This is a fascinating question so I’m glad you asked me. I think it’s actually one of the biggest enduring misconceptions in the crypto space, that you can plan for a distributive outcome by setting some initial parameters and letting the system go from there. Well, this idea is far greater than crypto of course – it’s the foundation of, for instance Rawlsian liberalism (you can try to design the political economy of society in such a way that ultimately minimizes inequality). I would say the notion of liberalism in general ultimately boils down to: humans have equal capacity and dignity, there are no natural hierarchies, and the political and economic structure of society can and ought be set up such that each individual is put in a position to thrive. More perniciously, we have collectivist concepts which have been attempted for over a century whereby the distributive outcome in society is considered too unfair to be fixed incrementally, and all existing power structures must be overturned in order to derive a new distributive outcome. This is socialism, or as it is actually politically imposed, communism. The alternative school, which I belong to, is that you can’t plan for specific egalitarian outcomes, and that we have 100 years of evidence of tinkerism that it doesn’t work. Instead, you give people the tools to be meaningful economic agents themselves and have ownership of their labor. From there, wealth is created. It’s undeniable that the capitalist system which is responsible for industrialization and modernization is responsible for the vast majority of scientific and technological progress, whereas socialist systems did relatively little to add to that total. As far as I’m concerned, the ingredients for success (and thus, strong distributive outcomes) are political stability, cultural coherence, a respect for property rights (so that individuals are incentivized to build things, as they know they will be able to retain them), free trade and commerce, and the existence of capital markets. But even with these pillars present, you can’t plan for a specific distributive outcome – you merely have a society that experiences growth and collective advancement, and hopefully the government at that point has the resources to take care of the least well off, within reason.

Now what does this have to do with crypto? Well the question you’re asking me – about a technical system that can cause resources to be allocated, persistently, in a specific way (in an egalitarian manner) – is the same question that we have been asking ourselves for hundreds of years, especially as the battled has raged between collectivists and free marketeers. The answer is of course… you can’t plan for an egalitarian outcome. To do so would only be possible through tyranny, because humans are so diverse and have different inherent abilities to generate economic output. A setting where wealth settles through society in an egalitarian manner is only possible if you forcibly deprive everyone above the mean of their wealth – but that’s not a recipe for a healthy, productive society as we know. The main motive which drives progress, and R&D, and innovation, is the entrepreneurial spirit, and that only exists where founders know they will be able to reap the fruits of their labor.

I’ll be more concrete. When the Soviet Union collapsed, a question existed as to how we might distribute equity in all the factories and companies that were previously owned by the government. In the end, it was decided that the workers themselves would get vouchers which represented stock in these companies. So if you had been working in the factory throughout the USSR, you were now eligible for your pro-rata share of that factory itself. So today, Russia is one of the most egalitarian societies out there, right? Wrong. The vouchers were bought up for pennies on the dollar by local oligarchs or opportunistic hedge funds, leading to more concentration of wealth. Most people didn’t know what they were worth and had no thought of owning equity. For them being able to liquidate the vouchers and get a small immediate payout was worth it. Plus, they had no trust in the state. Who knows if the voucher would be worth anything in 10 years? Might as well sell it now.

