Crypto Meets AI. What Could Possibly Go Wrong?

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Cryptocurrency and AI are new worlds that could transform our lives. But that may come at the cost of existing protections. Learn why that matters. 

A few years ago, cryptocurrency was on fire. From the supermarket checkout to family dinners, it seemed as if you couldn’t go anywhere without somebody bringing up Bitcoin (BTC). Today it’s artificial intelligence (AI) that’s got everybody talking. People say AI could do everything from providing customer service to driving cars and detecting serious medical conditions.

Depending on who you listen to, we’re either entering a dystopian nightmare or a utopian dream. The rise of AI certainly raises a lot of questions. One of which is connected with identity and what makes us human. Enter Worldcoin, a cryptocurrency created by Sam Altman, the man behind OpenAI and ChatGPT. And shiny bowling-ball sized orbs that scan your eyeballs and prove you’re human. And the promise of crypto tokens if you sign up.

What is Worldcoin?

Built on the Ethereum blockchain, Worldcoin uses blockchain technology to store what it calls “proof of personhood.” Essentially, it uses scans of people’s iris patterns to verify that they are human beings. As AI becomes a bigger presence online, the ability to tell the difference between people and robots will become ever more important.

That isn’t all Worldcoin wants to do. According to a letter from its founders, Worldcoin also hopes to contribute to democratic processes and address inequality. The thinking is that it will share some of the wealth created by AI and give people a universal basic income.

Worldcoin (WLD) tokens are not available in the U.S. for regulatory reasons. In other countries, once someone scans their eyes and gets a WorldID, they can install the World App and claim tokens, “simply for being a unique human.” AI may take our jobs, but that’s OK because we’ll get crypto tokens just for being us, I guess. People receive 25 WLD tokens for signing up, and then periodic grants afterward.

What could possibly go wrong?

I saw the film Oppenheimer last night. A movie about the creation of the atom bomb certainly gets you thinking about morals, scientists, and responsibility. The difficulty with a lot of new technology is that the types of people who are good at inventing aren’t always good at thinking through the consequences of their inventions.

Let’s take cryptocurrency as an example. The ideology of a decentralized system that works not only for money but also for identity is something I can get on board with. For example, right now, when you surf the web or use social media, you are giving a lot of your personal information to tech giants. One much-vaunted application of blockchain technology is that it can put you in control of your data.

This brings us to the question of digital identity and Worldcoin’s potential solution. Let’s say, ideologically speaking, that you don’t want the government or a tech giant to own and control your information. The promise of the blockchain is that it operates without the need for a centralized body. For example, in the future, a retina scan at border control might be stored on the blockchain rather than a government database. But then you have to ask about the role of intermediary organizations like Worldcoin — why would you trust it more than the government?

Orbs and eyeballs

Back to the orbs and their eyeball scans. According to Worldcoin, “The images of you and your iris pattern are permanently deleted as soon as you have signed up.” It says your iris pattern is used only to verify you’re a real person. The orb creates what’s called an IrisCode, which doesn’t contain any other information about you. You don’t need to give your name, email, or a copy of your ID.

On one level, that’s reassuring. But will Worldcoin be able to avoid any form of KYC (know your customer) policies forever? Centralized cryptocurrency exchanges around the world initially tried to avoid KYC, because ID checks don’t sit well with Bitcoin’s decentralized premise. They eventually bowed to regulatory pressure because the lack of KYC created an open playing field for fraud, money laundering, and other less-than-salubrious activities.

In terms of trust, Worldcoin has already come under fire for some of its initial attempts to collect information. Coindesk highlighted one shocking report from MIT Technology Review. “We found that the company’s representatives used deceptive marketing practices, collected more personal data than it acknowledged, and failed to obtain meaningful informed consent,” it said. The company told Coindesk it had since completely changed its systems and policies. Nonetheless, it isn’t reassuring.

Should you buy Worldcoin?

If you live outside the U.S., be wary about jumping on the bandwagon. Speculation is common in new tokens, especially ones that connect to trendy themes like AI. Worldcoin is not yet available in the U.S. However, its website says that World ID and World App are available in the United States.

WLD’s price spiked on its first day of trading, but what’s important is how it might perform in the long term. Do your own research, paying particular attention to WLD’s tokenomics. Bear in mind that a lot of Worldcoin’s model is based on giving tokens away. That means there’s going to be a lot of WLD tokens flying around, which will impact its price.

Bottom line

Our society isn’t perfect. However, there are laws and processes that have evolved over hundreds of years that give us rights and — to some degree — protect us from bad actors. In contrast, cryptocurrency and AI are relatively new worlds with very few protections. Right now, it’s important to ask, for example, who is auditing and policing organizations like Worldcoin. Personally, I’m not keen to scan my retina in exchange for 25 WLD — worth about $50 at today’s prices. I’d rather wait and see how the project develops.

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The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.Emma Newbery has positions in Bitcoin and Ethereum. The Motley Fool has positions in and recommends Bitcoin and Ethereum. The Motley Fool has a disclosure policy.

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