The first half of 2025 has been anything but predictable in the stock market. It seems like ages ago that concerns around Chinese start-up DeepSeek and the intensifying competitive landscape in artificial intelligence (AI) sent shockwaves across the capital markets. As investors know all too well, just about the only things economists have been talking about for almost two months now are tariffs.
In the wake of all this uncertainty in the equity market, some astute investors have turned elsewhere. Specifically, the cryptocurrency market has started to attract some new life.
Although Bitcoin seems poised to reach new all-time highs, venture capital (VC) juggernauts Andreessen Horowitz (A16Z) and Bain Capital just jointly plowed $135 million into a relatively new token called Worldcoin (WLD -0.60%) — an initiative that was co-founded by Sam Altman, the chief executive officer of OpenAI.
Let’s explore what Worldcoin is and assess why two of Silicon Valley’s most prestigious VC firms just invested in the fledgling crypto project during this period of pronounced market uncertainty.
What is Worldcoin?
Worldcoin is a cryptocurrency token that runs on the Ethereum blockchain. It serves as the transactional foundation for a project known as World Network.
To put it simply, Altman and his co-founders are seeking to build a community (the World Network) that helps solve a use case known as “proof of human.”
Essentially, by becoming a member of the World Network, each user is then granted a unique identifier known as their custom World ID. In an effort to combat the same user signing up twice or having the network comprised by artificial intelligence (AI) bots, World IDs are verified using a technology called iris biometrics (eye scanning).
Image source: Getty Images.
Why might Silicon Valley be interested?
Before joining The Motley Fool, I spent a decade working in investment banking as well as leading various financial projects at technology start-ups. Anecdotally speaking, I’ve seen VC investors become intrigued by ideas that may come across as off the beaten path. I see World Network as no different.
On the surface, World Network parallels something out of an Orwellian novel. But digging a little deeper into its purpose, I can understand the need for solving the proof of human (PoH) use case. In its initial whitepaper, World Network outlines certain functions (such as voting online) that are currently difficult to perfect due to potential breaches of security protocols.
To me, there is an opportunity here for World Network to touch a number of important addressable markets, such as digital identification, financial fraud, cybersecurity, and how each of these stitch together through the broader AI fabric.
There are some reports suggesting that interest is high for World IDs. Hence, there may have been a need for a capital infusion to fund the resources required to fulfill demand.
With that said, I can’t help but think the recent $135 million purchase of Worldcoin by A16Z and Bain Capital is anything more than a form of hedging. Said a different way, investing in the stock market right now is likely unattractive for institutional investors.
Since the venture realm is inherently risky in the first place, I think it makes more sense for funds to double down on existing portfolio opportunities, as opposed to allocating any dry powder to new start-ups with little to no traction or volatile stocks.
Should you buy Worldcoin right now?
Broadly speaking, the cryptocurrency landscape is incredibly volatile. Even established cryptocurrencies such as Bitcoin often display meme-like behavior as investors chase momentum for no tangible reason. This can make the price action of cryptocurrencies highly unpredictable.
Following news of the investment by A16Z and Bain Capital, Worldcoin rocketed by roughly 40%. Although these gains have retreated a bit, the crypto is still trading at levels that suggest some momentum is still holding (or HODLing).
One big concern I have about investing in Worldcoin is how the legal and regulatory environment will affect World Network’s ability to scale in the long run. While Altman’s prominent position in the broader AI landscape could serve as an asset, I still see the project as more of an uphill battle right now.
Although I understand why VCs are intrigued with Worldcoin, the majority of investors don’t have the same financial flexibility as these funds. Ultimately, I think investing in Worldcoin is highly speculative (even for crypto!), and I would pass on the opportunity right now.
Adam Spatacco has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Bitcoin and Ethereum. The Motley Fool has a disclosure policy.
