Pondering the Orb

Paris Marx: Molly, welcome back to Tech Won’t Save Us.

Molly White: Thank you for having me.

PM: Always excited to chat with you. You were on quite recently, but a ton of things have happened. Worldcoin has happened, and now we have late breaking news, I guess, that happened last week, that Sam Bankman-Fried had his bail revoked. So I said: Okay, it’s time to have Molly back on the show. We have to talk about all these things, even though it hasn’t been too long. So let’s start with this question of Sam Bankman-Fried and the bail. Since he was extradited to the United States from the Bahamas. He’s been on bail at his parents’ house — which I believe is in Palo Alto — and he’s been at some stuff. Do you want to give us a quick recap of what he’s been doing while he’s on bail that has been getting people’s attention and eventually making the judge and the prosecutor so angry that he’s now had his bail revoked?

MW: So Sam Bankman-Fried has been testing the waters around how far he can push his restrictions, because he’s confined to his parents’ house. He’s not allowed to do a lot of things. But at the beginning, he still had basically unfettered access to the internet and someone like Sam Bankman-Fried can get themselves into a lot of trouble that way. So it all started in January when he decided to email and send Signal messages to Ryne Miller, who is a witness in the case, he was the FTX general counsel, and I guess Sam Bankman-Fried and him and had a falling out sometime around the time of the bankruptcy. I think they may be disagreed about whether or not they could keep FTX going or whatever.

And so Sam Bankman-Fried sent him a message that said something like: I think we left things off on a bad note, I would love to reconcile to some extent. And then he said something about bouncing things off each other, vet things with each other, and use each other as resources. And the government got wind of these messages. Because he was using Signal, they felt to some extent that he was trying to conceal them from the government, and they felt like he was trying to tamper with a witness pretty much. That he was trying to say: Hey, let’s get our story straight. And so that was the first bit of trouble with Sam Bankman-Fried release.

PM: And just to be clear: Signal is an encrypted messaging app, so that means that the messages could be secret, or not shared, if no one would be able to find them.

MW: Yes, and Sam Bankman-Fried also has sort of a habit of sending Signal messages to auto delete, so that they actually can’t be recovered from his own phone. I don’t know if that was the case with the messages with Ryne Miller, but it’s definitely something that has come up in this case. And so before they were even able to come to a solution to that particular problem, he did something else, which was they discovered that he was using a VPN, which is a way of anonymizing your internet traffic. It could be used to, again, sort of skirt the government’s watch on him. It also could be used for fairly innocuous purposes, which is — and of course, what his defense has been arguing — they claim that he was just trying to watch football, this was around the time of the Superbowl. He claimed that he had bought this subscription to watch football, but it was geo-locked to the Bahamas. So because he’s in the US, he had to use a VPN so that he could illegitimately get access to this subscription that he had purchased. Anyway, kind of a thin excuse, in my view. Who knew Sam Bankman-Fried was such a football buff?

PM: I wouldn’t have expected it.

MW: So after that, he became very restricted on what he was able to do. They’ve made some changes to his release, so that he could only access the internet through this one laptop that was very carefully locked down, so that it could only access websites that were particularly necessary for him to prepare his defense. Like Google Drive, and Zoom and stuff like that. But also a small list of websites for his own personal entertainment, Netflix, Spotify, DoorDash, things like that. And he was restricted to only having a flip phone that was just calls and texts. He couldn’t use the internet, or Signal, anything like that. Then more recently, the big issue has been that he leaked private diary entries of Caroline Ellison. She was the CEO of Alameda Research, which is the FTX-linked trading firm. She’s also Sam Bankman-Fried’s ex-girlfriend.

He leaked these very private personal diary entries to the New York Times. He ran a story about Caroline Ellison, and her private thoughts, and how she was torn up about a breakup between her and Sam Bankman-Fried. She was expressing doubts about her own ability to run Alameda Research, it was a very personal story. It became very immediately clear that Sam Bankman-Fried was the source for a lot of the documents in that. And it later came out that he had had more than a hundred calls with this New York Times reporter, and he had invited the Times reporter to his house so that he could show him the documents without sending them electronically — which again, the government thinks was in order to try to conceal that he was the source of these documents. Anyway, that was the last straw for the judge.

The prosecutors have been somewhat lenient, I think, in terms of not requesting he be remanded. And the judge has several times now asked why that is, it seems like the judge, if anything else, was the one who was really frustrated at Sam Bankman-Fried’s behavior. Anyway, long story short, he has been sent back to jail. His bond has been revoked, and he will presumably be spending the rest of the time, until trial, which is scheduled for October in jail. So he’s currently in MDC, Brooklyn. There’s some conversation about whether he might be moved to a different jail that would have a little more leniency around offering him access to a computer to prepare his defense and so on and so forth. But long story short is he’s in jail right now.

PM: I guess the jail was maybe a little bit nicer than the one he was in in the Bahamas, where he quickly decided he wanted to be extradited to the United States after getting in there. What does this mean for Sam Bankman-Fried now? And does it have any impact on the trial come October?

MW: So you’re right that the jail is a little bit nicer, but it’s definitely no cushy white-collar jail. MDC Brooklyn is not known for its wonderful conditions. It definitely will have some impact on the trial, I think. It’s very challenging to prepare a defense when the defendant is in jail, although obviously, it happens all the time. A ton of people are detained pretrial; iit’s very common. With Sam Bankman-Fried, in particular, the case involves a lot of documents, and a lot of ones that are not trivially printed out and sent to a person to review in their jail cell. There’s huge databases and all sorts of massive files that he has to review. And so it is challenging to do that if he doesn’t have much access to a computer, much access to the internet.

In MDC Brooklyn, he can’t have a laptop in his jail cell, much less one with the internet. He’ll be limited on the hours with which he can spend preparing his defense, and so on and so forth. Like I said, there’s some question about whether he might be moved to Putnam County Correctional Facility, I think it’s called. Which might allow him to have a laptop in his jail cell, so that he could do this preparation, but again, he would be similarly restricted. He would not be trading cryptocurrencies from the comfort of his jail cell or anything like that, ideally. So, it may have some effect on the trial. I suspect the defense may argue that he’s having trouble preparing his defense, that it’s slowing them down, snd that may be legitimate to some extent.

