Learning Series #1— A Closer Look at Concordium and Worldcoin

September 15, 2023

There has been a lot of buzz around Worldcoin because it promises to expand participation in, and access to, the global economy regardless of country or background. Essentially, Worldcoin is building a digital identification platform that has ambitious plans to provide each person on earth with a way to verify that they are a real human and not a bot or an AI algorithm. It is also claiming to be an open source protocol that is aiming to become the world’s largest human identity and financial network, giving ownership to everyone. Worldcoin is backed by VC Andreessen Horowitz, Three Arrows Capital and cofounded by OpenAI chief executive Sam Altman.

Concordium, in its own right, is shaping the landscape with a unique perspective. As a public Layer 1 blockchain, its focus on privacy and accountability through its ID layer is a beacon of innovation. The connection it establishes between wallets and real-world identities, fortified by third-party verification and ingenious zero-knowledge proofs, weaves a tapestry of trust while preserving the essence of privacy. This strategic path resonates across diverse sectors — from the global economy to the intricacies of finance, the transformative potential of DeFi, the immersive realms of virtual experiences, and the dynamic world of gaming.

The purpose of this article is to educate readers about Concordium by comparing it to Worldcoin, focusing on key aspects like technology, onboarding, and business utility.

Safety Net for Web3

In the world of blockchain and digital transactions, ensuring compliance with privacy regulations and security standards is of paramount importance. One key aspect that hasn’t garnered much attention among the Web3 industry is the concept of anonymity revocation. By allowing legally qualified authorities the ability to revoke their anonymity, blockchain platforms can align better with evolving regulatory requirements, foster trust among users, and strike a balance between privacy and accountability. In this section, we’ll delve how Concordium and Worldcoin handle the anonymity of their users.

Built According to Compliance Standards

The Concordium Blockchain has an identity layer built into the core protocols. This means that before an individual or entity can send transactions to the Concordium Blockchain their real-world identity must be verified by an Identity Provider. Development of the ID layer hasn’t stopped there because during 2023 Concordium has been taking its identity solution to the next level with the introduction of Web3 ID, a zero-knowledge based Identity infrastructure.

Concordium’s Web3 ID allows companies or individuals (issuers) to make statements about users (holders) and create proof of these statements using a special cryptographic signature. Other parties (verifiers) can verify these statements by requesting a zero-knowledge proof. Holders can create this proof to show the requested information about their statements. The status of the credential issued is stored on the Concordium blockchain to make it immutable and decentralized.

The identity layer allows identification of account holders in case of an official investigation. Except for this users can create accounts and use them privately and these accounts can neither be linked to the account holder nor to each other. In the case of Concordium Blockchain, user identity is disclosed solely to qualified governmental authorities following a valid legal process. These authorities, such as local police, courts, or financial regulatory bodies, hold jurisdiction-based authority. To revoke anonymity, these authorities initiate legal proceedings and formal requests, often leading to official orders like warrants or court orders. Only upon receiving a valid order and serving it to anonymity revokers and identity providers can a user’s real-world identity be unveiled within the specified scope.

Concordium’s identity layer is adaptable to shifting financial regulations impacting the blockchain domain. When new laws like the “travel rule” apply to blockchain transactions, Concordium’s identity framework offers compliance-focused flexibility to suit specific business requirements.

Emphasizes privacy features, while also prompting discussions about compliance considerations

Worldcoin’s user onboarding process involves capturing and processing images, particularly unique iris patterns, to verify authenticity and previous sign-up status. Notably, these images are said to be deleted post-verification, with the option for users to enable Data Custody for streamlined future interactions. This deletion process will occur after the company completes training its AI neural network to identify irises and spot fraud. Besides iris detection, the Worldcoin’s data consent form notes that the company also conducts “contactless doppler radar detection of heartbeat, breathing, and other vital signs”.

The biometric data collected remains within the Orb, undergoing secure local processing and resulting in the retention of only an iris code — a distinct numeric representation. This technique is not unlike the biometric scans conducted by CLEAR or Apple’s Face ID. It’s designed to prevent duplicate sign-ups, allowing users to register anonymously without the need for personal details. Users retain the right to revoke data consent, emphasizing the data’s detachment from personal information, iris codes, or wallets.

