This week, Worldcoin, an outfit that aims to serve as proof of personality in a world where it’s getting harder every day to tell a human from a bot, raised $115 million in Series C funding.
Led by 10-year-old Blockchain Capital, whose bets include Coinbase, Kraken and OpenSea, the investment brings Worldcoin’s funding to at least $240 million, even as the controversial organization – founded in 2019 by OpenAI CEO Sam Altman – has much to prove.
Yesterday, we spoke with Blockchain Capital General Partner Spencer Bogart about what gave him confidence in Worldcoin, which aims to create a global ID, a global currency, and an app that facilitates payments, purchases, and transfers. Like many others, we wondered how it can achieve its goals when, right now, its mission rests primarily on convincing tens of millions of people to allow Worldcoin to scan their irises using futuristic, technically closed globes.
Below is part of that conversation, edited for length. You can also hear the longer conversation here.
Your co-investors in this new round include previous financier Andreessen Horowitz, Bain Capital Crypto and Distributed Global. Have Khosla Ventures or Tiger Global, who are also previous backers, made money again?
They can be part of this funding; I don’t believe they are a big part of it.
How much of the company do investors own? I suspect it is difficult to negotiate with Sam Altman given the power he wields and also his extensive experience across the table as an investor.
That is a correct characterization. Sam is a formidable founder and knows how to manage a dressing table. Again, My apologies. It’s not a figure I have in front of me right now. In general, companies sell 20% of the [equity] with every financing. Admittedly, things can go down or up significantly from there. I think in this case the number will be significantly lower than that of Serie A, Serie B and Serie C.
How long have you been talking to Worldcoin and what motivated you to lead this deal?
The original genesis was that Sam wondered: What if I could create a cryptocurrency that I could distribute to everyone in the world and everyone would get an equal share of it? To me, that’s certainly interesting from a business perspective [though] I don’t know if it’s something we’d be super excited to go and endorse based on the things that our team is typically interested in.
[Meanwhile] this basically requires ensuring that no one can collect a disproportionate share of it, which requires people to be able to identify unique people. And this really gets into the part that we’re excited about, which is World ID. It is this ability to easily distinguish between machines and humans on the Internet [because] most of the internet is supported by ad revenue and it costs as much to serve as bot traffic as it does to serve human traffic. Therefore, various applications and service providers have used CAPTCHAs to differentiate between bots and humans. But that is no longer viable in a world of advanced automated systems and especially things powered by AI. It also doesn’t discriminate between unique people, so I don’t know if the same person is going to consume a resource excessively
Which brings us to, OK, how can we provide a means to differentiate between humans and bots and make sure that each human is unique?
Which leads to biometrics.
At the heart of what defines people is biometrics, and my first thought was, why make this custom hardware to scan eyeballs? Billions of people are already walking around with an iPhone. Why don’t we use Face ID, right? The problem is that human facial structures don’t have enough randomness or entropy to differentiate between unique people, on the scale of tens of millions or hundreds of millions of people.
I didn’t know that was the case.
Nor is it something that came to my mind. I didn’t think that once you get past a hundred million people, there will be a lot of people who look like Spencer Bogart; their facial structures will be sufficiently indistinguishable from mine. Fingerprints have the same problem; there is not enough randomness in fingerprints.
That leads us to two viable options: DNA that is random enough to prove human uniqueness on the scale of billions of people. But you’re giving way too much information with DNA. Then there are irises. As it turns out, there’s an insane amount of entropy and randomness in the human iris. And in this case, the team has built up an insane amount of protection. You get an iris scan, it does not save your iris by default. It will be immediately removed from the device. It is only used to create what is called an iris code, which is a unique image or coding of your iris. And it is compared to all the others. And now, with these iris codes, we don’t know their name or location or anything. The only thing we know about them all is that they are unique people.
I suspect that a business strategy – helping companies reduce their interaction with bots – is the most lucrative opportunity for Worldcoin right now. You could also supply this cryptocurrency to anyone, although it’s not clear to me how people would use it. But before all this can happen, you need to get a significant number of people to these orbs that are strange and not easily accessible, when people are already nervous about biometrics and cryptocurrency. Worldcoin says it has now scanned the eyes of 2 million people. How much does it take for this to make sense? A billion?
These are the right questions. It’s about: do you have a network of demonstrably unique people? And that only becomes interesting for applications and companies on a certain scale. But I think it will depend on the use case. By the time you get to 10 million unique users, there’s already a bunch of applications that want to use that, while others won’t be interested unless you’re on a network of 500 million or a billion or 2. billion people.
Some of the other challenges here are yes, obviously, orb distribution. Currently there are 200 to 300 [orbs] in the wild today, with another 2,000 manufactured and waiting to be deployed. Then there is the issue of public perception. Ssomething that we’ve highlighted as part of the investment is, will there be so much negative perception that no matter how much we’re confident that this is 100% viable, will the public perception be so negative that people won’t want to get involved?
So far, the data says otherwise. Worldcoin has already onboarded nearly 2 million people by executing quite a capital-intensive boots-on-the-ground strategy, and this is still in beta testing. This is without pushing or pulling marketing; this is without the protocol even being on the mainnet. This is only for the first tests.
As for some of the things that could use this, Elon Musk has talked a lot about a bot problem on Twitter, touting the idea that if we make everyone pay $8 a month, that will help solve the bot problem. We think World ID is a low-friction way to solve the same problem and will be a more reliable solution. And there is a range of new applications and services that have not existed because of our inability to make this distinction historically. I don’t know what they are, but we’re interested in funding them.
Again, you can hear a lot more about the investment here, including why OpenAI could one day become a major customer of Worldcoin itself, why Bogart didn’t bother when hackers recently installed password-stealing malware on the devices of multiple Worldcoin orb operators, and why he is fascinated with flash transactions on the blockchain.