PM: That’s really interesting. But obviously, it’s kind of the consequences of his own desire to flout the rules or the conditions that were put on him when he was given bail. So it’s kind of his own fault that he’s in this situation.

MW: It certainly seems like it. He hasn’t spoken out publicly about why he’s been choosing to do this. I wouldn’t be surprised if he had some sort of justification for it. Where he’s like: Well, technically they didn’t say I couldn’t use a VPN or something like that. But, he does seem to be pretty brazen about pushing the boundaries of what he’s allowed to do. It seems he had been warned repeatedly by this judge that like: You’re on thin ice, don’t keep messing around like this. Just keep your head down. Prepare your defense with your lawyers and we’ll see you in October. But, I guess he was not willing to do that.

PM: Well, it’s good to have an update on Sam Bankman-Fried. I’m sure we’ll be hearing a lot more about him come October. But obviously, the main reason that I invited you on to the show today was to talk about Worldcoin, Sam Altman’s new big project to revolutionize, I don’t know, everything. The remit expands and we’ll talk about that. But I want to start by asking: have you been scanned by the orb?

MW: I have not, no. Believe it or not, I have not gone seeking the orb to stare into.

PM: I’m shocked.

MW: I know that comes as a big surprise.

PM: Just because it’s not available in your area, right?

MW: Right. Exactly.

PM: As soon as it shows up, you’ll be first in line. Like all of the people who used to lineup for the iPhones. This is long enough to get your eyes scanned by the orb.

MW: I’m gonna take my little tent and put it outside the orb store so that I can be first in line.

PM: Oh, man, do they have orb stores? That would be funny actually.

MW: I don’t think they do. I hope they don’t!

PM: Just like a dude set up somewhere with an orb.

MW: Like a mall kiosk or something like that.

PM: Get your iPhone cases, get your eyes scanned, you know? [laughs] So maybe people are wondering, what are you guys even talking about? Talking about orbs and eyes scanning? This is this company Worldcoin. Maybe you have heard of it — it’s been around for a few years. But it’s recently come out of beta in late July, and has been available in a bunch of different places. So Molly, how would you describe to listeners what Worldcoin is?

MW: Well, Worldcoin is a crypto project. I think that’s important to note, mostly why I’m here. The primary function right now is to distribute this cryptocurrency token that is also called Worldcoin. That’s sort of important to remember throughout all of this is that the crypto token is really the big part of this right now because it’s easy to get lost in the sauce around all of the things that they could do or might do, or perhaps one day hope to do. But right now, it’s really just about the token. The way that one acquires this token — besides purchasing it on the secondary market — is by creating a cryptocurrency wallet in the Worldcoin app. In order to do that, they have to prove that they are a unique human being by having their irises scanned by a piece of custom hardware that just so happens to be this shiny chrome orb, that it’s probably about the size of the basketball. That has to be sought out since they’re not actually that many of them. Once you’ve done that, then you are given your allocation of 25 Worldcoin and the opportunity to collect more on a weekly basis.

PM: I think that’s a good description of it. And we’ll get into the bigger framing of all the great, wonderful things that Sam Altman and his co-founder or CEO, or whatever the dude is, hope to achieve with this. But I guess that’s why you haven’t had your eyes scanned. Because in the United States, you can’t actually get the Worldcoin coin yet.

MW: Yes, right. So in some jurisdictions, you’re not allowed to receive the Worldcoin coin, primarily the United States. In most states, you can still have your eyeballs scanned, if you are so inclined to just give that data away for free, although there are some states and other jurisdictions that actually limit that as well. Worldcoin also limits where it operates to some extent, both in the sense that they have not widely deployed orb operators around the world, they’re sort of focusing on a small number of places. But also there are places like China where the Worldcoin app is not available.

PM: Just to give people an idea, I believe the last numbers that Worldcoin released are over two million people have had their eyes scanned by an orb over the past few years, because they have had this in beta for a while, testing it in particular countries. And we’ll get into that. I believe the number they have is there’s about 1500, orbs that are out there, or in the process of being deployed across 35 cities in 20 countries. Obviously, it’s not everywhere, it’s still quite limited as to the number of people who have signed up. Because they have ambitions of reaching a billion people, not million, that’s with a B. And that’s obviously quite an ambitious goal.What has been the response to this project dince it has come out of beta in the past few weeks?

MW: I would say it’s been a bit of a mixed response. Even people in the crypto community are not necessarily gung ho about Worldcoin, despite it being a cryptocurrency. Largely because it has this very sort of dystopian connotation of collecting all of this biometric data, which does not necessarily sit well with a lot of people in the crypto world. So there are certainly people in crypto who are very excited about Worldcoin who want to get their hands on it, so they can speculate on the price or who think it will be instrumental in onboarding new users to crypto and hastening the Web3 future. But it’s definitely been a mixed, if not sort of negative response, even out of the crypto community. I would say that has been echoed more broadly as well, where we’re seeing mainstream news reporting on it. And a lot of the questions that are being asked have to do with data privacy, and, honestly, just the ambitions of this project, which are very unclear at this stage. Definitely not the warm, open arms, response that they probably hoped for, but definitely one that is to be expected, given the scary things that they’re trying to do.

PM: Well, when you talk about a Web3 future, the idea that it might be kind of hastened into existence because of a project like this. That is one thing that really does stand out about it. Because it was founded in 2019, right before the crypto boom started to happen. Once the pandemic got underway. And then, we saw this big hype bubble that then began to burst by the end of 2021 and into 2022. So, how is a crypto project like this now rolling out once all the hype is gone?

MW: Well, I think it helps that they have Sam Altman involved, because Sam Altman is currently better known for his involvement with OpenAI and ChatGPT, and the AI hype bubble that is well underway at this stage. And so they’ve been able to somewhat pivot the project to focus on these AI narratives now. Which were really not a prominent part of the project’s marketing back in 2020-2021, when it was talking about how this was going to be the way to get everyone on boarded into crypto. Everyone was going to have a wallet, now, it’s going to be so easy. They were talking specifically about the Sibyl problem, which is a problem in crypto specifically because of the pseudonymity of it all.

