CNBC spoke to people on the ground in Uganda and Kenya about their experience with Sam Altman’s Worldcoin.Kenya suspended Worldcoin’s tech and raided the company’s local offices in Nairobi as part of a larger probe into the project.Authorities in Argentina, France, Germany and the U.K. have all announced inquiries into the business model.
For the past year, Keneth Byarugaba has been working as a runner for Worldcoin in Uganda. His job is to get as many people as possible to scan their eyeballs into a big metallic orb in exchange for about $60 worth of cryptocurrency.
Runners, who are paid a commission based upon how many Ugandans they recruit to sign up, station themselves in shopping malls, universities and on sidewalks to try to sell passersby on the idea of trading their biometric data for a new kind of digital identity known as a World ID.
“I knew I had what they needed because this was much more like a marketing job where you have to teach people about something and make them pique interest — something that I knew I could do so well,” said Byarugaba, who told CNBC that his knack for engaging strangers was perfected during his days as an Uber driver.
Getting on Worldcoin’s payroll involved jumping through a few hoops.
After passing the application and interview phase, Byarugaba was one of around 500 recruits. A battery of trainings and examinations on blockchain and marketing slimmed his class size down to about 200 employees. The organization’s goal is to make Worldcoin a household name in Uganda.
Byarugaba and his colleagues are selling the idea of being part of a novel world economy, where a scan of your iris unlocks access to universal basic income, online banking and a new form of virtual currency that streamlines the process of paying bills.
The narrative is sticky, and apparently, effective. Worldcoin says more than 2.2 million people have signed up since its soft launch in late 2021, though the organization’s ultimate ambition is to scale to 2 billion people.
But governments have expressed concerns over the biometric enrollment process and possible violations of national data protection laws. Some potential applicants are nervous about the aggressive evangelism associated with the product, as well.
“It just looked like a cool, fancy ball, which I discovered later took biometric IDs from people,” said Namureba Abel, who has worked in the crypto industry for the last decade.
“It looked like a scam mainly because of the focus on marketing and signing up new users,” continued Abel. “They were everywhere. They were in every mall here in Kampala.”
Abel works for Yellow Card, the largest centralized crypto exchange on the continent, and is typically a big advocate of emerging tech in the digital asset sector.
“The trigger for me was just their marketing style and how many users are signing up without any formal education,” he said. “They were actually paying people for data.”
When Muvya Muthama went to a mall in Nairobi, Kenya, to get his hair cut at the end of July, a long queue of people caught his eye. The line, he soon found out, was comprised of Kenyans keen on getting 25 Worldcoin “WLD” tokens — a free sign-up bonus given to all those who scanned their eyes into the orb.
Muthama, who also works for Yellow Card, was simultaneously intrigued and concerned.
After asking on-site representatives about the arrangement, Muthama went to a restaurant in the mall and examined Worldcoin’s white paper on his phone for three hours.
“I saw how they were using proof-of-personhood and blockchain, and I thought, alright, cool, it sort of makes sense,” Muthama told CNBC. “And then I saw that it was by Sam Altman.”
As Muthama dug into the larger mission statement around collecting biometric data as a means to differentiate people from robots, he thought it all seemed “a bit too dystopian.”
Peter Mwangi signed up for Worldcoin in May, ahead of the project’s official launch in July.
“When I’m scanning my face, I’m also asking myself some questions internally: ‘What will they do with all of this data?’” Mwangi told CNBC. “There’s a feeling that they’re taking too much away from you.”
Muthama was also suspicious for the same reason as Abel in Uganda: cash incentives to sign up.
“They were mostly collecting data from third-world countries. For me, it’s like alarm bells going off,” he said. “I don’t think the majority of people in third-world countries know about data privacy.”
“They’re getting enticed by the free Worldcoin and the money,” added Muthama. “When there’s a lot of poverty within a country, they will just rush to go for that free money without actually knowing what they’re going to put themselves into.”
When Mwangi enrolled in May, he said few on the ground knew there was an incentive to sign up and only 10 people were waiting in line with him. By the time the project officially launched in July, there were reports of lines with thousands of Kenyans queueing for a World ID — and the free money that went with it.
“They were giving people these Worldcoins that people could easily convert to Kenyan shillings,” said Mwangi. “People that I’ve spoken to, they don’t care much about what will happen to that data, as long as they receive some of these coins.”
Mwangi told CNBC that the Worldcoin Orb operators he dealt with in Nairobi “didn’t explain much” and that there wasn’t enough time to fully read the terms and conditions on the app before the scan.
CNBC reached out to Worldcoin to ask about Mwangi’s experience in Nairobi, but the organization did not respond to CNBC’s request for comment.
Worldcoin’s orb-shaped devices scan people’s eyes in exchange for cryptocurrency.
Worldcoin
Worldcoin, reportedly valued at $3 billion in its most recent funding round, is making a few big promises, but its overriding goal is to sign up the world’s population for a new, decentralized form of identity.
