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What's a SoulBound Token (SBT)?

An introductory guide to SoulBound Tokens


  • The concept of SoulBound tokens (SBTs) was proposed in a recent whitepaper written by Vitalik Buterin, Glen Weyl and Puja Ohlhaver.

  • SBTs serve as a foundational element of the emerging Web3 trend called "Decentralized Society (DeSoc)."

  • SBTs are NFTs, but of a different kind. They are non-transferable, publicly verifiable digital tokens.

  • SBTs expand the use cases of NFTs. They can be used for immutable records such as work history, work experience and academic credentials.

  • These tokens can be used in fields such as education, professional spaces (as digital resumes), and memories of participation in important programs/events. They are perfect vehicles to serve as proof of knowledge.

  • Many NFT projects are using Soulbound Tokens to reward/consolidate their communities.

NFTs are transferable

NFTs have been used mainly in fields such as art, real estate, gambling and the sale of collectibles, emphasizing ownership of something of value. However, NFTs can be traded to anyone willing to buy them, which assumes that anyone can own an NFT. This means that their usefulness is limited to demonstrating ownership, but not to demonstrating "earned" attributes, such as skill, experience or knowledge.

A good example of this can be illustrated using the proof-of-attendance-protocol (POAP) idea, in which participants in an event receive digital mementos or badges for showing up. If it is sold as an NFT to other people, the buyer becomes the owner even if he or she did not attend the event. With the current dynamics of NFTs, an individual's unique merits or credentials can be transferred to others. This creates the problem of authenticity because there is no way to prove the credibility of these badges. In an attempt to solve this problem, Soulbound tokens come into play.

What are SoulBound Tokens?

In a recent white paper Vitelik Buterin, Glen Weyl and Puja Ohlhaver discussed the possibilities of creating a decentralized society (DeSoc) and Soulbound tokens (SBT). The name was coined from the game World of Warcraft. SBTs are non-transferable NFTs held by a private cryptographic wallet known as Souls.

Soulbound tokens are non-transferable; once acquired, they will always be tied to one's personal wallet and identity and cannot be sold or given to third parties.

This makes them ideal for digitally representing assets that cannot be purchased, such as certificates of competence, reputation, medical records, etc.

The fact that they are non-transferable means that, as in the previous examples, they are tied to the user for life. The owner of the token can then control who has access to the data in the token and can also revoke that access when they see fit. SBTs thus offer a solution for people who want maximum control over their personal data because they allow them to be managed in tokenized form, rather than stored in a central database.

Limitations of SoulBounds

Based on the presentation by Buterin and his co-writers, there were questions about issues such as loss of keys. If one cannot access one's original wallet-and SBTs stored there cannot be transferred to another wallet-will users "lose their souls" forever? Moreover, the sensitive nature of the information that would be stored there raises serious security considerations about the use of SoulBound Tokens.

In the case of the first, Buterin and his team demonstrate that SBTs have a recovery mechanism designed to ensure that the drums are retrievable through a specific "guardian" chosen by the key owner. Regarding the second, they state that SBTs have the option of being public or private, depending on the user's discretion. This helps to protect users and their data from online exploitation.

In addition to the above, there has also been speculation that these use cases may have negative repercussions, such as the creation of a "social credit system." China is developing a kind of social credit system, culminating in a social credit rating or blacklisting depending on the user's conduct. Each individual's online handle will be associated with a real ID, and all data about that person will be stored online. In this way, people with a problematic history can be easily identified, which raises ethical questions about privacy and how these tokens would be used.

The future of SoulBound

Let's go back to the beginning. The goal of blockchain is not just to store value, but to enable ordinary people to have sovereignty over their data and how it is used. With the advent of SBTs, the average individual is in charge of his or her own data and can decide both how to manage it and who can access it - something that may seem small, but is a huge step forward from the centralized model of data storage that we currently accept.

In other words, SBTs are the logical next step in the quest for true blockchain decentralization. Where do you think they will take us?


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