Where it’s really challenging to ensure that only one person has one account in your crypto project. And so Worlddoin was positioning themselves as a way to ensure unique participation in crypto projects. They’re still talking about that to some extent, but I think it’s less exciting for people and so now they’ve really adopted this narrative around — AI is coming, this powerful Artificial General Intelligence is right around the corner. And once our world has become saturated with these non-human intelligences, we’re going to need some way to distinguish people and robots. And well wouldn’t they’re creating the solution to this AI problem that they are also creating.

PM: For that you need the orb?

MW: THE ORB. All caps! [laughs]

PM: Exactly! [laughs] I think that’s a really important distinction to make — jumping from one hype bubble to the next. Initially, it was conceived as a crypto project and still is a crypto project, but in order to kind of justify it, in this moment, it has to take on a different framing. And so Sam Altman is already the AI guy. He’s the big AI guru who leads the most prominent AI company that people are paying attention to because of ChatGPT. And so then he can come along and say: You know this project that we’ve been working on, that’s been trying to get people to adopt cryptocurrency? Well, now, actually, because we’re scanning your eyeball, we’re going to ensure that you’re not an AI and that you’re a real human being. It’s like: Oh, great. Thanks, man. I think we really need that.

MW: I mean, I think it’s really emblematic of a lot of crypto projects where the goal really is to generate the buzz around the cryptocurrency because that’s what drives the price. And so it doesn’t really matter what the crypto token does, or what the story is or what the story was. You just have to find something that’s going to get the headlines and the attention. If that requires you to pivot your supposed use case, then so be it because that will keep the money coming in. And I think that’s really what we’ve seen Worldcoin do here.

PM: Absolutely. Obviously, the coin was — I don’t know what you’d call it — like floated or something. When it kind of came out of beta, and we saw the value of the token spike initially, but then dropped down to about $2 US per Worldcoin, as I understand it. So based on my understanding of this is the idea that, obviously, Worldcoin is this company that’s controlled by Sam Altman and Alex Blania. And technically, they are in control of this company — that controls the orbs and the data and all this kind of stuff — but I believe it’s also being positioned as a crypto project. Where as long as you have some coins, or are a participant in the project, you will, at some point, be able to help control the decision making or something. Is that part of this as well?

MW: Sort of. So they’re doing what a lot of crypto projects do, which is called progressive decentralization, which means that they’re completely centralized right now, and probably will be for the foreseeable future. But they have outlined these vague plans to decentralize the project via a couple of different mechanisms, but basically introducing voting so that people can control the decision making to some extent. They also talk about decentralizing the hardware in this case, which is something that a lot of crypto projects don’t even need to worry about. But making it so that anyone could manufacture an orb and then begin operating it as their own entity. All these different things, so that they would eventually divest control over this project. I think that common theme, with this progressive decentralization concept, often doesn’t actually happen.

It’s just a helpful way to wave off criticism around the centralization of projects, which is an enormously unpopular thing in crypto to have a project be so centralized. And so projects that are centralized but don’t want to have to explain themselves will often just say: Oh, no. We’re going to decentralize, this is how. And then they can delay that conversation almost forever if they want to. And I think that’s sort of what’s happening here is there are a lot of major hurdles that Worldcoin would need to overcome in order to properly decentralized in the way that they’ve claimed they will. It seems they have not really made any strides towards doing that. And so I think it would be unlikely to see them actually decentralized in any meaningful way, anytime in the foreseeable future.

PM: You pick up the tech libertarian rhetoric that all of these crypto folks are interested in, then use it to help justify your company or your project. Then, if you never follow through, that’s all fine because you’ve received your payout, or you’ve become this big company already. There’s nothing that people can really do to stop you because you’ve either had your gains, and the company has collapsed, or you’ve kind of entrenched position.

MW: Right. That’s exactly right, yes.

PM: Cool. If we’re thinking about the bigger positioning of this project, we talked about how it actually works with these orbs rolling out, they scan your eyes, and all this stuff. But one of the things that they seem to be talking a lot about is how this will provide a proof of personhood that will then allow this service delivery and empowerment through a new financial system and all this stuff, things that we’re used to hearing with with crypto. But can you talk to us a bit about that bigger picture of what they are, at least claiming, that they’re trying to achieve through rolling up these orbs?

MW: Sure, so there’s this question in the crypto world around identity and how people can prove various levels of their own identity. And that ranges from proving that I am this one human being, Molly White, and this is all this information about me. To just proving that like: Hey, I am one person in this network, I’m a real person, not someone’s AI bot, and so on. And that’s what Worldcoin is really attempting to do. They’re focusing, at least right now, primarily on the latter thing, which is really just proving: Alright, there’s only one of me in the network. And I’m a real human being. And they’re attempting to do that by scanning irises.

The idea here is that then there might not necessarily need to be a centralized maintainer of the identity in the way that, the government usually maintains an identification record of its citizens. The idea here is like: Oh, we can just replace that centralized government entity with code, and so the algorithm won’t allow more than one person. But we won’t have to disclose more about ourselves in order to prove that we are just that one person. So it’s this kind of odd — I think, to people outside of crypto — kind of esoteric problem that they’re solving. But it’s really one that they’re hoping will allow them to solve problems around fair distribution of tokens and things like that, that crop up in these crypto projects, and to a lesser extent outside of crypto.

PM: It is fascinating because, obviously, there’s a lot of libertarian ideas that underpin the crypto space. And so you have a project like this come along. And ostensibly, the idea is, as you were saying, we’re going to create this identity system that is not controlled by the government. We can get rid of this legacy infrastructure, which is a lot of what the crypto narrative is often about, usually around banking and stuff. We’re going to get rid of the corporate form with our DAOs [Decentralized Autonomous Organizations] and we’re going to get rid of the traditional banking system and governments because we’re gonna have these ways of voting and using our tokens and blah, blah, blah. But they’re using this rhetoric, as we’ve been talking about, they’re not actually decentralized. They’re just a centralized organization that is trying to displace the position that the government holds and ensuring that our identities are proper, and all that stuff. And shifting it to a private company that will then benefit from having that monopoly over identity data.

