Explaining Blockchain Capital’s Big Bet on an Eyeball-Scanning Orb
This week, worldan outfit intended to serve as proof of human character in a world where it is increasingly difficult to distinguish humans from bots, has raised $115 million in Series C funding.
Led by 10 year old joint venture company blockchain capitalStakeholders include Coinbase, Kraken, and OpenSea, investments that bring Worldcoin funding to at least $240 million, even if controversial The organization — founded in 2019 by OpenAI CEO Sam Altman — has much to prove.
Yesterday, we spoke with Spencer Bogart, General Partner of Blockchain Capital about what makes him believe in Worldcoin, to create a global ID, a global currency and an app that enables payments , purchase and transfer. Like many others, we wonder how it can achieve its goals when, at least right now, its mission is primarily based on convincing tens of millions of people to allow Worldcoin to scan their irises using futuristic, technology-dense globes.
Below is part of that conversation, edited for length. You can also listen to longer conversations This.
Your co-investors in this new round include previous backer Andreessen Horowitz, Bain Capital Crypto and Distributed Global. Will Khosla Ventures or Tiger Global, also previous backers, relaunch?
They can be part of this financing; I don’t believe they are a big part of it.
What percentage of the company does the investor own? I guess it’s hard to negotiate with Sam Altman based on the power he wields and his extensive experience on the other side of the table as an investor.
That is a precise characteristic. Sam is a formidable founder and knows how to manage a limit board. Once again, I am sorry. That’s not a number I have in front of me right now. In general, companies sell 20% [equity] in each grant. Granted, things can move significantly down or up from there. I think in this case the number will be significantly lower than the number on Series A, Series B and Series C.
How long have you been talking to Worldcoin and what motivated you to make this deal?
The original source was Sam wondering: what if I could create a cryptocurrency that I could distribute to everyone in the world and everyone got an equal share? For me, from a risk perspective, it’s exciting [though] I didn’t know it was something we would be so excited about doing and underwriting based on things our team would normally be interested in.
[Meanwhile] this essentially requires ensuring that no single person can accumulate a disproportionate share of it, which requires everyone to be able to identify unique human beings. And this is the part that we’re really excited about, which is World ID. It’s the ability to easily distinguish between machines and humans on the internet [because] much of the internet is powered by ad revenue, and it costs as much to serve bot traffic as it does to serve human traffic. That is why many applications and service providers have used CAPTCHAs to distinguish between bots and humans. But that is no longer possible in the world of advanced automated systems and especially those powered by AI. It also doesn’t distinguish between unique humans, so I don’t know if the same person consumes excessive resources.
Which leads us to: okay, how can we provide a means to distinguish between humans and bots and ensure that each human is unique?
Leads to biometrics.
The root of what defines humans is biometrics, and my first thought was: why create this custom hardware for eyeball scanning? Like, billions of people went around with an iPhone. Why don’t we use Face ID, right? The problem is that the human facial structure doesn’t have enough randomness or entropy to distinguish between unique human beings, on the scale of tens of millions or hundreds of millions of people.
I didn’t realize that was the case.
It’s also not something that happened to me. I didn’t think about the fact that when you cross a hundred million people, there’s going to be a lot of people who look like Spencer Bogart; Their facial structure would be indistinguishable from mine. Fingerprints have the same problem; There is not enough randomness in the fingerprint.
That leads us to two possible options, DNA with enough randomness to be able to demonstrate human uniqueness at the scale of billions of people. But you are providing too much information with DNA. Then the irises. It turns out that there is a huge amount of entropy and randomness in the human iris. And in this case, the team built a huge amount of protection. You get an iris scan, it doesn’t save your iris by default. It will be deleted from the device immediately. It is only used to generate what is called an iris code, which is a unique mapping or encoding for your iris. And it is compared with all the others. And now, with these iris codes, we don’t know their name, location or anything. The only thing we know about them is that they are unique people.
I guess the enterprise strategy — helping companies cut down on bot interactions — is the most lucrative opportunity right now for Worldcoin. You can also make this cryptocurrency available to people, although I don’t know how people will use it. But before any of this can happen, you need to have a significant number of people in front of these strange and inaccessible spheres, when people are already worried about biometrics and cryptocurrencies. . Worldcoin says it has now scanned the eyes of 2 million people. How much does this take to make sense? A billion?
These are the right questions. It’s about: do you have a network of provable unique people? And that will only be interesting for applications and businesses of a certain size. 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 apps that want to use that app, while others won’t be interested in using it unless you’re in a 500 million network or one billion or two billion people.
Some other challenge here is obviously sphere distribution. Currently there are 200 to 300 [orbs] in the wild today, with another 2,000 already in production and awaiting deployment. Then there’s this question of public perception. Sone thing that we mark as part of the investment is: will there be so much negative perception of this that no matter how confident we are that this is 100% possible, Will public perception be so negative that people won’t want to participate?
So far, the data says otherwise. Worldcoin has already attracted nearly 2 million participants by running a fairly capital intensive ground-based startup strategy and this is only in beta testing phase. This does not promote or induce any leverage in the marketing; this no protocol even exists on the mainnet. This is only in initial testing.
For something that could use this, Elon Musk talked a lot about the bot problem on Twitter and came up with the idea that if we made people pay $8 a month, that would help solve the problem. solve the bot problem. We think World ID is a less frictionless analogy problem and will be a more accurate solution. And there’s a whole host of new apps and services that don’t exist yet because we haven’t been able to make this distinction historically. What that is, I don’t know, but we’re interested in sponsoring them.
Again, you can hear more about investing Thisincluding why OpenAI could become a major Worldcoin customer one day, why Bogart didn’t mind when hackers installed it recently password-stealing malware on the devices of many Worldcoin orb miners and why he is fascinated by lightning transactions on the blockchain.