Sam Altman’s Worldcoin project, which promises to distribute a Universal Basic Income (UBI) to global citizens willing to have their retinas scanned, sparked a new round of incredulous backlash from privacy advocates after new funding was announced last week . Early information on Worldcoin first surfaced in June, and I gutted it because of the ominous implications of collecting biometric data from the world’s poor (and the awful look of having the Big Brother device at the center of it all “Orb”).
But Sam Altman doesn’t seem to be reading CoinDesk because four months later the project continues essentially unchanged. Altman’s efforts to make the CIA’s wet dream come true are now backed with $ 25 million from Andreessen Horowitz, Coinbase Ventures, and the Digital Currency Group (Yes, that’s the parent company of CoinDesk: We don’t like everything the bosses do , and we write about it!). Somehow that quarter’s loss in the piggy bank adds up to a $ 1 billion valuation for Worldcoin, proof of how absurd the VC hut game can get.
The announcement of new funding met with renewed criticism, for exactly the reasons we set out in July, but from much more influential actors than me, my old man. Most notably, NSA whistleblower Edward Snowden blasted a hole in Worldcoin’s claim that its centralized database of hashed iris scans posed no privacy risk. Snowden argued that biometrics should never be used for identity or security because “the human body is not a ticket-punch”.
Getting beaten up by Edward Snowden for bad privacy practices pretty much requires a response, and Altman’s was … interesting.
What makes this statement so shocking (and, in my opinion, insincere) is that it was made in the middle of perhaps the greatest billing moment for Web 2.0 companies that rely on data collection for their business models. Altman was President of Y Combinator, arguably the leading startup incubator in Silicon Valley, from 2014 to 2019, and is deeply involved in the world of Web 2.0 data mining. Read the YC portfolio page and you’ll see a lot of machine learning, AI, and computer vision – almost always code for “we’re going to use user data”.
In the past few weeks, this model has faced a devastating, long-delayed backlash. Facebook is in the middle of what would be a battle for its life in a country with a functioning legislature: Whistleblower Frances Haugen has revealed tons of internal documents showing that Facebook executives, including Mark Zuckerberg himself, are using its massive data collection did in a way it knew was bad for society – but would increase Facebook’s bottom line.
Google is now the subject of an antitrust lawsuit from 15 states and Puerto Rico, alleging in part that the search giant played its own data-driven advertising machine to drive prices up and participated in other seedy data-driven promotions like misleading or forcing Chrome User to accept additional tracking. (Funny how the Chrome logo looks like … a bullet.)
Meanwhile, Apple, the nominal big tech privacy champion, has dropped a megaton bomb on data-hungry business models by making it easy and attractive for iOS users to opt out of tracking. Users took it up en masse, with an immediate, major impact on advertising revenue on Facebook and Snapchat.
Every single person in Silicon Valley observes these moving parts like a falcon. They pose a threat to the way the Valley has done business for the past decade, with the potential for tremendous damage to business results – including Altmans as he is believed to have significant personal stakes in a variety of data collection and monitoring systems Operations. Y Combinator has supported a few crypto projects, including Coinbase, but it doesn’t seem part of a principled stance: rumor has it that some of the recent Y Combinator startups have been pushed to adopt crypto-based ideas in favor of software-as-a-service -Models that often include some aspect of data monetization.
But you can watch the trees carefully and still miss a whole damn forest, as Mark Mulvey, author of the tech and crypto investment newsletter Surf Report, nicely sums up in response to Altman’s surprise statement.
There are really only two explanations here. One is that Altman is really unaware of the move away from invasive technology, which makes him unfit to lead the Worldcoin project. The other is that he fakes surprise as a weak PR strategy to fend off criticism without actually addressing it. Anyway, Worldcoin doesn’t seem to be changing its streaks.
Undermining privacy isn’t Worldcoin’s only faux pas: the funding announcement also revealed that 20% of all Worldcoin tokens will be set aside for the development team. In crypto this was formerly known as “premine” and is one of the biggest warning signals that a project should enrich insiders. The reveal drew critical comments from crypto influencers, including pseudonymous trader Dan Darkpill.
Worldcoin’s decision to use a massive premine is extremely strange given its supposedly charitable focus on distributing tokens to individuals in the developing world. In contrast to stakes in a company that are given to venture capitalists, premined tokens often have a shorter “lock-up period” before insiders can sell, or none at all. Worldcoin’s statement that the premine funds will be used for development suggests they will be sold for fiat, which directly undermines the value of the tokens that Worldcoin is handing out in exchange for those hideous iris scans.
This is a major reason crypto idealists have an ongoing debate about the best way to get a “fair start” that doesn’t privilege insiders at the expense of users. It’s also a major sketching factor for a project touting its social benefits without (yet) a clear explanation of how it’s going to generate all of those UBI payments while still making the profit its investors expect.
There are no signs that Worldcoin will revise its plans for Doxx The Entire World or Get Rich Trying. The entire episode is a grim emblem of the lingering appeal of the old Web 2.0 model of sucking data out of users like a vampire squid. Despite the vast mountain of evidence showing its harm to individuals and society, the financial rewards of surveillance capitalism seem just too addicting for the big data junkies of Silicon Valley.