However, a revelation now states that the hype around Worldcoin has not been reflected much in the Return-on-Investment (ROI) percentage of its investors. Recent data accessed by Technext shows that over 98.52% of WLD investors are “currently counting their losses”, as within just a month, Worldcoin tokens have lost about 52% of their market value.

The latest trouble comes amid the virtual currency facing regulatory issues globally. The project is currently under investigation in Kenya, Argentina, Germany, the United Kingdom and elsewhere, with debate breaking out over Worldcoin’s privacy and critical biometric data safety.

Worldcoin, which also issued a whitepaper during its launch, describes itself as a digital passport that can help the WLD holders prove that they are human. This will be achieved through the privacy-centric digital identity called ‘World ID’.

This World ID and the native token WLD can be acquired through simple verification of being a genuine human being.

According to data from CoinMarketCap, WLD traded at USD 2.2 around the first week of August 2023. However, the value came down to USD 1.06 in the next month. This shows that WLD has lost over 50% of its value within 30 days.

Data analytic firm IntoTheBlock also said that 98.52% of the current Worldcoin investors are currently in losses. This data indicates that just less than 2% of the token holders have made gains since July 2023.

While Kenya halted the project’s activities in its jurisdiction by citing controversial biometric scans of its citizens, Worldcoin witnessed a significant rise in its popularity and demand in Argentina.

The project reportedly crossed a major milestone with its ID verification in the South American country, as it signed up over 9,500 users in a single day in August, thereby setting a new record for single-day sign-ups.

“With the way the $WLD token is structured, it is not likely that the token would get genuine demand from investors which would propel a price surge. Most of the token holders got them as rewards, after having their eyeballs scanned by Worldcoin orbs at designated locations. And what happens after is that they convert the $WLD token to fiat immediately or soon after the scanning, and move on with their lives,” the Technext report observed.

Some 350,000 Kenyans, who lined up to get their eyeballs scanned by Worldcoin orbs located at the supermarket chain Quickmart’s Nairobi outlets, signed up with the project in the hope of getting free WLD tokens worth around 7,000 Kenyan shillings (USD 49.09).

The Kenyan residents then immediately converted the tokens to USDT before eventually converting the stablecoins to Kenyan shillings.

The Kenyans were reportedly interested in getting their eyeballs scanned for the pursuit of earning easy money via the Worldcoin tokens, as a certain Brian Mwangi, one of the WLD token recipients, told Bitcoin.com in August, “I was here by 5 am because there has been a lot of talk on TikTok and Instagram about the free money Worldcoin is giving all those who download their app and subscribe, we are for the iris scanner so that we can be sorted.”

Kenya now has warned its citizens to be cautious while giving their data to private companies, as the East African country was concerned about how the biometric data was getting stored, apart from “a private company offering money in exchange for citizens’ confidential data”.

The nation has now launched an investigation into Worldcoin and called on security services and data protection agencies to establish the project’s authenticity and legality.

Worldcoin, in response, told the media that it was planning to implement crowd-control measures and collaborate with the Kenyan government before resuming work.

Also, France’s data watchdog recently carried out “checks” at Worldcoin’s Paris office, as it felt that the legality of these biometric data “seemed questionable”.

To make matters worse, in May 2023, reports surfaced about hackers installing password-stealing malware on the devices of Worldcoin Orb operators.

TechCrunch learned about Worldcoin operators getting their personal devices compromised by password-stealing malware, such as the RedLine information stealer, to steal all of the credentials saved in their browser, including login details for the operator app.

Credentials of at least seven Orb operators were listed on the dark web. These included credentials that gave hackers full access to the Worldcoin Orb operators’ dashboard, which lacked security features like two-factor or multi-factor authentications.

Image Credit: https://commons.wikimedia.org/

The post Value loss, regulatory heat and data leak: Worldcoin runs into headwinds appeared first on International Finance.

At the heart of Worldcoin, lies the entity called ‘World ID’, which is basically a “digital passport” designed to establish the authenticity of its holder as a genuine human, rather than an AI bot.

To obtain a World ID, individuals must undergo an in-person iris scan using a unique silver ball-lookalike device called the ‘orb.’ The device will conduct an iris scan to verify the person’s human identity, before generating his/her exclusive World ID.

Some 143 million Worldcoins were released during the launch event. Out of these, 100 million were given to market makers as a loan, and the rest were distributed to investors who had verified their identity using the Orb technology.

The ‘World ID’ will be giving the Worldcoin holders the “proof of personhood” in the crypto market. Worldcoin has a limit of 10 billion tokens that will ever be created, as per the reports.

