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Michiel Frackers: Worldcoin proves: people give away their eyeballs for a few coins

Michiel Frackers: Worldcoin proves: people give away their eyeballs for a few coins

The technology industry is increasingly suffering from excessive attention to tech founders. Elon Musk continues to dominate the spotlight, whether he is reviving Twitter or tearing it down, depending on whom you ask. Still, the most significant news of the past week was the unveiling of Worldcoin. This project drew attention because of its shiny "orb," which scans the iris of new users, and because of the involvement of co-founder Sam Altman, also the CEO of OpenAI.

It was the week of Barbie and Oppenheimer, or Barbenheimer, and Worldcoin's Orb. Photo: created with Midjourney

Two months ago I wrote about Worldcoin and the company behind it called Tools for Humanity, which then presented itself on its 1-page website with the slogan "a technology company committed to a more just economic system" and raised as much as $115 million for the Worldcoin project.

The goal, the founders say, is to create a global identification system that will help reliably distinguish between humans and AI, in preparation for when intelligence is no longer a reliable indicator of being human. At Worldcoin, verification of humanity is ensured through the use of an Orb, a sphere: a biometric iris scanner.

But according to Alex Blania, CEO and co-founder of Tools for Humanity and Worldcoin project leader, there is a bigger purpose than just identification as a human being:

"We seek universal access to the global economy, regardless of country or background, and accelerate the transition to an economic future where everyone on earth is welcome and benefits"

The definition of a pyramid scheme?

Who is not moved to tears by this noble endeavor? Who is against being welcome on earth? Coindesk visited Worldcoin's headquarters in Berlin and from this brilliant article, "Inside the Orb," the impression emerges that Altman and Blania possess a unique combination of talent, otherworldliness and opportunism.

So they talk about Worldcoin as a crucial step toward a Universal Basic Income (UBI) for the entire world population, because these men think big. 

But they are particularly vague when the question is asked who should then pay for that universal basic income for our planet. Altman says of this:

"The hope is that when people want to buy this token, because they believe this is the future and there will be an influx into this economy. New token buyers is how it gets paid for, eventually."

Aha, so the influx of new buyers funds the system. That rings a bell, and I asked ChatGPT, the product of Sam Altman's other company, OpenAI, what the definition of a pyramid scheme is. Here it is:

'A pyramid scheme is a business model in which members are recruited through a promise of payments or services for enrolling others in the system, rather than providing investments or selling products. If recruiting multiplies, recruiting soon becomes impossible and most members cannot benefit; pyramid systems are therefore unsustainable and often illegal.'

I'm not saying Worldcoin is a pyramid scheme. Only that ChatGPT says it looks a lot like one.

Free coins for your iris

A cult of personality is emerging around Sam Altman reminiscent of the golden years of Steve Jobs and Elon Musk. Entire articles are devoted to the 400(!) companies in which Altman has invested.

Partly for this reason, people lined up in several places around the world last week to have their eyes scanned by Worldcoin's orb. The media cheerfully helped make the hype as big as possible, with service journalism like this article in India, "Sam Altman's Worldcoin is here: how to get your free coin.

Even the tweet in which Altman jubilates that every eight seconds someone has their iris scanned by Worldcoin was included in the article.

Because the system works stunningly simple: download the free Worldcoin app, scan your eyes at an orb, get a World ID and your Worldcoin app instantly receives 25 free Worldcoins; except in America, as Gizmodo experienced. But it's customer onboarding with a simplism and efficiency that would be the envy of a schoolyard drug dealer.

Critics have a point

Twitter would not be Twitter (oh no, it is also no longer Twitter but is now called X, but more on that later), if it were not for a number of astute critics who have analyzed Worldcoin well, such as here and here.

Ethereum founder and widely acclaimed ethicist within the blockchain industry Vitalik Buterin immediately warned of the possible, unintended, bad consequences of Worldcoin's approach:

'Risks include inevitable privacy breaches, further erosion of people's ability to surf the Internet anonymously, coercion by authoritarian governments and the potential impossibility of being simultaneously secure and decentralized.'

Vitalik Buterin, co-founder Ethereum

For now, let's believe Blania and Altman's promise that iris data will be immediately deleted from the orb and not stored. But how many fake orbs will be used by criminals to defraud consumers of their iris scan?  

In any case, the question is justified whether a centrally run company should undertake this kind of initiative. World ID is effectively a universal passport, why should it be developed by a commercial company?

Remember, for all the fancy promises and goals, this is a commercial organization and the founders and backers own 25% of all Worldcoin. That's a higher tax rate than VAT. Even stranger: from Asia, I cannot see the pages in the white paper that deal with these tokenomics at all. A problem more people faced. Why are they shielding information from the same people who are allowed to have their eyes scanned?

Decrypt summed up Buterin's objections well, although the schematic objection Buterin shared in his blog post is also illuminating:

Vitalik Buterin's schematic representation of the problem

'Proof of Personhood' is relevant, but not in this way

Cybercrime will only increase in the age of AI, so there is a need for proof that you are dealing with a human being and not a computer program. Just not in the way Worldcoin is tackling the problem. Michael Casey of Coindesk puts it this way:

"The risk is not with the technology per se - we have known for years that AI is capable of destroying us. It is that if we concentrate control of these technologies with a handful of overly powerful companies motivated to use them as proprietary "black box" systems for profit, they will quickly move into dangerous, humanity-harming territory, just as the Web2 platforms did.