The premise is called proof-of-personhood — that is, validating the identity of every individual on the planet through biometric capture and then connecting that decentralized virtual ID to an address on the blockchain. The company describes World ID as a sort of “digital passport that lets you prove you are a unique and real person while remaining anonymous.”
According to Worldcoin, this ID could be used to sign into all websites without the user having to forfeit identifying information in the process, such as a name or email. It would also theoretically be untraceable by governments or other organizations. As Worldcoin explains on its website, it doesn’t “want to know who you are, just that you are unique.”
Digital identity management company Okta is a first mover on the adoption front. The business-to-business software firm, which has a market cap of $11.5 billion, gave users the option of logging in with their World ID beginning in June. Social media app Discord also uses World ID for verification. But ultimately, the foundation envisions a future where a World ID could be used to facilitate nationwide votes, among other use cases involving banking and e-commerce.
Ava Labs president John Wu tells CNBC that the self-custody feature of the Worldcoin ID is also critical.
“Having privacy, digital identity and having it to yourself — self-sovereign, meaning self-custody — is a big theme in all of the world, not just in web3,” said Wu.
Worldcoin is the brainchild of Sam Altman, the man behind OpenAI and ChatGPT, a large language model-based chatbot capable of human-like conversations that sparked widespread interest in generative artificial intelligence when it launched to the public last year.
At the same time, AI-powered tools have engendered a sophisticated new breed of deep fakes, or digital renderings that mimic the likeness of a real person through voice and video. Collectively, this fresh wave of technology has made it easier than ever to impersonate a human online.
In a way, Worldcoin is Altman’s antidote to the very problem he helped create.
Granting users a unique online persona could theoretically help cut through online fraud and create a virtual world that more closely resembles reality.
As the Worldcoin white paper puts it, “Custom biometric hardware might be the only long term viable solution to issue AI-safe proof of personhood verifications.”
The iris, which controls both the size of the pupil and the color of the eye, is specific to every human. For a decade, the FBI has augmented its fingerprint database with iris imaging. Similarly, Worldcoin’s orb uses multispectral sensors to scan this intricate pattern of ridges and folds in the eye and uses it to assign a singular World ID, which demonstrates definitively that its holder is a human and not a bot.
So far, there are 1,500 orbs in more than 20 countries across five continents. By Altman’s estimates, on day three of its launch, one person was getting verified every eight seconds.
A tester operating one of Worldcoin’s orbs in Chile.
Source: Worldcoin
The concept of a financial network built on a monopolistic currency accessed through your eyeball may sound like a dystopian mark-of-the-beast tale, but Worldcoin’s pop-up locations don’t feel particularly scary or spooky. Think less sci-fi, more airport security.
The process of collecting biometric data to confirm identity is similar in spirit to the scans that Clear does at the airport, and to Apple’s facial recognition system, Face ID.
In the case of Worldcoin, the organization says it uses a cryptography-based, privacy-preserving technique known as zero-knowledge proofs to separate the biometric data from the identifier.
“We designed the whole system to be fundamentally privacy-preserving,” Altman’s co-founder and Worldcoin CEO Alex Blania previously told CNBC. “The iris code itself is the only thing leaving the orb. There’s no big database of biometric data.”
Worldcoin’s white paper indicates that as a default setting, all images are “promptly deleted” on the orb following sign-up, unless the user specifically opts into Data Custody. Either way, Worldcoin says that “the images are not connected to your Worldcoin tokens, transactions, or World ID.”
Data protection is actually core to the whole design of the system, according to Oliver Linch, CEO of digital asset trading platform Bittrex Global.
“What the founders of the project are saying is, ‘This is a way that we have found to move the conversation on how we secure access and how we ensure that the people accessing their online personas in whatever form that takes are the real people — and they’re not AI or bots,’” said Linch.
Byarugaba tells CNBC that privacy safeguards are a key part of his pitch to Ugandans.
“It’s encrypted,” explains Byarugaba. “No information can be dished out of the system. The fact that this is zero knowledge, zero-knowledge identity, there is not much about someone that is known.”
But participants will have to trust that Worldcoin has properly implemented the technology used to shield the biometric data that was captured to create the ID. They’ll also have to trust the firm has followed basic security hygiene.
Vulnerabilities are already showing in some places, according to reports.
Earlier this year, TechCrunch reported that hackers installed malware on devices belonging to Worldcoin Orb operators to capture their login credentials and gain access to dashboards containing a mix of internal data and documents — login details that were subsequently listed for sale on the dark web.
Meanwhile, a black market for iris data reportedly sprung up in China in May, with sellers from emerging markets such as Cambodia offering their credentials to buyers in China where Worldcoin’s crypto wallet is unavailable. Chinese crypto site BlockBeats cited prices as low as $30 for the illicit exchange. The apparent appeal of the trade, according to Coindesk, is access to Worldcoin’s WLD token.