MW: I think critically, in this project, they are aiming to create a global database as well. So right now, there isn’t really a global identifier, it’s each government has its own system. And there are certainly complications that arise there. But yes, they’re basically saying that this one private venture-backed company should be the record keeper for a global identity system, which is a scary prospect. It is bizarre to me that the people who worry about more local — at least national governments maintaining identification systems — are not even more concerned about a centralized entity doing so on a global level. But again, I think that’s where the progressive decentralization promises really come in. Is that if you can convince people that eventually no one will own this, and it will all just sort of run itself, then you can hand wave away those pesky concerns around centralization and privacy.

PM: It’s terrible. I don’t know how people buy into the narrative, but obviously I think we’re both in agreement on that. I do find it interesting, though. One of the articles I was reading about this said that, by distributing these coins it’s supposed to empower people, because there’s the wealth that comes with it, but also whatever other benefits that come with holding these tokens. And the idea is that there’s a fairness that comes with that. But as I understand it, 10% of the tokens have already been distributed to Andreessen Horowitz. And 10% of the tokens have been given to Worldcoin’s full time employees, even before the general distribution happens. I feel like that is something that we see quite commonly in these crypto projects, where the people who are in early, get these initial allocations, so that then when the price jumps, they can cash out or reap the rewards of that.

MW: Exactly. Worldcoin is simultaneously positioning the Worldcoin token as this currency adjacent asset. And it’s going to be something that people are receiving as a form of universal basic income, which then suggests that it’s going to be used as a day to day transaction currency. But simultaneously, they’re also allocating 25% of the tokens to insiders, be it Worldcoin employees or the investors like Andreessen Horowitz, Blockchain Capital, and all these other groups. And it’s very weird to look at this and say: Okay, so 25% of our money supply goes to this very small set of insiders. It really doesn’t jibe with the benevolent goals that they seem to be espousing around UBI and other such things. Because it’s very weird to think of a quarter of the universal basic income supply going to Andreessen Horowitz.

PM: What you wouldn’t distribute it like that, Molly?

MW: If I was Andreessen Horowitz, I would.

PM: We’ve talked about the coin, and how, really, this is a push to kind of get people to adopt the coin, make sure that’s out there, and hopefully increase its value over time by making people dependent on it. But as you’ve been discussing, there’s also a piece of this where the company is scanning everyone’s irises; they’re getting other biometric data from the people who sign up to use this. Is this also a biometric data play? What are they hoping to achieve with that?

MW: Well, it certainly seems to be given that the goal right now is to scan everyone’s irises, and then figure out what to do with all this data later, which is a very weird way to start a company. But yes, the goal, really, is to create this database of unique identifiers per person that are generated through these iris scans. And they’re very quick to tell you: They’re not storing the iris scan data, they are using an algorithm that converts it to just a unique identifier, and that’s what’s getting stored. But I think there remain a lot of questions around whether or not bad is so much better than storing the original scan data. In a lot of cases, they actually are storing the original scan data because they promised that this is the best way for you to keep your Worldcoin app functioning if they do an upgrade at some point in the future, so that you wouldn’t need to go get rescanned.
I think there’s really major data privacy concerns involved with the project, both with the Iris data itself, and with this so called unique identifier that they’re creating. And what can be inferred from that. What kind of risk you’re undertaking if that were to get compromised, or if someone were able to spoof that and act as though they were you, and so on and so forth. Especially if this project achieved the type of adoption that they’re hoping it would, which would involve powering these universal basic income schemes, and democratic governance and all these really lofty goals. The more that this ID is used to do, then more that you have to really worry about protecting it, I think.

PM: Absolutely. I feel like these devices have been in use for a number of years before this beta period ended. As you described that, one of the stories that I remember from an MIT Tech Review piece that was written about these experiences, and we can get into this a little bit more. There was one man, I believe he was in Chile, who described how he had signed up. He’d had his iris scan, he had the account created, but then he lost control of the account and had been trying to figure out how to get control of it again, and Worldcon was not able to help with that. So he went to be scanned again to see if he could do that. And they said: No, we already have your scan, it will just connect to the account that already exists, the account that you don’t control, and now have no way to resume control of. This seems to be an issue in crypto projects more generally, where if you lose your password for your wallet, then that’s it, you just lose all your money. But especially if we’re building this into something that’s more than a currency, but to be used in this much broader way, there seems to be a lot of risks inherent in that.

MW: Right. Worldcoin has basically solved — well, claimed to have solved — the problem of the initial onboarding, scanning the eyeball, and you get the account associated with that. But they have very little of what they’ve done in the way of recovering accounts. If they’ve been lost, as you just described, or if someone transfers control of the account to another person, there is no ongoing verification that the account is under the control of the person whose iris was scanned. There’s no ongoing verification that the person controlling the account is even alive, which is a very strange thing. If we’re talking about, again, universal basic income, social welfare type of thing, you typically expect those benefits to go to people who are still among the living.

PM: I’m not sure the other folks are going to benefit much from it.

MW: I mean, maybe some kind of survivor’s benefits. They’ve only gone the first step into this process that clearly requires much more thought, in order to properly implement. But it’s also really important here that, to some extent, we’re taking them at their word that they want to actually implement these huge lofty projects around UBI or democratic voting or whatever it might be. And that’s when a lot of these problems would become extremely worrisome. But I think to some extent, it may well be that they’re just hoping to create this coin, pump the price, cash out, and then sort of fade into obscurity, as so many crypto projects have done. So, I have this struggle that I’m dealing with, where I want to take them seriously so that we can interrogate the types of things that they’re promising to do. But on the other hand, I don’t want to overstate what they actually seem to be doing, and contribute to this hype cycle that is building around Worldcoin, when it is just the headlines that is powering the token growth, and that may be their sole goal.

