What are SoulBound tokens?
You probably haven’t heard about it, could be a popular hype word for the next set of Bullrun pump and dumps; we are all here for it anyways. In an almost 40 pages whitepaper, Vitalik Buterin alongside other authors shared the mechanics of the Soulbound token. The Canadian developer shed light on what he described as the ‘future’. NFTs are pretty special kinds of stuff; currently popularized by digital content owners creating signatures to their media, NFTs are currently important in the crypto space majorly for financial reasons. NFT collectors couldn’t care less about the technology. Billions of dollars worth of art and photography NFTs have been traded on NFT marketplaces since the concept gained fame in the last quarter of 2020.
This article reflects on other less popular but more important applications of NFTs.
Soulbound tokens (SBT) are NFTs; a unique form of NFTs. Like the common NFTs that create unique and immutable signatories for assets, SoulBound tokens are designed to certify certain personal attributes, qualifications, and identities. Soulbound Tokens depict holders’ innate abilities, qualifications that they have earned, and any other characteristics that are peculiar to them. Like a badge, they display these qualifications and features and present easy means to verify them. According to the whitepaper co-author, Glen Weyl, Soulbound tokens will be due for release in the last quarter of this year.
Normal NFTs create verifiable ownership of assets (most popularly, digital assets); Soulbound tokens create a verifiable proof of personal attributes. Soulbound Tokens (SBT) are pretty much like Non-Fungible Tokens (NFT), a big difference being the fact that they are non-transferable and are to be issued by the entity awarding the concerning qualification. Like your degree certificates, a Soulbound token confirming your qualifications can be issued by your academic institution. These tokens are unique to the holder and the issuer.
Soulbound token authentication will create a new and better way of creating and verifying credentials. Falsifying Soulbound tokens is impossible and so are the credentials they attribute to the holder. The use cases are boundless. certifications, proof of originality, proof of participation, proof of membership…
The inabilityto transfer Soulbound tokens makes them less lucrative as they cannot be traded like every other NFT, however, they weren’t meant to be traded.
Can you lose your Soulbound token? Well, the answer might be a bit complicated but; Yes, and also NO. No, because Soulbound tokens are issued to your Ethereum address and can not be moved from the address. This means that as long as you retain ownership of your address, your Soulbound token remains yours and cannot be moved. However, in case of a wallet hack or loss of wallet keys, accessing your Soulbound tokens will be impossible. This technically means that you’ve lost them, along with your address.
In the whitepaper released, the authors shared insights on a community recovery method. This explains an approach designed to recover keys to a Soulbound token through a DAO of delegated participants. The ‘community recovery’ method presents a means through which lost Soulbound token keys can be retrieved through appointed institutions or individuals who have the ability to access and change the private keys to a wallet should it get compromised. These guardians must be members of a qualified majority of a (random subset of) Soul’s communities.
When Soulbound tokens are finally rolled out, they will help fight identity theft, scams and fake certifications in crypto and mainstream systems.