But doesn’t the initial distribution for a new cryptocurrency really matter? Even though this is a strong part of Bitcoin’s founding myth, I’d say no. As you note, it really was insiders (basically people that read the cypherpunk mailing list or various niche libertarian and cryptography forums) that got a huge fraction of all the BTC “for free”. 50% of all BTC were issued in the first 4 years, for virtually nothing. What I would say matters is the direction of travel, not the initial conditions. Bitcoin has the very neat feature whereby the minters of the coins are not particularly privileged. Mining is almost perfectly competitive, and no miner really dominates – not for long, at least – and miners have thin margins and frequently go bust. This means that miners tend to be only temporary custodians of those newly issued Bitcoin, and none of them gain enough stature whereby they can use their protocol access to get super rich and then change the protocol in their favor. Staking, by contrast, is largely the opposite (in my opinion). The direction of travel for PoS, ceteris paribus, is weakly concentrative. Because the set of privileged entities that can stake at scale is a regulated function – basically, exchanges, asset managers, and custodians. And in those lines of business there are returns to scale, and it does pay to be large and politically important. So to summarize my view, you can improve things at the margin by making sure the business of seigniorage (creating the new units of currency) is a competitive one. This makes sure you don’t create a permanently privileged class that is able to harvest wealth from the protocol and turn it into political power. PoW accomplishes that – any open, competitive process does. But aside from that, you can’t make a grand plan to have your token be held equally by everyone globally, no matter how intricate your airdrop. This is for the same reason that you can’t make everyone the same IQ, height, skin color, attractiveness, and so on.

What about Worldcoin? Well Worldcoin will likely fail for two reasons: 1) the world doesn’t need a new free-floating SoV coin (this is obvious), and 2) just initially distributing the coin in a sybil resistant way is no guarantee that people will care about the coin and hold on to it and keep using it. 1 is trivial, Worldcoin has no theory whatsoever of why it should be valuable beyond “investors want to make money”, 2 is a bit more subtle. Recall the Soviet voucher privatization. Most people just sold theirs for pennies on the dollar because they didn’t know what it was worth, they weren’t in the business of speculation, and they had a shorter time preference. Foreign hedge funds came in and bought a lot of the vouchers because they were more sophisticated and understood the arbitrage. Oligarch robber baron types also ended up with a lot of vouchers through intimidation and coercion. So consider Worldcoin. I’m a Somalian and I scan my eyes. I get $20. Am I going to hold it in some complicated free-floating crypto that I don’t understand the value or prospects of, or am I going to sell it for USD cash, which I can use to buy cigarettes with today? The latter obviously. Just because Worldcoin is able to bribe people to scan their eyeballs doesn’t mean that they can force everyone to gain an equal understanding of the value and trajectory of the token and to gain sufficient technical competency to hold and use it. So Worldcoin thinks they’re solving the problem of sybil resistance in the issuance of scarce economic units, but what they’re actually trying to solve is the problem of people having different wants and needs, different economic circumstances, different time preferences, different risk tolerances, and different desires to speculate. That latter “problem” can’t be solved. It’s just natural human diversity.

So how would I distribute a new crypto token? The truth is, it doesn’t matter. If it becomes economically consequential, early insiders will sell out and the supply will naturally disperse that way, as the general population decides it’s worth owning some. Of course, this is a messy process – look at spontaneous dollarization in countries with failed currencies, the people who realize the direction of travel first end up doing best – but it can’t be any other way. If there is to be another SoV currency, some early insiders will get rich. That’s not something that can be planned out of the system.

One coda on proof of personhood though. I am actually intensely bullish on the idea, but not for distribution of new coins. Rather, as a way to solve the epistemic uncertainty that derives from the rise of cheap AI content. Historically, it was relatively hard to forge content, especially audio and video (and even photos). This is now trivial – effectively costing 0. So just in the last couple years, we have entered a new age of uncertainty. Some may worry that no digital content will ever be reliable ever again. But this is wrong. In fact, we’re merely in a brief interlude between two ages of certainty. And the coming age of certainty will be far more concrete than the previous one (which was dependent on the cost to doctor content). The way we will achieve this is not by proving that some content is AI generated (this is impossible), but rather by committing to all content that we want to later prove is authentic. This function will be incorporated into your devices, so you will simply have the option to sign a photo with your biometrics when you take the pic, and to insert a hash of the photo on chain. Video might be more technically challenging but still doable. Text is trivial. So biometrics and proof of personhood will be very important, but not for currency distribution. Rather, for selectively proving that certain content is authentic and was created by a human (or at the behest of a human). This will probably be a reality within 12 months.