PM: I really appreciate that distinction, because I think it’s a really important one to make. And I’ll give you a bit of a theory that I have. Okay, it’ll take a second to describe it all. Basically, obviously, Altman is in control of this AI company. And we saw the AI boom, in the mid 2010s, when the AI was supposed to take our jobs and all this kind of stuff. We’re seeing a bit of a repeat of that right now. At the time, one of the other narratives that emerged out of that was that: Okay, we need a universal basic income in order to ensure that once people lose their jobs to the robots and AI, that they will still be okay, and be able to live. There were different versions of it. There was a left version, where you still have your whole social welfare state, and you still have public health care, and all that, but you also just give people some money, so they can get by.

And then there was more of a right-wing libertarian version, where you’ve got the welfare state, you privatize everything, and you just give people like their monthly stipend as their universal basic income. And this is what a lot of people in tech supported. And it feels to me like we’re in this moment where the AI hype is back in large part because of Sam Altman, and because of OpenAI, and then they can see that this is naturally going to lead to a UBI kind of interest, again, if there’s concerns about people’s jobs, and this was obviously part of the crypto stuff as well. UBI was always part of that conversation, because again, it’s a libertarian vision of how that might work. But now, Sam Altman also sees how he can use the promises that we’re going to help with AI stuff, but also help distribute this basic income once the AGIs and the robots that can do all of our work come for us.

And so why not use that as a justification to kind of capture the energy and potential excitement that might resume for basic income in a moment where AI is everywhere again. And then use it to promote his own companies that’s just trying to get people to buy this token, and hopefully have it go up in value, while also getting their biometric data? Like it just seems very, what’s the right word? Like, it just seems very concerning to see these developments and to see how it’s a repetition of something that happened in the past. But it’s also being captured in a way that it was even more than last time, because we know how the cycle works. And so someone like Sam Altman can just kind of sieze it for his own ends. I don’t know, this is my conspiracy theory, I guess.

MW: No, I mean, I don’t think it’s off-base. Because I think we’re watching someone weaponize the tech hype cycle. He’s very much been able to catch on to the fact that both the excitement and the hope for what AI might bring can increase interest in a company such as OpenAI, but also that the fear and the concerns about what something like AI might bring can also increase interest in a totally different type of thing. Which is this company that claims to be able to solve all these problems that AI might bring. So he’s sort of playing both sides here, where he is hoping to profit both from all of the excitement and the positive hopes for AI, and profit from the fear and the criticism of AI, at the same time. It’s kind of impressive to watch to some extent, but also very upsetting, I would say.

PM: Definitely. We’ve seen this very clearly with him. Where he uses these grand fears of AGI in order to distract from more the real issues that are occurring already with AI. And that he doesn’t want to see regulated because that works better for his business and what he’s trying to achieve. I think you can see something similar with Worldcoin, kind of frame it around dealing with these issues that are going to be relevant, right now, to try to evade some of the scrutiny. But with that said, as I was saying, these orbs have already been out into the world, and a lot of them were deployed in the Global South in particular. What have we been seeing with the real impact of these technologies as they were in beta and actually being deployed in communities?

MW: Well, the way that the Worldcoin orbs was developed was put pretty questionable, ethically. It involved a lot of data collection from, like you said, the Global South. These low income locations where the promise of these Worldcoin tokens was very hard to turn down, I think, for a lot of people who really needed the money and had to decide: Okay, I guess I’ll let you scan my iris. And even agree to terms that they didn’t fully understand in a lot of cases, and then submit to their data being collected, stored for an interminable amount of time, handled with questionable practices, and use to train this algorithm that supposedly will now uniquely identify irises for the entire global population. It was a very questionable way of doing that type of development. There was very little in the way of ethical disclosure or informed consent to these types of data collection. It was being performed by these orb operators, that’s what they actually call them. Who were brought on almost as gig workers for Worldcoin, who were basically paid per scan that they were able to collect.

They were encouraged to be creative in how they brought on new customers. And that really led to a lot of less than savory schemes, I think, to get people to submit to these iris scans. But it also led to a lot of problems for the orb operators who were the ones who are bearing the brunt of people’s anger when these Worldcoin tokens took longer to materialize into real money than they did maybe hoped. Or when they realized that the data that they had provided was being stored in ways that they didn’t necessarily consent to. The MIT Tech review and Buzzfeed News both did really great reporting last year on some of the consequences for these orb operators who were arrested, they were attacked, harassed. And Worldcoin did basically nothing to support them, or to prevent these things from happening. Really, the way that this whole project was developed has been concerning from the get go. The actual iris scanning that they’re doing today is built on years of very unethical practices.

PM: I think those are all good points. And those stories are very concerning when you read about what this company has actually been up to. Now they want us to not pay attention to that, or act like it never happened, as they roll out in other parts of the world and try to increase their user base. Then just to pick up on what you were saying, these orb operators were paid pennies per scan. Were just expected to go out and recruit people, were not given the information that they would need to answer people’s questions. One of the things that the MIT Tech Review piece stated based on talking to some of these operators was that one of the major questions that they will get was always about privacy. And they did not have the information to be able to accurately address those concerns or tell people how their data would actually be used. And the company knew that people in the Global South — people in Sudan, in Indonesia, in Kenya — would be in need of the money that they could offer in order to have their irises scanned. It was really easy for them to get participants, especially in those years after the pandemic, where a lot of people were struggling, food prices were going up and all those sorts of things. It’s just incredibly unethical.

MW: There were a lot of questions raised around how the data was being stored or processed. The length of time they were storing data, a lot of questions around that. And Worldcoin has claimed to have addressed a lot of them. But it’s really just their word, there’s really no way to verify that. For all the talk of open sourcing their software and eventually open sourcing the hardware. There’s no real proof of how they’re storing the data or what guarantees they can make around the safety of that data. There’s a lot of them just saying: Oh, just trust us, we’re anonymizing it, we’re making sure that it’s responsibly stored. But there’s really nothing to back that up, and there’s really no evidence that we should trust this company, which is already engaged in such questionable practices to begin with.

