What is Soulbound Token (SBT)?

Soulbound Token is a unique type of Non-Fungible Token (NFT) invented by Vitalik Buterin, co-founder of Ethereum, and has a very important feature.

Consider a digital badge of honor permanently associated with your online persona that showcases your accomplishments, experiences, and connections. What we are talking about is the potential of Soulbound Token (SBT), which is a different concept in the world of blockchain technology.

Invented by Ethereum co-founder Vitalik Buterin, SBTs are a unique type of Non-Fungible Token (NFT) with a very important feature: they are non-fungible. Unlike regular NFTs traded on markets, SBTs are forever tied to your digital wallet and act as a permanent record of your online journey.

Think of these as virtual badges of honor that represent:

Credentials:

Earned college degrees, professional certifications, or completed online courses.

Memberships:

Membership in communities, participation in DAOs, or participation in certain events.

Good luck:

Completing a marathon, winning a coding competition, or contributing to an open source project.

So why the “soul bound” part? The term is borrowed from online games where powerful items cannot be traded or gifted, reflecting the personal significance of these tokens.

What are the effects of SBTs?

Decentralized Reputation:

SBTs can create a more trustworthy online environment by providing verified, immutable records of achievements and commitments.

Decentralized Society (DeSoc):

They serve as building blocks for DeSoc, envisioned as a future where individuals can independently manage their online identities, independent of centralized platforms.

New Use Cases:

Imagine applying for a job where your work experience is displayed as Soulbound Tokens, or gaining access to private communities based on the badges you've earned.

Challenges and Things to Consider:

Privacy Concerns:

Balancing transparency with personal data control is crucial.

Standardization:

Different SBT standards are emerging that require technical solutions for interoperability.

Governance:

Who decides who issues SBTs and how they are maintained?

Decentralized Society:

How Can SBTs Shape Our Future?

Decentralized societies, often referred to as DeSoc, envision a future where individuals have much greater control over their online identities and data, free from the clutches of centralized platforms. SBTs (Soulbound Tokens) are seen as important building blocks in this new paradigm and offer several unique features that make them perfectly suited to DeSoc:

Non-Transferable IDs:

Unlike ordinary NFTs, SBTs are permanently attached to your digital wallet and represent your unique experiences and achievements. This creates a more authentic and reliable representation of your online self, as opposed to easily manipulated profiles on centralized platforms.

Reputation and Trust:

Verified SBTs can promote trust and transparency in DeSoc communities by showcasing your skills, contributions, and connections. Imagine joining DAOs where voting power is linked to specific SBTs representing relevant expertise, or accessing private forums based on earned badges.

Governance and Participation:

SBTs can be used to define ownership and voting rights in DeSoc governance models. Community members with specific SBTs that represent their history of participation or contributions can have a say in decision-making, leading to more democratic and decentralized systems.

Community Building and Collaboration:

Joint SBTs within communities can create a sense of belonging and foster collaborative efforts. Imagine using SBTs that indicate common interests to find like-minded individuals, or participating in projects where team roles are assigned based on relevant SBTs.
Data Ownership and Privacy: DeSoc aims to provide individuals with control over their data. SBTs can selectively store information, revealing only what is needed in certain contexts, while maintaining ownership and confidentiality of sensitive data.
SBTs are still in their infancy, but their potential to revolutionize online identity is undeniable. As the technology matures, overcoming challenges and navigating ethical considerations will be key to unlocking the true potential of this innovative token.


Vitalik Buterin's article “Decentralized Society: Finding the Soul of Web3”
ERC-725 standard for SBTs
Projects like Proof of Humanity and Coordinape exploring Soulbound Token use cases