The price of WLD is down more than 80% to about $1.45 since its launch, with a circulating supply of just over 126.7 million coins. The white paper says a total of 10 billion WLD tokens will be released onto the market over the next 15 years, a minting model some crypto analysts have compared with other microcap altcoins that have seen their price surge and then plummet, leaving late-stage buyers with big losses.
Reports say the project has faced a mix of other issues, including scammers conning users out of tokens, as well as questions over whether anonymized test data from participants was used to train the AI models that help power the project. Ethereum co-founder Vitalik Buterin warned of other potential security concerns in a July blog post, including “the possibility of 3D-printing ‘fake people’ that can pass the iris scan and get World IDs.”
In response to privacy concerns, the company told CNBC, “The Worldcoin Foundation complies with all laws and regulations governing the processing of personal data in the markets where Worldcoin is available, including the General Data Protection Regulation and the UK Data Protection Act. From its inception, Worldcoin was designed to protect individual privacy. The project has implemented privacy-centric design and has built a robust privacy program, conducting a rigorous Data Protection Impact Assessment and responding timely to individual requests to delete their personal data.”
Some governments have begun to take action against the project.
Kenya suspended Worldcoin’s tech and raided the company’s local offices in Nairobi as part of a larger probe into the project. Authorities in Argentina, France, Germany and the U.K. have all announced inquiries into the business model, citing privacy concerns surrounding the nature of Worldcoin’s highly sensitive user data, including the identity scans that are core to the project.
In response to Kenya’s suspension, Worldcoin told CNBC, “The demand for Worldcoin’s proof of personhood verification services in Kenya has been overwhelming, resulting in tens of thousands of individuals waiting in lines over a two-day period to secure a World ID. Out of an abundance of caution and in an effort to mitigate crowd volume, verification services have been temporarily paused. During the pause, the team will develop an onboarding program that encompasses more robust crowd control measures and work with local officials to increase understanding of the privacy measures and commitments Worldcoin implements, not only in Kenya, but everywhere.”
Although Worldcoin has a lot of big-name backers, not all inspire confidence.
In May, the organization raised $115 million in a Series C funding round led by Blockchain Capital. Other members of its cap table include venture capital funds such as Andreessen Horowitz, Coinbase and LinkedIn co-founder Reid Hoffman, as well as fallen industry titans such as failed crypto hedge fund Three Arrows Capital and Sam Bankman-Fried, former FTX CEO. Bankman-Fried is currently jailed in New York awaiting a criminal trial while his defunct and allegedly fraudulent exchange makes its way through bankruptcy court.
Ricardo Macieira, Worldcoin regional manager, Europe, holds the biometric imaging device, the Orb, in his hands, Berlin, Aug. 1, 2023.
Annegret Hilse | Reuters
Kenya has stamped out Worldcoin for now, though it’s worth noting the country has a confusing relationship with crypto. The government hasn’t passed a legal framework to regulate the sector, yet the finance ministry is looking to capture a cut of the proceeds, having just proposed a 3% tax on the transfer of digital assets in next year’s budget.
Still, Worldcoin participants in Kenya and Uganda tell CNBC they see a great deal of utility in both the World ID and the WLD token.
Despite his concerns, Mwangi ultimately chose to enroll in the project because he believed in the wider mission of the World ID.
“Currently in Kenya, a large number of people have been conned out of their money when trying to trade cryptocurrency,” said Mwangi. “It got so bad to the point where the government had to warn people not to use it, and banks will prevent people from trying to buy crypto from crypto providers outside the country, because a lot of people are losing their money.”
“From that perspective, it’s easy to understand that Worldcoin is sort of trying to solve for an identity crisis in the crypto market,” he added. “For that reason, I signed up.”
In Uganda, Byarugaba indoctrinates recruits in other benefits of the WLD token.
“People can use Worldcoin as a medium of exchange because it’s designed to be more of a utility token. That means they can use it in their day-to-day payments,” he said.
Byarugaba also listed off a battery of other potential use cases, including global remittances, accessing loans on the blockchain through decentralized finance and paying bills using the WLD token. CNBC has not independently confirmed whether people on the ground in Kampala, Uganda, are able to use the tech to these ends.
The overwhelming majority of users, however, appear to be cashing out their WLD tokens for fiat cash.
“Most of them have exchanged it and put it to use,” said Byarugaba.
Byarugaba, for his part, isn’t paid in Worldcoin’s WLD token, but in Ugandan shillings via mobile money, which is an electronic wallet tied to a phone number that does not require a smartphone or data to operate. Users can pay bills and shop with their phone through SMS texting, instead of having to rely on traditional banking options.
“We get a daily pay advanced to each one of us to handle our daily expenditure,” he explained. “This advance is deducted off the gross monthly pay per sign-up, and we are given what remains.”
— CNBC’s Jordan Smith contributed to this story.
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- Source: https://cryptoinfonet.com/regulation/this-ugandan-earns-a-bonus-for-each-person-he-gets-to-sign-up-for-sam-altmans-eyeball-scanning-crypto-project/
