All you need to know about SoulBound NFTs
Dear subscribers, I took a pause for 2 months from writing as I needed to focus on some personal matters but I am back now again with regular posts all around Crypto, Web3, NFTs and the Metaverse 🔥
Let’s dive into an interesting topic today - Soulbound Tokens (SBTs). If you have not been living under a rock for the past 12 months, you have certainly heard of the term NFT (non-fungible token). The recent use cases of NFTs have been largely profile picture projects (commonly referred to as PFP). An NFT, in more general terms, is a unique certificate living on the blockchain and containing specific information and/or pointing to specific assets. These assets can be images such as it’s often the case for PFP NFT projects but also can be video, music, or really any digital format you can think of. Each NFT is unique in itself and transferrable and can be traded similarly to ERC20 tokens for example on platforms like Opensea or Rarible.
What does that have to do with Soulbound Tokens i.e. SBTs? In short, SBTs are non-transferable NFTs, meaning they can’t be given away, traded, or taken from your private crypto wallet. The non-transferability aspect could give raise to a whole new set of use cases. Some may be tied to real-life achievements e.g. your university degree, earning a professional certification or winning an award. It does not just need to be limited to achievements but could be also tied to your personal information as well. SBTs could be used to verify your name, birthday, criminal record, medical history, nationality and more. The possibilities are endless.
SBTs make it next to impossible for people to claim false credentials. For example, in order for you to have an SBT that shows your Harvard Degree, Harvard University needs to grant you an SBT first before you can claim it.
Vitalik Buterin has coined the term Soulbound token and sees one of the use cases in fighting scams and theft in the decentralized finance world.
One of the concerns that you might see is what happens if you lose or forget the private keys and are not able anymore to access your SBTs. This is indeed a valid concern and could bring identity theft to a whole new level. Vitalik proposed for such cases to have a “social recovery model” in place where individuals can appoint a set of individuals who would have the ability to change the private keys of a user’s wallet.
SBTs and a decentralized society (DeSoc) are something Vitalik Buterin is very passionate about. There is a 37 page white paper where you can learn more about this topic. SBTs could be already available by end of 2022 according to Jason Levin and Co-Author of the paper Glen Weyl.
To wrap up, proponents argue that SBTs have the potential to make verifying information more streamlined and trustworthy. The opponents on the other hand see SBTs more as China’s authoritarian social credit system. What’s your view on SBTs and where do you see their applications and use cases?
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This is quite an interesting piece. Glad to see you back in the blog world Rizvi. Hope everything is looking up!