PM: Yeah, no, it’s a great point. I think one of the things that stood out to me when I was reading about all of this, obviously, the company was going around the world and offering people Worldcoin tokens in order to sign up and offering people local currency to sign up and even having drawe, I believe it was, in Sudan for AirPods, if you signed up and had your iris scan. You’d go into a draw for a set of air pods, and they got thousands of people to sign up because of that. But in the MIT Tech Review piece, they spoke to the CEO Alex Blania, I believe he said his name was. They wrote that: They didn’t understand how a company could speak so passionately about its’ privacy protecting protocols, while clearly violating the privacy of so many. Our interview helped us see that for Worldcoin, these legions of test users were not, for the most part, its’ intended end users. Rather, their eyes bodies and very patterns of life, were simply grist for Worldcoin’s neural networks. I thought that put it really well. They don’t care about the people who they were testing it on. They were using them, as you’ve been saying, for their algorithms and for the larger project. Ultimately, the consequences for those people, the Sam Altmans of the world and the Alex Blanias, is that doesn’t really matter.

MW: I think that’s very clear. In order to train these models to uniquely identify irises, you need a massive amount of iris data. And unlike the text data that is widely available on the internet for scraping that’s being used in large language models, there isn’t really this huge repository of iris data available. So they had to come up with their own ways of collecting that. You’re right that the people that they were scanning, up until July of this year, were not necessarily the people that they’re focusing on for these big benevolent promises. They were simply the source of data that they needed to make such an algorithm feasible. Whether or not it even is, remains to be seen, whether they’re done training the model remains to be seen. What kinds of data they’re going to need to continue to collect in order to make sure this model can scale to eight billion people, like they claim, I think, remains to be seen. Who knows to what extent this type of practice will continue, as they are claiming to be developing this algorithm.

PM: I think, as you were saying, that also forces us to say: Okay, what is this company actually doing versus what it’s claiming to do? Is it really going to try to scan the irises of eight billion people? Or is this just part of the marketing framing in order to get people interested in this projec, so it’s other goals — it’s goals that it’s not as open about — can be achieved. I think that another thing that suggests that maybe it’s not going to work out, as they are leading us to believe, is that according to the reporting, the app has a lot of problems and doesn’t work very well. The orbs frequently malfunction and need to go to Germany for maintenance. It doesn’t always detect people’s irises properly, which is supposed to be the very point of the thing.

MW: Yeah, I mean, I think there’s a little bit of a Occam’s razor thing here, where if you actually look at the amount of effort that they’ve put into the project, and into solving the kinds of problems that you would need to consider — if you are actually planning to roll out this system to eight billion people — and make it usable, not only at the moment, but going forward for an indefinite period of time. It doesn’t look like they’ve put that kind of effort into it. And you could, I guess, write it off as them being an early stage company, they’re just building and they’re gonna work out the kinks, as they go. The crypto way, move fast and break things.

It does seem to me that maybe the goal is not actually as they claim, to roll this out to remote corners of the world where there’s not even internet access, where people don’t even have smartphones. To people who maybe can’t have their irises scanned for various reasons due to birth defects, or surgeries, or whatever it might be. There’s all these things that have gone, apparently, unconsidered by Worldcoin, which makes you wonder: Okay, so what is it that they are focusing on if they’re not focusing on these important edge cases? Or even important features that would allow a network like this to be usable, over a longer term?

PM: Absolutely. It just brings to mind some of those stories that were in the articles that you cited. People whose only access to the internet was the Facebook app that they get because of free basics on their phone. And that is the Internet to them, or people who don’t even have email addresses, and they’re telling them about these digital currencies that they really don’t understand. But ultimately, the goal of the company is just to get people’s virus data. Obviously, the company is out of beta now, they are scanning people’s eyes in more parts of the world and hoping to sign more people up. What have we seen from the government response to this, as the company has sought to kind of expand its ambitions in recent weeks?

MW: Well, I guess in addition to the ‘move fast and break things’ mantra, they’ve also been following the other protocol of crypto projects, which is: don’t ask permission, ask forgiveness. So, they have been attempting to scan people’s irises in locations where they had not really achieved permission to do so. And so now they are facing a whole slew of inquiries and investigations from, mostly EU countries — there’s a handful in the EU at least. And then they’ve been shut down in Kenya actually, due to data privacy concerns. Like I said, there are already jurisdictions in the US where they can’t do the scanning. So they’re really running up against some of the existing data privacy laws as they start to do this mass biometric data collection.

Then there’s also the question of cryptocurrency regulations. Where are they actually allowed to be distributing cryptocurrency tokens and what is the regulatory status of those tokens? They don’t distribute the tokens in the United States because of concerns over securities laws. I think they are going to run into similar issues elsewhere, where there are strict regulatory regimes around cryptocurrencies. Again, they don’t operate in China for that reason. I think the fact that they are a, doing this mass data collection and b, involved in cryptocurrencies — two things that are the focus of regulatory scrutiny — will also be a major hurdle towards their goal of scanning the eyeballs of every person on the planet, Many of whom live in places where those things are fairly tightly controlled.

PM: Good luck getting the eight billion people without China!

MW: Right! [laughs]

PM: It’s not going to happen. Quick question, and then I’ll go back to what you were just saying: Americans can’t get these tokens for getting their eyeballs scanned. Can they buy them on the secondary market or are they just completely shut out of it?

MW: I mean, it’s a cryptocurrency. If you can get it on a decentralized exchange, there’s really no stopping you. Whether or not that’s kosher, I guess, is a different question. But they are available to people who want to trade them.

PM: I figured, but I figured I would clarify.

MW: There’s also the other way that people have been getting access to Worldcoin when they don’t have the ability to scan their own iris. Which is pay somebody in another country to scan their iris and then sell them the account, and that has been happening in various places. There was some reporting earlier this year before the official launch about a mass group of people in China who could not scan their irises. And so they were paying people in Cambodia, and Kenya and various other places to scan their own irises, and then transfer control of the wallets. Which very much defeats the purpose of Worldcoin and having your iris connected to your wallet. But like I said, there’s no ongoing verification that the person whose iris was scanned, is the person actually controlling the account.

