🧵 One perspective on Worldcoin

Hi,

I am away with my family this week, so I asked EV member Keith Teare to share his perspective on Worldcoin, Sam Altman’s controversial UBI project, with us. Keith is an investor, writer, and has previously experimented with UBI. I have known Keith since 1994 when he was running Cyberia, one of the world’s first cybercafes, in London, and have met up with him in Silicon Valley, where he is now based, a number of times.

Worldcoin has raised many eyebrows since first becoming public in 2021 — please join Keith in using the space in EV this week to debate, challenge and propose new ways to think about this incredibly ambitious project. Members of Exponential View can comment by logging in here.


Today’s edition is supported by our knowledge partner, McKinsey & Company

The reviews are in. McKinsey’s new book, CEO Excellence, is a Wall Street Journal and USA Today bestseller. It’s an insight-packed look at how the best CEOs do their jobs—including chiefs at JPMorgan Chase, Netflix, and Sony. Looking for a master class from the highest-performing CEOs on the skills and practices that have driven their success? Order now.


Hi,

I’m Keith Teare. It’s an honor to step into Azeem’s shoes today.

While I am not here to speak about myself, I do want to give you some brief background as it is relevant to how I perceive Universal Basic Income - and Worldcoin. I was born into a poor family in Scarborough, UK. My mother qualified for us to get free school meals and uniforms, and while I appreciated the food, I was embarrassed at the handout. Universal Income is an attempt to meet life-sustaining needs for everybody. As an investor focused on automation, I believe this need will accelerate. I experimented with the idea of UBI at Ubi Network two years ago, and learned first-hand about its opportunities and challenges.

When I first heard about Worldcoin’s vision, I found it hard to contain my excitement. OpenAI CEO Sam Altman (former president of Y Combinator) and physicist Alex Blania set on the mission to create a human-centric coin that can be distributed to every person on earth. This could be done by leveraging advancements in biometric technology and blockchain. It is a UBI scheme using a new currency and identity chain. They describe it as

“[a] new, collectively owned global currency that will be distributed fairly to as many people as possible.”

Worldcoin uses a device called Orb to establish a unique user ID through retina scanning, ensuring that each unique user is registered and can access the services.

Two weeks ago, they announced a $100 million round of funding at a $3 billion valuation. The investments came from Khosla Ventures and Andreessen Horowitz. This is the largest financial commitment to universal basic income in the entire history of the concept. It’s also the first time institutional money has been invested into Worldcoin’s crypto-based vision for UBI.

So what?


The concept of a global currency is audacious. That it will be collectively owned is intriguing. That it will be distributed fairly represents a clear social agenda. And that it will go to as many people as possible underlines that the team at Worldcoin are serious about their objective. If the Worldcoin proposal is taken at face value, the primary intention is to create a new way of distributing wealth outside of the control of nation states, directly to people.

The background to Worldcoin is best understood by examining Sam’s work at OpenAI (which Azeem and Sam discussed on the Exponential View podcast in 2020). He recently penned an essay entitled Moore’s Law for Everything that I covered in my own newsletter That Was The Week. Inspired, or perhaps provoked, by his work at OpenAI, Sam contemplates the near future when AI and robotics have reduced the cost of labor for most things to zero.This consequently leads to the removal of human labor. His point echoes the labor theory of value as developed by Adam Smith, David Ricardo, Karl Marx and the classical economists. As automation is responsible for more and more of human output, the labor contained in products and services will shrink towards zero. As that happens, prices will also trend towards zero because the cost of production of everything will trend towards being free.

In this world, two things become inevitable. First, fewer humans will be employed, and second, the cost of living will shrink. These two trends make AI and automation the primary source of future human freedom - freedom from work.

But that progress comes at a cost if capital is concentrated in the hands of a few owners. Altman argues for a tax on capital and a transfer of wealth to humanity.

He goes on to write:

We should therefore focus on taxing capital rather than labor, and we should use these taxes as an opportunity to directly distribute ownership and wealth to citizens. In other words, the best way to improve capitalism is to enable everyone to benefit from it directly. This is not a new idea, but it will be newly feasible as AI grows more powerful. There will be dramatically more wealth to go around. The two dominant sources of wealth will be 1) companies, particularly ones that make use of AI, and 2) land, which has a fixed supply.

Taxing capital needs to be understood as a transfer of value from companies to the people via a taxation authority.That authority could be governments, but in the long run is more likely to be in the form of a decentralised autonomous organization (DAO). Like all authority, it depends on people choosing to recognize it. Taxing capital is the same as socializing wealth. The only thing that makes it capital is that it is private. By taxing it, we make it social. That act reduces AI and robotics to a method of production, leaving the value they create to be distributed as needed. Taxing capital, in the final step, leads to an outcome where companies as we know them today will not exist. What we currently think of as a company will cease to have owners benefitting from their ownership. Taxation could deliver the proceeds of production to humanity as a whole via a Worldcoin or Worldcoin-like mechanism. Capitalism will have been superseded by a higher form of civilization, where production directly meets need. Once automation is ubiquitous, and human labor reduced to as close to zero as possible, re-distribution becomes theoretically possible as ownership of capital is phased out.