Orb’s image retention and the World ID system’s use of zero-knowledge proofs further preserve privacy, facilitating pseudonymous verifications. However, it’s worth noting that the official documentation completely lacks explicit details on potential anonymity revocation in exceptional circumstances, like legal requirements or fraud suspicions. There is a lack of clarity on whether Worldcoin can effectively mitigate or block the involvement of malicious actors once they have been onboarded.

As seen in the news, Worldcoins ongoing compliance challenges are far from minor. The Kenyan government has halted Worldcoin’s new user sign-ups due to data privacy worries. Meanwhile, in the U.K., the Information Commissioner’s Office is investigating the project’s data handling. Germany’s Bavarian State Office for Data Protection also launched an inquiry, expressing concerns about biometric data collection. These concerns converge on the claim that Worldcoin, situated in the Cayman Islands, has collected sensitive biometric data without proper authorization or adherence to data regulations. With Kenya, U.K., and Germany leading the way, more countries are likely to scrutinize Worldcoin’s practices closely.

User Experience Comparison: Onboarding Practises

The Web3 industry is frequently seen as posing significant challenges when it comes to welcoming new users on board. The realm encompasses numerous concepts that newcomers must grasp before achieving a seamless proficiency in its usage. This challenge is also one that both we at Concordium and Worldcoin are striving to address through very distinct approaches.

Concordium’s approach

Concordium enables new users to onboard using mobile, browser and desktop platforms, thereby encompassing the majority of the planet within its user base. Accelerated, secure and compliant onboarding using eID is available for Danish citizens and will be available for Swedish, German and Finnish Citizens as well in the coming months.

  1. The user downloads the Concordium ID app on their smartphone, which is the official wallet and identity app for the Concordium network.
  2. The user creates an identity on the app, which is a cryptographic key pair that will represent their account on the network.
  3. The user verifies their identity through one of two third-party identity providers (IDP) (DTS, Notebene), which act as a trusted entity that checks the user’s real-world identity documents and issues a verification credential to the user.
  4. The user can then use their verified identity and credential to access various decentralized applications (dApps) and decentralized finance (DeFi) platforms that are built on the Concordium chain, without needing to perform costly KYC for each of them.

Worldcoin’s approach

  1. The user downloads the World App on their smartphone, which is the first wallet built for the Worldcoin project.
  2. The user finds a nearby Worldcoin Operator, who is a independent contractor hired by Worldcoin Foundation to manage signups for their country or region.
  3. The user meets the Worldcoin Operator and scans their iris using a custom hardware device called an orb. The iris scan verifies that the user is a real, unique and living human.
  4. The user receives a World ID, which is a cryptographic proof of their humanness, and a share of WLD, which is the native cryptocurrency of the network.
  5. The user can then use their World ID to access World App a native cryptocurrency wallet and Universal Basic Income in the form of WLD token.

What Are the Onboarding Differences Between Concordium and Worldcoin?

Concordium takes a unique approach to identity verification that prioritizes user privacy and compliance. Concordium has officially partnered with reliable third-party identity providers (IDP) to validate users’ real-world identity documents like passports and driver’s licenses. This approach ensures secure verification while maintaining the confidentiality of personal information. In comparison Worldcoin uses independent contractors who act as Worldcoin Operators to receive their commission in the stablecoin Tether. Contractors determine the rates they pay their subcontractors (typically in local currency), as well as the working conditions. Both country-level and subcontracted orb operators are incentivized by commission-based payment structures to register as many people as quickly as possible. According to investigative journalism, this approach has led to questionable onboarding incentivization practices and lack of security guidance from Worldcoin’s side has led to leakage of information.

One notable advantage of Concordium is its global reach in online identity verification. Users can conveniently undergo the verification process from anywhere, making it highly accessible and user-centric. This widespread accessibility sets Concordium apart from Worldcoin, which requires in-person verification at specific locations due to its reliance on custom hardware (the orb) to scan users’ iris biometric identifiers.

Concordium’s commitment to privacy preservation is commendable. It prioritizes ensuring user data is handled with utmost care and offers incentives in the form of access to various decentralized applications (dApps) and DeFi platforms. This approach aligns with the growing demand for privacy-focused solutions in the digital world.

