After the launch of the Worldcoin identity-verification project on Monday, the value of the crypto token associated with it experienced a significant increase and continued to rise throughout the day.
The cryptocurrency community, which Sam Altman from OpenAI helped co-found, voiced some reservations about the project, which resulted in the surge in cryptocurrency prices being short-lived. Because of this, the token lost all of the ground it had gained in the beginning.
According to the data provided by CoinMarketCap, the value of one worldcoin (WLD) token reached its all-time high of $3.58 yesterday on cryptocurrency exchanges. However, it quickly dropped to $1.92 overnight after experiencing a price drop. It is currently trading at $2.43, which is more than 25% higher than the previous low point. Thankfully, it has recovered since then and is now trading at that price.
Because members of the cryptocurrency community are concerned about the Worldcoin identity-verification project, the value of the crypto token has decreased as a result.
In order to verify individuals as being human, the project utilizes a piece of hardware known as an orb to scan the individuals’ irises. The organization that is driving this project is under the impression that this particular kind of verification will play an essential part in the new digital economy, particularly as the use of artificial intelligence becomes more widespread throughout society.
Users who have used the Orb to verify their identity can claim WLD tokens on the project’s app, provided that doing so is legal.
In contrast, Vitalik Buterin, one of the co-founders of Ethereum, recently published a blog post in which he voiced his concerns regarding possible abuses of the system. He brought up concerns regarding centralization, privacy, and safety in the workplace.
The fact that approximately 30 percent of Worldcoin’s Orb-verified users are located in developing regions, such as Asia and Africa, sparked concerns about the possibility of exploitation and earned the cryptocurrency additional criticism.
ZachXBT, a pseudonymous crypto influencer, took to Twitter to express his concern regarding the Worldcoin team’s boasting of their user numbers. He accused the Worldcoin team of taking advantage of people in less developed nations. He was referring to an article that was published in April 2022 by the MIT Technology Review. In the article, it was revealed that the company engaged in deceptive marketing practices, collected excessive data without proper acknowledgment, and did not obtain meaningful informed consent from its customers.
Because of these worries, the data watchdog in the United Kingdom has decided to launch an investigation into the project, during which they will investigate the collection of personal data.
As a response to this, a spokesperson for Worldcoin stated that the company complies with the most stringent privacy guidelines and requirements in the markets where its token is available.
It has been detrimental for Worldcoin to be associated with controversial figures in the cryptocurrency world, which is especially problematic when taking into consideration the questionable nature of its tokenomics.
Sam Bankman-Fried (SBF), who was the founder and CEO of the cryptocurrency exchange FTX before it went out of business, made investments in Worldcoin during the Series A funding round that took place in October 2021. The allegations of fraud against Bankman-Fried have added to the concerns held by Worldcoin.
Kyle Davies, who was one of the co-founders of the Singapore-based hedge fund Three Arrows Capital, made the suggestion that his company had also invested in the Worldcoin project.
Dylan LeClair, a markets analyst for Bitcoin Magazine, provided some criticism of Worldcoin’s strategy with regard to the WLD tokenomics. He pointed out that the project appeared to be following a similar approach to SBF’s Solana ecosystem playbook, launching and promoting a low-value token with only 1% of its total supply in circulation. He was referring to the playbook that SBF had developed for the Solana ecosystem.
In a nutshell, the association of Worldcoin with controversial figures and the dubious nature of its tokenomics have given rise to concerns and attracted criticism from a variety of quarters within the cryptocurrency community.
During the launch of the project, the company increased the percentage of tokens it would receive from 20% to 25%.
At the beginning of the project, it was disclosed that a total of ten billion WLD tokens would be distributed over the course of the next fifteen years. However, as stated in Worldcoin’s whitepaper, there were only 143 million WLD tokens available for circulation when the platform first went live.
The tokens that have been distributed to investors and members of the development team will be locked for a period of one year.
The goal of the project is to create a large network of human users, which is why the circulating supply is relatively low. In order to accomplish this goal, the majority of the WLD token supply is going to be disbursed to both new and existing users over the course of the next few years.
Worldcoin forecasts that there will be a greater number of tokens available for purchase during the first week of operation.
Since it was first made available, there has been a roughly 3% increase in WLD’s total circulating supply. In addition, after the launch of the product, the project moved to the Optimism network, and the Dune analytics dashboard of the company says that there are currently 155,000 wallets on the platform.
Worldcoin asserts on its website that it has more than 2 million users whose identities have been verified by Orb.
On Twitter, author and investor William Mougayar voiced his opinion, stating that the project made a mistake by launching the token with limited practical use. He said that this was a mistake the project should not have made. He believes that, as a result of this situation, speculative trading opportunities have arisen.
Mougayar criticized the short lockup period for early investors as well because, in his opinion, it may not align with the project’s long-term goals and may allow early investors to quickly sell their holdings once the lockup period is over.