Privacy economics vs doomcoins, snitchcoins, and pocket cops

Fuelled by old surveillance money, two new Web3 projects, Worldcoin and Arkham, seem set on replicating the surveillance state and surveillance economy in a tokenised and supposedly decentralised form.

The game is set between incentivised surveillance vs incentivised privacy — choose your token, pick your future! It’s time to decide whether the future of Web3 fulfils its potential, doing away with the issues of Web 2.0 — or merely becomes a gamified replica of existing social problems.

Before delving into what is at stake in these new gamified surveillance dynamics, let’s zoom out for some historical context.

The new snitch economy, same as the old snitch economy

It all began with an alliance between big technology companies, government and security agencies in the US: regulators eased up on privacy protections while Google, Facebook and Amazon rolled out their platforms and began gathering immense amounts of information about people, which could then be used for intelligence purposes. This model was then replicated by new startups and the past two decades of the internet has been run on the surveillance business model, where platform companies offer ‘free’ digital services while profiting from user’s data.

The surveillance economy demanded more data, which led to interface designs and algorithms created to ensure people would spend more and more time on platforms, willingly, scrolling, clicking, liking, chatting and uploading information about themselves. Technology companies started to make serious money and a whole data economy emerged, now worth 3 trillion dollars. Investors made a lot of money too, including Peter Thiel, investor of Facebook, the platform supposedly facilitating friendship and community. He co-founded Palantir, the private intelligence company, indeed selling your friendships and ‘likes’ as intelligence, profiling and targeting technologies to government and private agencies.

Fast forward to today and all the information produced and gathered through this surveillance business model has been fed to machine learning algorithms and giving rise to new businesses, including Sam Altman’s OpenAI, which spurred him to create Worldcoin, which launched earlier this week. And as it turns out, OpenAI as well as Palantir are both investors in Arkham, last week’s token launch for a decentralised intelligence dox-and-earn marketplace.

Is the surveillance economy from Web 2.0 being repackaged and decentralised into a snitch economy for the new Web3 era? Let’s take a closer look.

Arkham snitchcoin

The ARKM token was launched last week powering the Arkham exchange. Billing itself as a way to ‘deanonymise the blockchain’ with the ‘world’s first on-chain intelligence marketplace’, the Arkham Exchange uses a ‘bounty mechanism’ to ‘match buyers and sellers of on-chain intelligence’. What this means is that anyone can flag a target for investigation and others can earn payments by revealing that information, thereby earning ARKM ‘snitchcoins’.

The launch sparked understandable outrage across the Web3 industry. Looking more closely, Akham is hardly worse than the already existing 3 trillion dollar data economy. The Web 2.0 data economy has platforms and data-brokers selling information about people, used to profile and target them for commercial or intelligence purposes. Arkham merely makes the intelligence markets available to ordinary people: a decentralised, open version of the Web 2.0 surveillance economy. What’s painful about this is that Web3 was supposed to be different.

So far, over 52,444 wallets have essentially doxxed themselves, by claiming tokens following the release of Arkham’s ARKM. This is incentivised surveillance, the snitch economy in action. People love free money and will do many weird, wonderful and self-doxxing actions just to get some. Which means economic incentives can be used to engineer many types of outcomes especially when they are rolled out with a clever bit of PR. One of the main funders of Akham may have just done that with their own project, Worldcoin, that launched this week.

World(doom)coin

A clever PR technique involves declaring and amplifying a problem, and then swooping in as the saviour offering the solution. And indeed, the current debates around AI have the mediascape divided between economic and scientifically informed critiques and doomsday declarations.

Leading up to the launch of Worldcoin were a flurry of headlines quoting OpenAI CEO Sam Altman lamenting the jobs losses and other harms foreseen to be unleashed by the powers of AI. And sure enough, after amplifying this doomy narrative, Altman swoops in with a solution: a global Universal Basic Income (UBI) powered by World(doom)coin.

In order to gain eventual access to this UBI, users need to sign up to a ‘World ID’, a digital identification system. The system has people handing over iris scans to the company via ‘Orbs’, devices that scan people’s irises. The idea is to create ‘proof-of-personhood’ via these eye scans using zero knowledge cryptography, although of course, while the Iris is a complex biological design, it can be spoofed just like anything else.

Nym CEO Harry Halpin told The Block in July: “We did not create cryptocurrency to allow Sam Altman to create a giant welfare state. Technologically it’s dangerous. Worldcoin is an example of zero-knowledge washing — taking a fundamentally evil or dubious concept and trying to make it look socially acceptable by adding some zero-knowledge fairy dust on top of it.”

If Arkham is the decentralised version of Web2.0 surveillance markets, Worldcoin amounts to a Web3 welfare state minus democracy. And indeed, zk-technologies are increasingly used to privacy-wash projects — enabling the consequences of surveillance to continue, while hiding its mechanics. Although some of Worldcoin’s infrastructure may be decentralised, the project, in effect, centralises the collection of biometric data, using the language of Web3 to attack its first principles.

There are other, actually decentralised UBI systems out there, not least Circles, friends of Nym, where decentralised networks of trust are used instead of biometrics. Read their Blackpaper released earlier this year.

And there are also projects seeking to actually make AI open as a resource for the benefit of everyone, not least Gensyn, also friends of Nym, who subscribe to the first principles of Web3.

The game is on — choose your token, choose your future

Web3 tokens fluctuate in economic value, but they have fairly stable values, in the sense that tokens incentivise specific projects that have real world effects. Which token you hold, trade and stake has an impact on the future of digital infrastructures and the people who use them.

When token economics were first invented in Bitcoin, the aims were threefold:

1.. To create a peer-to-peer digital cash system, to prevent mass surveillance as global commerce became increasingly digitised; 2.. That the money creation would also bootstrap an open infrastructure by incentivising people to run it (mining rewards); 3. That these inherent incentives provided by the system itself, would ensure its economic independence from external influence. 4. These core values of privacy, autonomy and economic independence continue to resonate with most of the Web3 industry today. So it is no surprise that Arkham and Worldcoin have not received a warm welcome by much of the industry.

The first principles in terms of engineering unleashed a whole industry and experimentation in token economics and incentive design. As token economic engineering principles, they could be directed at pretty much anything. Economic incentives are economic incentives after all, and have become a tool used for rewarding any type of behaviour. The game is now on to ensure value flows in the direction of the values that we want to see reflected in the future of the internet.

Choose your tokens — choose privacy and freedom over surveillance and doom.

The coming pocket cops…

Another major development these past weeks has been on the regulatory front, with both the UK and EU continuing their push for client side scanning. Stay tuned for a breakdown. Meanwhile, join the Nym community and participate in surveillance-proof token economics.