Furthermore, Concordium is taking proactive steps to expand its reach, as evident from the upcoming swift eID onboarding for Germany, Sweden and Finland. Danish eID onboarding has been implemented and thus enables Danish Citizens to create their Concordium wallets very swiftly with few taps. This approach highlights Concordium’s dedication to compliance and privacy-centered user verification practices.

In terms of onboarding, Concordium offers a user-friendly and secure process. Users can undergo identity verification online just once, enhancing both security and compliance by relying on a trusted third-party ID verification process. While there might not be immediate rewards for verifying identity like Worldcoin, Concordium’s focus remains on empowering users through enhanced access to the ecosystem.

In contrast, Worldcoin’s onboarding process relies solely on iris scanning through a custom hardware device (the orb). While this approach may appear inclusive, it also raises concerns about the level of security and adherence to standards, especially given the limited locations for orb scanning and regulatory limitations in various countries.

In summary, Concordium stands out as a leader in privacy-preserving and compliant identity verification. Its user-centric approach, commitment to privacy, and proactive expansion efforts make it a reliable and trustworthy choice for individuals seeking secure access to decentralized applications and DeFi platforms.

Applications in the Business Landscape

In Web3, understanding how useful a solution truly is goes beyond just its initial appeal. To really grasp its value, we need to look at adoption — how much developers are embracing it and building on top of it. This is like a litmus test for how well the project is doing. But there’s more to the story. We also need to consider the quality of the solutions that are being built and how well they fit into existing systems.

We should ask ourselves: Can this project solve real-world problems? Can it make things more efficient and secure? Can it spark new business ideas and ways of doing things? These factors are all crucial for the success of a Web3 project. We should also look at how well it connects with other systems, how easily it can grow, and whether it meets the needs of the industry. In this rapidly changing landscape, the combination of adoption and usefulness is what sets the course for a web3 project’s future.

Diverse Utility Spanning across Sectors

Concordium’s diverse ecosystem is the canvas upon which visionaries and developers collaborate, united by a shared commitment to identity, security, and sustainability. At the forefront of this groundbreaking movement are over 40 visionary projects, each a testament to the limitless potential of Concordium’s Layer 1 infrastructure. The ecosystem stands as a beacon of innovation, a testament to the transformative power of blockchain. Among these ventures, some truly exceptional solutions have emerged, revolutionizing industries and reshaping paradigms.

Take Sellix, for instance, a beacon of seamless commerce in the digital realm. This innovative platform empowers creators and sellers with a secure, swift, and streamlined avenue to market their subscriptions, digital wares, and licenses. The era of frictionless transactions has dawned, thanks to Concordium’s pioneering blockchain.

Meanwhile, Concordex Decentralized Exchange redefines liquidity with an unparalleled focus on accessibility and concentration. Yield farming becomes a realm of boundless possibilities for single token holders, while swappers revel in an ecosystem unmarred by fragmentation. The future of decentralized finance is illuminated, courtesy of Concordium’s visionary infrastructure.

In the realm of art and culture, Spaceseven’s NFT marketplace transcends the ordinary, becoming the quintessential digital oasis for collectors and enthusiasts. Rare digital masterpieces find their home, while artists thrive within an ecosystem that champions their craft. Concordium’s blockchain emerges as the bedrock upon which artistic expression and innovation intertwine.

But the scope of Concordium’s influence extends beyond art and commerce. AesirX stands as a fortress against cyber threats, offering bespoke technology solutions that safeguard global businesses from online vulnerabilities. In a digital landscape fraught with challenges, Concordium’s security prowess becomes the ultimate shield.

Environmental stewardship finds a steadfast ally in ClimaFi, an embodiment of Concordium’s commitment to sustainability. Melding carbon expertise with the power of blockchain, ClimaFi offers scalable solutions for carbon reduction and removal. A greener world, powered by Concordium, is no longer a distant dream, but a tangible reality.

