Worldcoin, a digital identity cryptocurrency project founded by OpenAI’s CEO Sam, officially launched in August but it is off to a rough start in Africa. The Kenyan government raided and locked down its Nairobi office, but for it to resume operations, it must earn regulators’ trust and the people’s approval.

It has been a month since Worldcoin, a digital identity cryptocurrency project founded by OpenAI’s CEO Sam Altman, officially launched in various parts of the world. Unsurprisingly, at launch, thousands trooped to its registration booths primarily to benefit from the sign-up bonus worth about $50, with many not knowing the implications of surrendering their data. The project’s plan to offer money to people who agree to get their iris scanned at a silver orb also generated interest from thousands of people in Kenya, one of the first countries where it was launched. Since its launch, Worldcoin has issued its unique digital identity to over 2 million people and gifted 22 million of its crypto tokens to willing people according to its website. On August 3, the Kenyan government raided its local offices and ordered the company to stop signing users up while it investigated the legality and authenticity of the project’s activities in the country. The Kenyan government cited security, privacy and data protection concerns in its decisions. But it’s not alone, authorities in Argentina, France, Germany and the U.K. where it also launched have begun a probe into its activities. Although Worldcoin has announced that it is working with relevant authorities to resume activities soon, it still needs to prepare to avoid some booby traps ahead and deliver on its many promises to survive on the continent.

Worldcoin told the BBC it chose Kenya as the first African country to launch its project because it houses a booming tech space and more than four million Kenyans who are already trading in crypto. Citing the storied success of M-Pesa, a digital payment system, in revolutionizing the East African country’s financial sector in the last two decades, Michael Kimani, the president of the Blockchain Association of Kenya, believes another reason for Worldcoin’s choice is that Kenya is generally considered a great test bed for digital innovation products on the continent. “From a business standpoint, Kenya is an excellent market to test trial and launch digital products because of the existing infrastructure and cultural normalization of technology,” he explained.

M-Pesa launched officially in 2007 as a digital financial product that allowed low-income citizens without bank accounts to for the first time quickly transfer money, pay bills, and shop online. The payment has long been praised for increasing financial inclusion in the East African country. In 2006, a year before M-Pesa’s launch, only 19% of Kenyans had access to banking services, in 2016 that figure rose to 75% and today it stands at 83%. However, even the successful digital product underwent heavy scrutiny from Kenyan regulators. Before launch, M-Pesa’s parent company Safaricom submitted a request for authorization to the Central Bank of Kenya, and per the CBK’s request, prepared a detailed risk mitigation programme while the M-Pesa system was audited multiple times by Consult Hyperion, a UK-based technology consultancy firm. In 2008, after it had gained 4.5 million active customers, Kenyan regulators called for an audit of M-Pesa’s system.

In 2015, when Bitcoin usage started spreading in the country, the Central Bank of Kenya (CBK) cautioned the public about virtual currencies. “CBK reiterates that Bitcoin and similar products are not legal tender nor are they regulated in Kenya,” a public notice issued by the CBK reads.

Like every other digital innovation product that came before it in Kenya, Worldcoin will face scrutiny. But Africa provides the best chance for the crypto project to achieve its goals. This is because countries on the continent have a high affinity for digital innovation, struggle with building robust identity systems and have low financial inclusion.

Addressing privacy concerns

Particularly, Worldcoin’s success is reliant on its compliance with the Data Protection Act 2019, a law that regulates how local and foreign companies handle and use data belonging to Kenyans, enforced by the Office of the Data Protection Commissioner (ODPC). On April 18 2023, the ODPC issued a data controller registration certificate to Worldcoin, but on August 3 Kenyan authorities made a U-turn. Kenya’s interior and information ministries in a joint statement said its registration certificate is not a valid license for the project to operate in the country. In the statement, the government ministries raised concerns about whether the consent sought from individuals was voluntary or illusionary. In an interview with NODO, Meshack Masibo, a Kenyan technology lawyer, reiterated that Worldcoin would have to prove that it collects and processes Kenyans’ personal data with their consent. “Worldcoin will be hard-pressed to prove that the users it was collecting data from were properly informed of who was collecting the data, why the data was being collected and the purpose of processing,” he continued.

