Worldcoin assigns digital identities to users, with the goal of distinguishing humans from AI actors. However, the project has faced scrutiny regarding data collection. By meeting with regulators and government officials, Worldcoin seems to be taking these concerns seriously.

Data Collection Halted in Spain and Portugal

Despite its innovative potential, Worldcoin faces regulatory hurdles. Last month, the project was hit with temporary bans in Spain and Portugal. Regulators in these countries expressed concerns about the collection and management of users' biometric data.

This was not the first instance of scrutiny for Worldcoin. The project had previously faced similar inquiries from authorities in Germany, France, Argentina, Kenya, and South Korea.

Privacy Concerns Fueled by Biometric Data Collection

A key factor behind Worldcoin's troubles is the use of iris scans, a form of biometric data. Since its launch last year, the project has faced criticism regarding privacy.

Ethereum co-founder Vitalik Buterin is among those who have raised concerns. He, along with others, believe Worldcoin's data collection methods might violate privacy laws.

Privacy advocates have raised concerns about how this data might be used and the potential for misuse, including surveillance or sale to third parties. Additionally, the project's focus on incentivising signups in developing countries has sparked worries about exploitation and a lack of informed consent.

This has led to investigations by authorities in different countries. Argentina even threatened a $1.2 million fine for potentially breaching their National Consumer Protection Law.

Project Attempts to Address Concerns

Worldcoin has implemented new measures to address privacy concerns. They introduced "Personal Custody" allowing users to store their biometric data themselves, and offered an option for users to request deletion of their iris codes.

Additionally, they pledged to take age verification more seriously to prevent minors from signing up. These actions follow consultations with privacy and security experts, and aim to comply with regulations in various countries.

Despite these challenges, the project remains steadfast in its mission to revolutionise the crypto landscape through biometric authentication and universal access to financial services, aiming to meet the rising demand for their Orb-verified IDs.

Increasing WLD Token Supply by 19% Through Private Sales

Worldcoin announced in a blog post on 23 April that it will increase the supply of its WLD token by up to 19% over the next six months. This will be achieved through private sales of WLD tokens to institutional trading firms outside of the United States.

Worldcoin to increase WLD token supply over next 6 months. (Source: Worldcoin)

World Assets, a subsidiary of the Worldcoin Foundation responsible for token issuance, will sell between 0.5 million and 1.5 million WLD tokens per week. This translates to an injection of 36 million new tokens into the market, representing an 18.6% increase in the total circulating supply.

To minimise the potential impact on the token price, Worldcoin will negotiate with trading firms to execute these private placements at market prices.

Scarcity of Orbs - A Calculated Move or Overambition?

Worldcoin presents a unique concept with far-reaching implications. By adopting iris scan technology and a new blockchain, the project aspires to revolutionise financial inclusion. However, its path is riddled with challenges. Regulatory hurdles and privacy concerns pose significant roadblocks.

The recent orb scarcity presents an interesting paradox. On one hand, it could be interpreted as a logistical oversight, highlighting the challenges of scaling a nascent and ambitious project. After all, the project's rapid user acquisition outpaced orb production capacity. On the other hand, the scarcity could be a deliberate strategy. By limiting the number of orbs in circulation, Worldcoin might be attempting to control the issuance of Worldcoin tokens and potentially manipulate demand. This aligns with their recent announcement of increasing WLD token supply through private sales, further influencing tokenomics.

Whether this scarcity is a misstep or a calculated move remains to be seen. Only time will tell if Worldcoin can navigate the complex regulatory landscape surrounding biometric data collection and effectively address privacy concerns.

Embracing Innovation for a More Inclusive Future

As Worldcoin navigates challenges and criticism, it epitomises the fusion of technology and social impact. By leveraging biometric authentication and blockchain, Worldcoin pioneers a future where financial inclusion transcends geographical barriers. While regulatory obstacles persist, the project's resilience highlights its commitment to reshaping global finance for the better.