Soulbound Token (SBT) vs Non-Fungible Token (NFT)
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Key Characteristics
SBTs are non-transferable, and represent the traits of a person or entity in the Web3 world. Moreover, when Decentralized Society becomes a reality, and if your private key is lost, your SBT can still be recovered using the social recovery approach. Otherwise, NFTs are transferable, and demonstrate ownership of specific items. Also, if your private key is lost, the NFT cannot be retrieved because it is not bound to a wallet or a single owner.
SBT Use Cases
Certifications and Documentations
Another potentially promising field covers certification and documentation currently collected on centralized ledgers like “behind closed doors.”
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For instance, academic and medical records or certifications not applying universal standards would be recorded by SBT, creating a “proof of history” that cannot be tampered with.
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DAO
In its current form, DAOs are vulnerable to Sybil attacks, or spam that allow attackers to create multiple wallets to have more voting power. With soulbound tokens, the DAO would be able to distinguish between real Souls and fake wallets.
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Proof-of-Attendance
Equally interesting would be proof of attendance records of real-life or digital events, similar to a Proof of Attendance Protocol (POAP). For instance, academic attendance could be recorded with a soulbound token, connecting it to a student’s academic record, and later, to their record of employment.
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NFT Use Cases
Collectibles
NFTs are used as a new form of collectibles. For example, buying an NFT of your favorite celebrity or athlete. Also, NFTs can offer traditional collectibles, such as coins or stamps a new lease of life by bringing them into the digital world.
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Gaming
NFTs for video games combine aspects of art, collectibility, and utility for players. NFTs can be decoration for player characters, or offer utility within the game itself. For example, The value of each pet in CryptoKitty, a play-to-earn game, depends on a combination of rare looks, features, and utility.
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Finance
In decentralized finance (DeFi), NFTs are utilized to earn financial benefits. For example, JustLiquidity, Julwallet’s developer, introduced an NFT staking model. A user can stake a pair of tokens in a pool for a certain period of time, and receive an NFT to access the next pool.
In this context, NFTs can be compared to an entrance ticket, which will be destroyed once the user accesses the new pool. In this case, the destroyed NFT is not burned but sent to the secondary market.
Where to find SBT and NFT
SBTs can be issued on the blockchain by any entity with specific purposes. Meanwhile, NFTs can be bought at NFT marketplaces such as OpenSea or Decentraland marketplace
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Data from
https://cointelegraph.com/…/what-are-soulbound-tokens…
https://www.coindesk.com/…/what-are-soulbound-tokens…/
https://coinmarketcap.com/…/what-are-soulbound-tokens-sbt
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Disclaimer:
Cryptocurrency is highly risky; investors may lose all investment money. Investors should study all the information carefully and make investments according to their own risk profile.
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