What Are Soulbound Tokens (SBTs)?
A non-fungible token (NFT) is a digital asset stored on a blockchain. NFTs have unique metadata and identifiers encoded within them which distinguishes them from other tokens and this data cannot be falsified. NFTs are transferable, never being tied to one person or group.
Souldbound tokens (SBTs) are non-transferable NFTs. The idea behind them lies in issuing and verifying personal information such as education, university degrees, licenses, medical history, and certifications through the use of blockchain technology to secure the data.
The term ‘Soulbound’ is derived from World Of Warcraft, where an item once picked up, cannot be transferred or sold to another player.
How Do SBTs Work?
Soulbound tokens were first proposed by Ethereum co-founder, Vitalik Buterin in January of 2022.
SBTs are stored within a ‘Soul Wallet’ or just ‘Soul’. SBTs would be issued by a company, school, or organization as proof of affiliation within a certain program, course, or event.
These tokens are verifiable on a blockchain and cannot be sold for a higher price, making it impossible to fake their credentials. Although, SBTs can possibly be revoked by the issuer.[1]E. Glen Weyl, Puja Ohlhaver, Vitalik Buterin – Decentralized Society: Finding Web3’s Soul – Page 3
Souls will only portray information that a user is comfortable sharing online.[2]E. Glen Weyl, Puja Ohlhaver, Vitalik Buterin – Decentralized Society: Finding Web3’s Soul – Page 5 Although, if smart contracts need to verify an SBT held within the wallet, they can do this without ever seeing it through the use of a zk-SNARK.[3]Vitalik Buterin – Soulbound
Can You Recover SBTs?
With SBTs potentially playing a huge part in your identity, there is concern about losing access to these tokens.
Social recovery methods are emerging to become an alternative to current recovery methods, in which people rely on people they trust to initiate the recovery of their wallets.
Users would be able to minister a set of “guardians” such as close friends, family, other wallets or institutions who could authenticate the owner of the Soul. [4]E. Glen Weyl, Puja Ohlhaver, Vitalik Buterin – Decentralized Society: Finding Web3’s Soul – Page 6This would allow guardians, through a majority, to change the keys of the wallet, although retaining a high number of guardians from various social circles to avoid conspiracy is a necessity.[5]E. Glen Weyl, Puja Ohlhaver, Vitalik Buterin – Decentralized Society: Finding Web3’s Soul – Page 6
Although this method distributes the points of failure, recovery is still dependent on “curating and maintaining trusted relationships with a majority of guardians.”
When Will SBTs Be Available?
“Decentralized Society: Finding Web3’s Soul”, a whitepaper co-written by Vitalik Buterin describes that SBTs are a key part to create a decentralized society. Fellow co-author of the whitepaper, Glen Weyl predicts that SBTs will be available for early use by the end of 2022.
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