Step into the blockchain and Web3 world, and let’s get to know Soulbound tokens!
What are soulbound tokens (SBTs)?
Soulbound Tokens (SBTs) are non-transferable NFTs that represent the traits or reputation of a person or entity using blockchain technology. The concept of soulbound tokens was proposed in May 2022 by Ethereum co-founder Vitalik Buterin, lawyer Puja Ohlhaver, and E. Glen Weyl, an economist and social technologist.
The whitepaper, entitled “Decentralized Society: Finding Web3’s Soul,” lays out the foundation of a fully-decentralized society (DeSoc) governed by its users, and how Soulbound tokens (SBTs) can function as the credentials in everyday life.
According to the authors, the concept of soulbound tokens is inspired by the popular fantasy game World of Warcraft, where powerful “soulbound items” cannot be transferred or sold to another player once picked up.
How can SBTs be used?
Here are some examples of future use cases for soulbound tokens:
Certifications and Documentations
Another potentially promising field is certification and documentation currently collected on centralized ledgers like “behind closed doors.”
For instance, academic and medical records or certifications not applying universal standards would be recorded by SBTs, creating a “proof of history” that cannot be tampered with.
In its current form, DAO 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.
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.
SBTs vs NFTs
SBTs are not transferable and contain verifiably unique information about their owner (their Soul), such as employment or medical records, certifications and others. They are bound to a single Soul. One Soul can have several SBTs with qualitatively different pieces of information.
NFTs are transferable and contain a verifiably unique piece of information recorded on the blockchain, such as the data of a digital piece of art. They are not bound to a wallet or a single owner.
Disclaimer: Cryptocurrency is highly risky; investors may lose all investment money. Investors should study information carefully and make investments according to own risk profile.
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