PM: That’s a great point, and you can already see the flaws in the model emerging that they either didn’t plan for or don’t actually care that much about.

MW: Didn’t bother to consider, yes.

PM: Their goals are different than what they’re publicly claiming. I thought that was a fascinating story about the black market iris data going around in China, and I’m sure it’s happening in other places as well. Where in the states are people doing something similar? I’m sure it’s probably happening, so they can get their hands on some Worldcoin, the few people who are still really into cryptocurrencies. But you were talking about the European investigations. Obviously, this company is collecting a lot of data on people. Europe has some of the strictest regulations on data privacy, and I’m sure are concerned when they’re seeing a company go around with these silvery orbs, scanning people’s eyes and promising them crypto tokens as a result. Has the response in Europe mainly focused on GDPR, or are there other concerns there as well that extend to general crypto regulation?

MW: It’s mostly focused on the data privacy so far. I think there are investigations in Germany, France. The UK is making inquiries they’ve said and they all cite the data protection side of things more than the crypto side of things.

PM: Gotcha. The UK has been trying to attract crypto-investment. So I don’t know why they wouldn’t be trying to bring in some Worldcoins and get British public’s eyeballs scanned. The country might be going down the drain, but they can at least scan their eyeballs and get some crypto tokens, I guess.

MW: There have been serious questions around the extent to which blockchains are going to be compatible with the GDPR and other various privacy regulations. And I think that this might help, I hope, some of these EU regulators understand that a lot of the so-called innovation that they are hoping to encourage and attract is going to come up pretty quickly against the data protection regulations that they’ve put into place.

PM: Fascinating. Yeah, I hadn’t considered that angle to it, but obviously once it’s on the blockchain, you can’t really get it off the blockchain. That’s how it’s supposed to work. And that would create really serious issues if you want people to be able to to have control over their data and remove things that they don’t want being public anymore.

MW: Right, exactly. I think up until Worldcoin to some extent, that’s been a very theoretical problem for a lot of people. Trying to understand: Okay, but it’s all just people trading these meme coins around, so hat’s the big deal?

PM: These funny monkey pictures.

MW: Yeah, exactly. Like, who cares if someone can see that you’ve paid for a board ape. But now that there’s iris data involved, now that they’re talking about providing social welfare benefits, they’re talking about day-to-day transactions, I think people are able to actually game out how this type of thing would work. And whether or not immutable public ledger is really the best solution for such a thing. I’m hoping that this very dystopian and probably short-lived project might at least get people thinking a little bit about some of the issues with crypto more broadly.

PM: Awesome. I’m crossing my fingers that that will happen as well. We’ve seen this progress happening in the United States, so it’d be great to see Europe step up its regulatory frameworks toward crypto as well. You also mentioned Kenya there. I thought it was really interesting that Worldcoin is also targeting Kenya, when we know OpenAI has also been using Kenyan workers in order to train its AI systems. And of course, for people who aren’t aware, workers in Kenya were paid about $2 an hour — could be a little bit more than that — in order to train these systems, reading really kind of toxic and harmful and abusive material to try to train ChatGPT, so, it wouldn’t spit those things out to users.

Now, journalists are going back and speaking to those people. And they’re saying, they have trauma, they have mental health impacts as a result of having to do that work. And so it was interesting that one of Sam Altman’s companies was exploiting them for creating these AI models. And then another of his companies went back and said: Okay, now we want to scan all your eyeballs. But it’s good to see the Kenyan government stepping in there, do you know what their concerns focus on?

MW: They’re also concerned around data privacy. So they actually raided one of the Worldcoin warehouses and took some hardware and documents and things like that, ostensibly relating to some sort of a data privacy inquiry. But, I mean, I think that it does illustrate the extent to which a lot of tech companies really see the Global South, the developing world, as a testing ground for these products that they will later roll out in San Francisco, and then other places where they’re hoping to get all of this attention and hype. But not have to go through the dirty process of testing the algorithm and making sure that everything works. And so they use these countries where they can do such things fairly cheaply.

And then discard them and move on to the Global North and more developed countries to actually produce the end product. I agree, though, that it’s good that these regulators are starting to pay attention to these types of projects. But it does seem like a little bit too little too late, given that Worldcoin has already been operating in Kenya for quite some time. Again, they were one of the places named where people were selling accounts to people across the globe who wanted access to the Worldcoin. So I think some harm has already been done here, unfortunately. But it is good to see that they’re starting to pay attention to some extent.

PM: It’s always good when that happens, it would just be better if it happened a bit sooner.

MW: Before all of the irises were scanned.

PM: Exactly. I do think, though, as you’re describing there this project further puts into perspective something that we’ve been talking about for a long time when it comes to crypto projects, in particular. People like Pete Howson, I believe his name is. He’s talking aboutt crypto colonialism. I’ve talked to Olivier Jutel about that on the show before, but how these companies —crypto companies in particular, but tech companies more broadly — do go into these markets and just seek to exploit people for profit while talking about how they’re going to massively empower them. And Worldcoin is coming in and saying: We’re going to do all these wonderful things for empowerment, and we’re going to create this identity service. We’re going to take all your data to train our systems. It’s like: We’re just going to use you as inputs for that process. There’s no real empowerment that is coming out of that, and it’s just yet another example of how this works.

MW: Yeah. I think that it’s also used to silence a lot of the criticism against the projects here where you will speak out against something like Worldcoin or even crypto more broadly, and people will sort of say: Well, that’s just your white American privilege. You have financial privilege in order to dismiss these technologies. Can’t you see how these projects are helping people you in developing countries? But what we’ve seen actually play out is broadly that they are not helping people, that the people who are engaging with these projects in those locations are suffering for it and often being exploited. In the way that Worldcoin has been exploiting people, as effectively test subjects, without the proper disclosures or the proper consent. So I think it really lays bare some of the disingenuous arguments that we’ve been seeing broadly around crypto, and how dare you criticize crypto because it’s going to help all of these people. You can just look at this and say: Look, it’s not helping people, the people who are receiving these tokens are not necessarily coming out better for it.