The frontiers of data and technology are also reshaped by Concordium’s guiding hand. arivu labs ushers in an era of simplicity, enabling limitless blockchain use cases through its intuitive API and UI Portal. IoT platforms gain an unassailable layer of security, thanks to Concordium’s tamper-proof Provenance Tags, ushering in an era of verifiable origins and anti-counterfeiting protection.

And then, there’s the exhilarating world of MotoDEX, a blockchain game where the thrill of motorcycle racing converges with cutting-edge technology. Concordium’s blockchain becomes the track on which digital racers vie for supremacy, a testament to the platform’s boundless versatility.

As the stage of innovation continues to evolve, Concordium doesn’t stand still. Collaborative efforts with entities like Energinet, XONE, Frontier, Mana Games, Digitalsocial.ID, and Versus showcase a commitment to nurturing groundbreaking partnerships. These collaborations breathe life into transformative ideas, birthing solutions that transcend boundaries and redefine industries.

Amidst this tapestry of innovation, the Concordium Foundation and Seier Capital A/S stand as pillars of support. The Grant Program they’ve established serves as a beacon of encouragement for budding entrepreneurs, existing blockchain visionaries, and industry giants alike. This financial incentive program fuels the fire of innovation, igniting a cascade of brilliant ideas that find their home on Concordium’s blockchain.

Concordium’s ecosystem isn’t merely a confluence of ideas — it’s a symphony of innovation, a nexus of possibility, and a testament to the transformative power of blockchain technology. As these projects unfold and the grant program propels the next generation of pioneers, Concordium’s trajectory becomes a force that reshapes industries and paves the way for a future where innovation knows no bounds.

Business Utility of the Worldcoin

Worldcoin, in comparison to Concordium, operates within a OP Layer-2 network situated atop Ethereum’s base layer. OP leverages Optimistic Rollups to address scalability concerns, although long-term viability remains a topic of consideration within the Ethereum community. An essential facet to acknowledge is the reliance of Worldcoin’s WLD token on Ethereum’s ERC-20 standard, implying a close correlation with Ethereum’s forthcoming developments.

The central thrust of Worldcoin centers around the conceptualization and implementation of Universal Basic Income (UBI) through the World App. Presently, much of the project’s spotlight is cast upon the World App, positioned as an entry point into the broader Worldcoin ecosystem. This wallet offers support for digital identity while also enabling users to claim WLD token rewards, save and send cryptocurrency to other World App users and trade limited number of cryptocurrencies such as wBTC and ETH using the interface connected to Uniswap (DEX) Decentralized Exchange.

In the realm of innovation, Worldcoin has demonstrated its commitment by sponsoring hackathons — an endeavor indicative of an earnest push to cultivate new solutions within the Ethereum landscape. However, at this juncture, tangible outcomes in the form of fully realized solutions appear to be in a nascent stage, perhaps rightfully so because the project has just recently launched on OP Mainnet.

Worldcoin’s current orientation, focused primarily on the World App’s development and the pursuit of providing Universal Basic Income, lends a narrower lens to its immediate business use cases. While its ambitions are undeniably noteworthy, the project’s trajectory embodies potential for growth, adaptation, and diversification in response to the dynamic and evolving nature of the blockchain industry.

In summary, Worldcoin’s business use cases presently pivot around the advancement of the World App and the conception of Universal Basic Income. The project’s alignment with Ethereum’s developmental trajectory underscores its connection to the broader blockchain landscape. Although progress has been made, we need to continue watching and exploring the ecosystem’s growth and potential.

Wrapping up the Learnings

In this comparison article, we’ve delved into the worlds of Concordium and Worldcoin, two distinct platforms that are revolutionizing the landscape of blockchain-based identity solutions. By examining key aspects such as technology, anonymity handling, onboarding processes, and adoption potential, we’ve gained valuable insights into the strengths and challenges of each platform. Concordium’s commitment to privacy preservation, compliance, and user-centric onboarding shines as a standout feature, ensuring secure access to decentralized applications and DeFi platforms. On the other hand, Worldcoin’s ambition to provide universal access to the global economy through its unique identification process has sparked both excitement and concerns. As the Web3 ecosystem continues to grow, the interplay between adoption and usefulness will be the ultimate determinant of the long-term success of both Concordium and Worldcoin, shaping their contributions to the broader blockchain landscape and the global economy.