Still, there is at least one positive aspect that can emerge from the Worldcoin project. It draws attention to the need for some sort of proof of humanity, which may give impetus to the many interesting projects that seek to give people more control over their identity in the Web3/AI era.

The answer to proving and elevating authentic humanity could lie in capturing the "social graph" of our online connections, relationships, interactions and authorized credentials through decentralized identity models (DID) or initiatives such as the decentralized social networking protocol (DSNP) that is part of Project Liberty.

Or it could still lie in a biometric solution like what Worldcoin is working on, but hopefully with a more decentralized, less corporate structure. What is clear is that we need to do something."

Portable identity and reputation

Casey's line of thinking leads to a system of identification and reputation, where you can use services anonymously, but share your identity and reputation if you wish. My Uber score, for example, is 4.96, but if I want to book a room through Airbnb, I do so as a completely unknown individual.

This is why a landlord is the first to ask for a passport copy, while it would also be valuable for Airbnb and the landlord to know that at least as a passenger in an Uber, I did not demolish nor puked all over the car. Such a system where you as a user carry your online reputation with you and decide for yourself to share at a time you deem appropriate would be extremely useful in the digital economy. Universal basic income is so radical that it should be introduced through the normal democratic way.

Twitter becomes X

It can't have escaped anyone's notice, Elon Musk is turning Twitter into X. What a romantic he is, isn't he, to name his company after his youngest son? Musk explains that in the coming months "your entire financial world can be orchestrated" from X. Because he wants to make Twitter a "super-app," an all-encompassing app that merges information, communication and transactions. Similar to China's highly successful WeChat. Musk wants to get rid of the hated ad model as soon as possible.

Every second Musk spends on the overrated Twitter remains a waste of time and a waste of his talent. I still hope one day Musk gets angry about Alzheimer's, cancer and the mental health of humanity and uses his undeniable talents to solve those problems, for example with a biotech company. Musk has mastered development of software, hardware and mechanical innovations, how hard would biotech be for him?

The informative podcast More or Less, from the couples Morin and Lessin, discussed Musk's plans for Twitter in detail this week. It's the only podcast I know of, by the way, in which two couples discuss a specific industry, noting that ex-Wall Street Journal reporter Jessica Lessin is the astute founder of the online trade magazine The Information and Dave Morin is an investor who previously started Path, the most beautiful app of a failed social network I've ever used.


Bill Gates has a podcast

Speaking of notable podcasts: Bill Gates has started a podcast called Unconfuse Me, and the first edition featured actor Seth Rogen and his wife Lauren as guests. Apparently that's a trend, to appear as a married couple on a podcast. I can hear you thinking, "Bill Gates has a podcast with Seth Rogen, doesn't that sound like Kermit the Frog with Scooby Doo as a guest? It certainly sounds that way, but it turned into an unexpectedly candid conversation about Alzheimer's, home care and recreational drug use, among other topics. Playback at double speed is not recommended.

Barbenheimer does nearly $1.2 billion in a week, Oppenheimer breaks IMAX projectors

The box office success of Barbie and Oppenheimer is unexpectedly huge: Barbie is expected to end the weekend with sales of $750 million and Oppenheimer is approaching $400 million. Even more strikingly, the 70 millimeter version of Oppenheimer in the IMAX is so complex that the film is sometimes out of sync with the sound and even literally breaks. So much for all the doomsday scenarios that "old-fashioned" cinemas would lose out in the streaming era. Good feature films are drawing more audiences to theaters than ever.

Barbenheimer, but made by AI

If Barbie and Oppenheimer were squeezed into one movie, this would be the trailer. I say it too often about AI applications, but it's incredible that this was created entirely by AI: image, sound, video. Above all, the speed at which these kinds of applications are developing is unparalleled. The last time I was so stunned by a technology on the Internet was over 25 years ago when George Michael presented video in a Web browser.

Spotlight 9: Party Q2 at Google and Facebook

Yes, I know they are actually called Alphabet and Meta these days, but admit it, who reads on when those names are in the headline? It was the week when the second quarter results were released so there was a lot of movement in the stock markets. This web page contains a short, handy overview of the results of the major tech companies.

Meta and Alphabet rise, Microsoft falls. Investing in the stock market thus seems like a sprint, not a marathon

The short-sightedness in the stock markets was demonstrated for the umpteenth time this week. Alphabet and Meta made sharp price jumps, due to higher-than-expected sales while partly driven by currency differences. Granted, Alphabet made 28% more sales on cloud services and that will only increase in the AI era.

However, Meta lost a whopping $21 billion in 18 months on investments in Reality Labs, Meta's business unit that is going to do something with all the buzzwords of the last two years, including Web3, Metaverse, AR, VR and anything with difficult glasses. Result: 10% share price gain. How is it possible?

Microsoft, which has taken a tremendously strong position in the field of AI by incorporating OpenAI into the Bing search engine *and* invested as much as $10 billion in OpenAI, a guaranteed hit, was not understood by investors because the investments in AI "do not lead to higher sales right away. Result: 2% decline.

The pink cloud is a schematic representation of my brain as I look at the stock market and see Meta rising, while Microsoft is falling. Photo: created with Midjourney

CNBC doesn't get it either and explains it some more:

'The growth in AI has the potential to drive Microsoft's two largest businesses: the public cloud Azure and the more traditional and market-leading productivity software Office.'


That is exactly how it is, but investors apparently had a horizon this week that ended with the Friday afternoon drinks.

Michiel Frackers is Chairman of Bluenote and Chairman of Blue City Solutions

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