Worldcoin has attracted attention with its ambitious global digital identity project since its first day. However, this rapid rise did not last long and the cryptocurrency of the project experienced a 45 percent decline in August. So why did Worldcoin crash?
Why did Worldcoin crash?
Worldcoin, a project that aims to provide a global digital identity through iris scans, has come under the spotlight from regulators. Launched on July 24, the project initially offered an airdrop of 25 WLD tokens to participants willing to undergo iris scanning.
The cryptocurrency, which traded at $2.3 in early August, has lost 45 percent of its value since then. After attracting so much attention and rapid rise, the reason for such a decline was, of course, a matter of curiosity.
It is speculated that the reason behind the price drop of the project and its associated WLD tokens is increased regulatory scrutiny and pressure on the project.
How does Worldcoin work?
Worldcoin’s mission revolves around the concept of “World ID”, a unique identifier created through iris scanning. This ID is stored on the Worldcoin blockchain, ostensibly to protect user privacy. World Appserves as a user credential store and a cryptocurrency wallet.
On the other hand, while this idea promises to solve the bot problem on the internet, it also raises ethical questions, especially regarding the exploitation of economically disadvantaged populations. As of August 15, more than 16 million people had registered on the platform. But this rapid expansion has led to scrutiny from governments around the world, including Kenya, France, Germany and the UK.
Global responses and regulatory scrutiny
On August 3, 2023, the Kenyan government took a tough stance against Worldcoin, not only banning its technology but also raiding its Nairobi offices. This move was a significant blow to Worldcoin’s expansion plans in Africa, where the project has achieved significant success.
In Europe, Worldcoin has faced a barrage of inquiries from many countries. France, Germany and the United Kingdom launched investigations into the project. That is, countries have focused their investigations on data privacy and the consequences of collecting biometric data for financial gain.
Following this review, more countries began investing in Worldcoin. On August 11, Argentina joined the countries investigating the project.
