Soulbound tokens, according to co-founder of Ethereum Vitalik Buterin, are non-transferable NFTs that can be used to reflect a person's identity and accomplishments in Web3. What Are Soulbound Tokens? What Does Non Transferable Mean? We'll see.
What Is A Soulbound Token?
Buterin first introduced the idea of "soulbound" assets on the blockchain in a blog post from January 2022. In it, he described how the well-known fantasy game World of Warcraft has potent "soulbound goods" that, once acquired, cannot be traded or sold to another player.
“NFTs in their current form have many of the same properties as rare and epic items in a massively multiplayer online game,” he wrote, before describing some of their shortcomings. “While transferable NFTs have their place and can be really valuable on their own For supporting artists and charities, there is also a large and underexplored design space of what non-transferable NFTs could become.”
This idea was expanded on by Buterin and his colleagues in a May 2022 paper titled “Decentralized Society: Finding Web3's Soul.” Digital non-transferable tokens that stand in for social identity in a decentralized society are referred to as soulbound tokens.
The accounts known as "Souls" will hold or issue SBTs that represent an individual holder's "commitments, credentials, and connections" in the paper's hypothetical decentralized society. “Such tokens would be like an extended resume, issued by other wallets that attest to these social relations,” the authors explain.
SBTs can, in the most basic sense, be "self-certified" in the same way that a person can add their educational background or professional experience to a CV. Similar to how a university can provide a graduate with a certificate for successfully completing their studies, SBTs may similarly be awarded by Souls acting on behalf of people, businesses, or organizations.
What Does Non Transferable Mean? Can you buy soulbound tokens?
Soulbound tokens(Non-Transferrable NFT) cannot be bought and sold and are not designed to have market value. Instead, they might be given out by people or by another organization to mark an accomplishment.
Idexo, an NFT innovation platform, asserts that it introduced the initial soulbound token in April 2021 before the concept was given a name. Its non-transferable Early Adopter NFTs are linked to the holder's Telegram login and were issued on the Binance Smart Chain.
The community can now create SBTs on several blockchain platforms thanks to Idexo's recent addition of SBTs to its software development kit.
The Bottom Line: What Are Soulbound Tokens? What Does Non Transferable Mean?
The white paper claims that Souls and SBTs will be the foundation of a decentralized society that is characterized as a "transformative, pluralist future" in which personal ties and social interactions are crucial building blocks for your Web3 identity.
Through the establishment of provenance and reputation, soulbound tokens can assist in resolving the problem of trust in Web3. Since they cannot be transferred, there is less chance that individuals will try to manipulate the ecosystem by purchasing status or fabricating accomplishments. As a result of A more intensive process of identity theft and impersonation, this may also reduce the frequency of Web3 scams.
By the end of 2022, according to one of the white paper's authors, Eric Glen Weyl, SBTs will be accessible for initial use cases. According to a September 2020 announcement from cryptocurrency exchange Binance, users that meet know-your-customer (KYC) requirements will receive soulbound tokens on the BNB blockchain.
For SBTs and the development of a truly decentralized society, privacy is still a problem. However, soulbound tokens have the potential for large-scale utility.