However, Worldcoin is now facing potential scrutiny from Britain’s data regulator.

Entering The ‘Worldcoin’ Universe

While Worldcoin launched with two million users from its trial phase, the crypto project scaled up eyeball-scanning operations in 20 countries, including at sites in London. The brain behind Worldcoin is an organisation known as ‘Tools for Humanity’.

Early adopters in select countries will be rewarded with Worldcoin’s cryptocurrency token, WLD, the price of which has experienced remarkable growth, since the former’s inception.

On July 24, the WLD token, while trading on the world’s largest cryptocurrency exchange, Binance, peaked at USD 5.29, before settling to USD 2.49. WLD’s cumulative trading volume reached the USD 25.1 million mark.

Tools for Humanity’s Co-founder and CEO Alex Blania told Reuters that these World IDs will be the ‘effective differentiator’ between real individuals and AI bots in the crypto world.

Sam Altman sees Worldcoin’s features as the basis for a secure and reliable identity verification system, apart from creating a future where AI will be harnessed to create a more equitable and inclusive society.

While Sam Altman is entitled to have a positive opinion about the ‘World ID’, the ‘Worldcoin Project’ is also raising concerns.

What’s The Deal?

Crypto coin Ethereum co-founder Vitalik Buterin, while discussing the technicalities of the ‘proof of personhood’ blockchain protocols, spoke about the privacy and security concerns around the Orb and other issues with its WLD tokens.

Buterin’s essay, shared from his Twitter handle, outlined major risks with Worldcoin’s approach to ‘proof of personhood’.

“At the very least, if someone else scans your iris, they can check it against the database to determine whether or not you have a World ID. Potentially, iris scans might reveal more information,” the Ethereum co-founder stated.

Buterin also said that the Orb does not give its users a way to verify whether the tool is built properly.

“Hence, even if the software layer is perfect and fully decentralized, the Worldcoin Foundation still has the ability to insert a backdoor into the system, letting it create arbitrarily many fake human identities,” he remarked further.

Buterin also spoke about Worldcoin’s vulnerability to scenarios like ‘mobile device hacks’ or ‘social engineering schemes.’

“Users could be coerced into scanning their irises while showing a public key that belongs to someone else, and there is the possibility of 3D-printing ‘fake people’ that can pass the iris scan and get World IDs,” he stated further.

“If even one group does this, they can generate an unlimited number of identities,” the legendary computer programmer remarked, while raising the risks around the possible World ID sales in exchange for money.

Buterin also talked about countries forcing citizens to get verified while showing a QR code belonging to the governments.

Freedom of the Press Foundation President and whistleblower Edward Snowden too criticized Worldcoin, stating that the project simply just stores a global database of people’s iris scans, disregarding the “potential consequences”.

‘Tools for Humanity’ has already built up a database of hundreds of thousands of iris scans in almost two dozen countries. However, BuzzFeed came up with a report, where it claimed to interview a number of Worldcoin ‘orb’ operators, apart from accessing confidential company presentations, Orb operator contracts, internal marketing materials and over 100 screenshots of discussions between Orb operators and Worldcoin executives.

The materials contained evidence that “hundreds of outraged messages” have been sent to Orb operators from people “demanding the money they were promised.”

Two operators were also quoted by the report as claiming that the “system could be gamed” by executing more than one signup per person. One even stated that they had “repeatedly scanned around 20 of their friends one night to boost their sign-ups.”

A 2022 study from MIT Technology Review also discussed that the company representatives were “using deceptive marketing practices” in collecting more personal data than it was willing to admit and “failed to obtain meaningful informed consent” as per Europe’s global privacy framework GDPR.

Chinese blockchain outlet Blockbeat also reported about fraudsters offering iris scans from Know Your Customer (KYC) merchants in Cambodia for less than USD 30. Another Techcrunch article claimed that hackers were able to install password-collecting malware onto the biometric devices of WorldCoin operators.

The Final Verdict

Worldcoin claims that its Orb devices create a hash of the irises which checks it against a central database to ensure there are no human duplicates, while keeping users’ privacy and data security its top priority. Images taken by the orb also get deleted once the “iris code” is created, the venture stated, apart from pointing out that the business was fully compliant with GDPR regulations.

However, we have pioneers like Vitalik Buterin and Edward Snowden pointing out red flags around the ‘World ID’ system, which can’t be dismissed as wild imaginations. How the Tools for Humanity leadership deals with these concern areas will decide its business prospects in the coming days.

The post IF Insights: Worldcoin, ‘proof of personhood’ and the privacy debate appeared first on International Finance.