Similarly, Worldcoin would have to demonstrate that it has adequate data protection safeguards for cross-border data transfers, said Masibo. This is because, on August 15, the ODPC filed a lawsuit to prevent Worldcoin from transferring data out of Kenya.

Another explanation for Worldcoin’s problems in Kenya is that the government is afraid that Worldcoin might become the country’s defacto ID, because of the financial incentive it induces. This is given Worldcoin’s relative success in the country despite the failure of the government’s digital ID project, Huduma Namba due to trust issues.

Delivering on its financial inclusion promises

“Worldcoin aims to provide universal access to the global economy no matter your country or background, establishing a place for all of us to benefit in the age of AI,” reads the project’s page. These promises might not look enticing to citizens of Western countries but they are to people in the Global South. For example, in Africa, crypto is famously seen as a survival tool, providing people in countries with weak currencies with new ways to store value and allowing people without access to financial services the opportunity to conduct transactions for low or zero fees.

Since Worldcoin considers itself a product for the unbanked, Africa remains the best place to champion that cause as over half of the population does not have access to financial services. In truth, African entrepreneurs and governments have created a tailor-made robust banking infrastructure that has helped successfully expand financial services to millions of people. Take, for instance, Nigeria’s (Nigerian Inter-Bank Settlement System) NIBBS, a platform created in 2014 to enable same-day clearing and settlement of inter-bank transfers and payments in Nigeria. With this platform, millions of Nigerians could interact with the financial system as they could easily move money around. However, this kind of effective digital financial system is difficult to replicate across the continent.

In June, after its first digital ID programme failed, Kenya announced it is working on a new digital ID project, but it is worth noting that it is not linked to a digital payment component yet. Historically, governments integrate successful digital ID programmes into digital payment systems. For example, India’s Aahaar national identity database verifies users who want to use its Universal Payments Interface (UPI), a money transfer system that has reached millions of Indians without access to banking services. Kenya’s government will want to replicate this, particularly because integration can be used for a universal basic income (UBI)—a flat amount anyone can receive—, another of Worldcoin’s core propositions. One might think a collaboration between Worldcoin and the Kenyan government to achieve such integration would be possible. But Philip Kisaka, a Nairobi-based technology expert, is sceptical about such a collaboration as their interests might not align. “So, outsourcing such a delicate administration function to a private entity might be very high risk,” Kisaka told NODO. Besides, partnering with the government is tricky because national digital ID programmes have proven to be susceptible to data breaches. In recent times, citizen data stored on Aahaar and Argentina’s Renape identity database have been hacked, with some data up for sale. But Worldcoin has an opportunity to get it right independently or collaboratively, especially as around 500 Africans still lack proper identification documents as of 2020, according to the World Bank.

According to Bill Okello, a tech lawyer, Worldcoin’s UBI proposition is its most interesting component as it prepares humans for a way to thrive in an increasingly automated world. “As the world progresses we come to a world where there will be fewer and fewer jobs that robots can’t do better than humans, so this will create mass unemployment. When there is (such) mass employment, there will be a way for governments to provide UBI,” he told NODO. While cryptocurrency complexity acts as a stumbling block to its mass adoption across the world, Okello opined that funding people’s wallets with WLD coin has successfully created a familiarity with crypto in the mass populace. “Worldcoin has extremely simplified how people interact with crypto; it’s great for financial inclusion.” It’s possible that soon, crypto perks such as instant and zero-fee transactions across the continent and world will gain great appeal to [the] masses.

Worldcoin’s success in Africa lies in its ability to surrender itself to relevant rules, regulations and audits; convince regulators it is capable of safeguarding user data; and deliver on its financial promises. The project can also play to its strength as a decentralized ID system, as it eliminates central authorizations which in turn prevents possibilities for privilege abuse and single points of failure. “As long as we have certified that our data is not being used in a way that would harm us, it’s better for Africans to have it and not need it, than for us to need it and to not have it,” Okello concluded.