PM: Getting 20 or 25 Worldcoin coins, does not justify the exploitation that is going on there, and what the company is trying to get out of them. I think we can be pretty certain —especially seeing how so many of these companies have worked out in the past — that the empowerment piece of it is not going to come to fruition, at the end of the day. I wanted to end by talking about something a bit broader to bring up this conversation about this terrible company. Obviously, you have been at this for a few years. Digging into all of these crypto companies, digging into this industry, following along with the lawsuits and the regulatory efforts, and the coin offerings, and all the NFTs and all these sorts of things. I’m wondering, after having done this for a few years, how do you still keep at it? Do you still feel really interested in seeing the developments in these things? Do you reach a point sometimes where you’re like: Man, I need to stop paying attention to cryptocurrencies and all this stuff. How are you feeling about it now that you were proven right, that Web3 was not going so great?

MW: Honestly, I still find it absolutely fascinating. I love to pay attention to what is happening in crypto because it’s a microcosm, I think, for a lot of the tech industry and what we see happening. I mean, you can just see such obvious parallels between the crypto hype cycle and what we’re seeing now with AI. And so I just find it really fascinating to watch, going through that lifecycle and the ways that it makes people behave in the ways that these projects try to ingratiate themselves just continues to fascinate me.

PM: Awesome. I figured, but I had to ask. Obviously, the crypto hype has declined — we both know that listeners will know that. Do you feel like people should still be paying more attention to crypto than they are because of things that are still going on in this space that are still being worked out? Or do you feel like there is appropriate attention being paid to what is still going on in this space?

MW: I mean, I think for the layperson, you don’t necessarily need to pay that much attention. But I do think that it’s critical that the regulators and the policymakers are continuing to really consider the crypto world because these things don’t just go away — the decline in interest, and the so called death of crypto is, I think, probably temporary. Whether or not we’ll see the highs of 2021 again, I don’t really know. I don’t try to predict where crypto is going to go because it is so unpredictable. But I don’t think we can all just look at this and be like: Oh, phew, that’s over with. No need to put anything in place to prevent that from happening again, and then just move on with our lives. So I’m definitely hoping to see some learnings from the rather brutal couple of years we just had, and some consequences for some of the worst actors that were a part of it as well.

PM: And do you think that will come out of the Sam Bankman-Fried trial that is supposed to begin in October? And do you think that just beyond interrogating him and what he was doing at this company? Do you think it will also force regulators and policymakers to look at the broader industry as this key figure goes under the legal scrutiny but also public scrutiny as well, because it will obviously be highly reported in the press?

MW: I think the case against Sam Bankman-Fried is going to be somewhat historic for crypto and it’s definitely something that policymakers are looking at. I think a lot of people see Sam Bankman-Fried as crypto, he’s the guy. And so a lot of their perceptions of the industry really changed when he fell from grace. And I think that will really influence any decisions that are coming forward. But I also think that the crypto lobby really can’t be understated. I’s a powerful and wealthy group of people who are clearly influencing policymakers. And so I worry to some extent, whether or not the actual clear lessons from the past couple of years will take root and create ate some good policy. Or whether or not it will just be brushed off in the way that the crypto industry is hoping as a freak accident, or a failure of centralization, but not crypto or choose your narrative that you want to go with. I do think he will likely see some pretty serious consequences for what happened. What’s less certain to me is whether or not other companies will be prevented from doing similar things in the future. Or if we’re just gonna see another slew of Celsius’s and FTX’s, and all these other fraudulent companies the next time that crypto gets a little bit of attention in the media.

PM: I guess the worry is that he’s positioned as the one bad apple, instead of it being an industry of very bad apples. I guess to close this off: Where do you see Worldcoin going from here? What do you think is going to happen with it, and do you think that it’s possible — obviously, we’re seeing this second boom in AI hype within a decade, or about a decade — do you think that it’s possible we see another crypto hype cycle, in the future?

MW: So I think regarding Worldcoin, the typical pattern for VC-backed crypto projects is the token releases, it spikes in price, there’s a lot of interest around it. The VCs cash out, and all of the retail holders of the token are worse off for it. And so I wouldn’t be surprised to see that play out largely in the same way with Worldcoin. The extent to which they continue to actually pursue their stated goals, I’m not so sure about. I think Stan Altman’s primary focus is probably OpenAI right now and not Worldcoin. Although he does have people who are focusing specifically on Worldcoin, but I’m not really sure where they go from here. They’re talking about very vague things around government’s adopting Worldcoin and being the ones to implement universal basic income, which is kind of a bizarre thing, given that the government was what they were seeking to supplant in the first place with this project. So there is no sort of clear step to here where the Worldcoin and I’m sort of expecting it might just fade into the distance, I guess, we’ll see.

Regarding crypto, I do think that there is the risk that there will be more attention being paid to crypto in the near term. Partly due to the Bitcoin halving, which is coming up pretty soon. So that’s a change in the rewards around Bitcoin mining, and it tends to affect Bitcoin prices. If Bitcoin prices go up, that tends to spark new hype cycles, people get all interested in crypto all over again, because look: Lines going up! So I have some concern around that. And I think that the tech industry is always looking for its next big thing and I think the shine of ChatGPT can only last so long and so everyone is going to be trying to rebrand whatever it is that they’re working on to look shiny and new. Crypto has already done that several times now with Bitcoin and then blockchain and then NFTs and you know. So if something new comes out of that, and can successfully be marketed, then we might well see it come back again. But you know, again, when that happens, I can’t really say.

PM: You’ll be there to chronicle at all if it does happen, and we’ll, obviously, be continuing to watch your work even if it doesn’t. I know that you’ll certainly be doing a lot for the fall when Sam Bankman-Fried comes back under the spotlight in particular. It’s always great to keep up with you and your work, Molly. I’d highly recommend people subscribe to your newsletter to get the updates on everything still going on in the crypto industry, if you’re interested in that. Thanks so much again, for taking the time it was really great to chat.

MW: Thanks so much for having me back.