In this world we — as a human race — can prove that Francis Fukuyama’s recently restated End of History prognosis was premature. Altman’s alternate future suggests  distributed ownership, real wealth to citizens, and individual freedom.

This begs the age-old question of how we could afford universal income.

AI will lower the cost of goods and services because labor is the driving cost at many levels of the supply chain. If robots can build a house on land you already own from natural resources mined onsite using solar power, the cost of building that house is close to the cost to rent the robots. And if those robots are made by other robots, the cost to rent them will be much less than it was when humans made them.

The collapse of prices driven by reduced labor will enable fundamental needs to be met extremely cheaply: food, care, education, housing, health, and more, would all move towards being free. It is no longer necessary to be utopian to see this possibility. But this economic change will require social change if it is to benefit all.

I believe that Worldcoin could be the mechanism by which this vision can be realised.

The long road ahead


When Facebook announced it was creating Libra as a means of payment tied to a basket of currencies, national governments immediately sought to stop it. And we are all too familiar with the SEC seeking to regulate crypto currencies in various ways. All global technologies have been met with governmental attempts to regulate them - the internet is an obvious example. If the spending-power sits outside of the scope of national regulation, then it is likely nation states will seek to slow or stop it.

But because money is whatever people decide to trust, just like the Internet, global money is probably unstoppable. And global UBI requires global money.

If Worldcoin can execute its vision, it will be sending hundreds of dollars a month, or more, to people its network can identify. The core has to be merchants globally accepting Worldcoin as payment - the real value is in exchange for tangible needs like food, housing, clothing, education, leisure, and health. If merchants start accepting Worldcoin as payment, the company will become the biggest company on earth - and consequently, part of the problem. For that not to happen, Worldcoin needs to be committed to a smart-contract that taxes Worldcoin itself and to a DAO or a similar governance system.

Like all things, the devil is in the details. And the details can be messy.

There have been various challenges to Worldcoin’s vision and execution. Coindesk reported on the challenges of biometric data collection, and the MIT Tech Review described troubling practices they found through an extensive investigation. A recent Buzzfeed article said:

“The currency has not yet been launched, but a BuzzFeed News investigation has found that Worldcoin is already wrestling with a host of problems, from managing angry Orb operators to concerns that the company is using its cryptocurrency as a way to amass millions of biometrics and perfect a new kind of authentication technology for the blockchain era."

The focus on data privacy and biometric data is to be expected - and rightfully so. In the ideal case, privacy and security risks will be reduced to a minimum. Encrypted data stored on the blockchain allows it to be tested for uniqueness. But we are not there yet. Biometrics and personal data are held in a centralised database to train algorithms and test the security systems. As the reporters show, the deployment of this technology and testing of its effectiveness has been controversial to say the least. That said, I consider a big part of this problem to be already solved. Apple scans our face or fingerprint without ever storing our biometrics on its servers. And it works very well, so long as the user has a smartphone. Worldcoin is in its testing phase and has not stated how its technology will work. I hope it can learn from Apple’s approach, but we will have to wait and see.

Cryptonews also weighed in with the revelation that:

“Coinbase-backed startup Worldcoin has decided to stop operations in at least seven countries as a result of intensifying logistics challenges that are impacting the company’s launch plans.”

The process of testing is, of course, going to be uneven. The publicity surrounding Worldcoin leaving various countries is a marketing blunder. Communications and messaging are at fault, rather than the process itself. As founder Alex Blania said to Cryptonews:

“You’re still talking to a Series A company, not an Uber. Things are not perfect.”

At this point in time I consider Worldcoin to represent an encouraging and bold vision for the inevitable post-work society. I recognise that getting there is difficult. There will be some real issues along the way in that the system is not as secure as is hoped for in the future. However, I think that this is not a reason to put aside the idea – it should serve as an incentive to work harder for it to fulfill its promise.

End note


Azeem here. Big thanks to Keith for stepping in and sharing his perspective on Worldcoin! Please use the comments to respectfully engage in a conversation about Worldcoin, UBI and the future of work.

We’ll be back with our regular wondermissive next Sunday!

Ciao,
Azeem

P.S. I’ll be speaking at the KITE Festival of ideas and music in Oxford in early June. Readers of Exponential View get 15% off all tickets. I hope to see you there!


What you’re up to – notes from EV readers

Josh Berson is organising Refugium, a weekend long seminar with 10-15 people to read experimental fiction, watch slow cinema, listen to audio art, and figure out how to make sense of the senseless. Apply for this one of a kind experience by May 1, 2022.

CEO Sean Gourley and his team at Primer deployed an AI that captures, translates and extracts key information from Russian military communication in Ukraine in real time.

Jay Lemery and his team at the University of Colorado School of Medicine are launching a “Diploma in Climate Medicine” designed to be a heavyweight credential for healthcare providers seeking novel leadership opportunities in all aspects of climate and health policy.

Gianni Giacomelli on environmental innovation as technology and operations.

To share your projects and updates, fill out your details here. Because of space constraints, we prioritise updates from paying members and startups I have invested in. (You can become the former by subscribing, if you have not already, and the latter by getting an intro to me via a trusted contact.)

Comments

Sign in or become a Exponential View member to join the conversation.