Worldcoin, which rebranded as “World” in October 2024, is facing a storm of legal battles, privacy violations, and public backlash, and for good reason. Founded by Sam Altman of OpenAI fame, the crypto venture promised a futuristic solution: biometric verification via iris and face scans, in exchange for a digital ID and free tokens. The idea seemed almost too good to be true—until it became clear that Worldcoin had failed to protect its users’ most sensitive data.
Governments worldwide are slapping fines and blocking Worldcoin’s operations for violating privacy laws, and it’s no wonder. The core issue? Worldcoin’s systemic failure to keep user data safe. And the bigger problem? Worldcoin is just one of many ventures trying to revolutionize digital identity without considering the real-world privacy and security risks. If we’re serious about adopting blockchain for everyday use, privacy can’t be an afterthought.
The Worldcoin Privacy Fiasco: A Warning Shot for Blockchain Projects
Worldcoin’s troubles began with its so-called “black box” architecture. The World Chain blockchain, built on Ethereum as a permissioned layer-2 network, allowed only a select group of insiders to run the network’s nodes. These insiders had exclusive control over verifying transactions, leaving the system open to attacks and making it almost impossible for outsiders to trust the network’s integrity. This flies in the face of blockchain’s core values of decentralization and transparency—values that are essential for fostering trust in any technology, but especially in systems handling sensitive personal data like biometric identifiers.
The whole approach of limiting access to trusted “nodes” and operating a semi-private blockchain for biometric data goes against the ethos of public, permissionless blockchains. If blockchain is supposed to decentralize power and offer transparency, locking biometric data away from public scrutiny is a dangerous step in the wrong direction.
ZK Technology: Not a Magic Bullet for Privacy
At the heart of Worldcoin’s pitch was ZK (zero-knowledge) technology—a cryptographic method that allows information to be verified without revealing the underlying data. ZK technology has been hailed as the savior of biometric privacy, but it’s not as flawless as the hype suggests. While it can confirm that someone’s identity is valid without exposing sensitive data, it does not solve the fundamental problem of how to securely store that data in the first place.
In a now-updated blog post, Worldcoin promised to delete user data once it had trained its models, but the major leak of user data pointed to something far more troubling: the ZK-proofs may not have been properly isolated within a secure, closed-loop system. In simple terms, the data wasn’t protected as promised, and it got out—undermining the whole premise of privacy by design.
The Growing Need for a Better Biometric Identity Solution
The Worldcoin saga may have been a mess, but it’s also driving innovation in how we handle biometric identity data on the blockchain. Other projects, such as Fractal ID, have emerged with the aim of building a more secure and interoperable decentralized identity system. But even Fractal, which offers KYC (Know Your Customer) solutions, faced a massive breach in 2024 when hackers stole 10GB of data from 300,000 users, including personal photos and financial documents. While Fractal’s efforts represent a step in the right direction, this breach highlights the ongoing vulnerability of biometric data onchain.
Biometric data—whether it’s fingerprints, facial scans, or iris patterns—requires an added layer of protection beyond just encryption. It needs to be secured in a way that ensures it can’t be easily exposed or exploited if a breach occurs. This is where the latest advancements in encryption technologies come in.
Why ZK + Fully Homomorphic Encryption (FHE) Could Be the Future
Zero-knowledge proofs (ZK) are a powerful tool for verifying the validity of data without revealing it. However, ZK is only part of the puzzle. The real breakthrough comes when ZK is combined with Fully Homomorphic Encryption (FHE). FHE allows computations to be performed on encrypted data without decrypting it, meaning the sensitive information is never exposed, even during processing. This is a game-changer for biometric systems, as it prevents the creation of centralized vulnerabilities that hackers typically target.
When combined, ZK and FHE offer a double layer of security for biometric data. With ZK handling verification and FHE ensuring computations can be done without exposing the underlying data, biometric data can be kept private and secure at every step. This approach would allow for digital IDs that protect user privacy while ensuring data integrity and security. It’s the kind of robust, future-proof solution that projects like Worldcoin should have been working toward from the start.
Building Privacy Confidence: Why Transparency Matters
The future of biometric IDs isn’t just about protecting data—it’s about rebuilding trust. For digital identities to gain widespread adoption, users need to have confidence that their personal data is being handled securely. Unfortunately, the lack of transparency in Worldcoin’s operations only eroded public trust, especially when it became clear that user data was mishandled and exposed.
For privacy technologies to be effective, they must be easy to understand and verify. Projects that collect biometric data must prioritize transparency at every stage, from data collection to processing and storage. In other words, we need a new framework for privacy stacks—one that combines cutting-edge technologies like ZK and FHE while ensuring that users have a clear understanding of how their data is being protected.
Next Steps: A Privacy-First Future for Blockchain
In 2024, we’re already seeing some promising use cases for the combination of ZK and FHE, including blockchain record-keeping initiatives in India and secure land registries operated by non-governmental organizations (NGOs). These early successes show the potential of combining these technologies to create secure, transparent, and scalable solutions for digital identity and other privacy-sensitive applications.
But as the Worldcoin debacle shows, we must do better. Blockchain-based biometric IDs hold enormous potential, but we need to build with privacy in mind from the very beginning. We need privacy solutions that don’t just promise security but deliver it—solutions that incorporate multiple layers of encryption and avoid single points of failure. If we want the crypto industry to live up to its potential, we need to move beyond the hype and tackle privacy as a core challenge, not an afterthought. The clock is ticking, and we can’t afford another privacy catastrophe.
