Soulbound tokens, are unique and spiritual tokens that are non-transferable NFTs. What does this mean? While many NFTs can hold significance to the creator or holder with a promised layer of security, Soulbound tokens are a little different – they take it to the next level. As creator, Vitalik Buterin, the founder of Ethereum, intended it in his own way, these NFTS are “bound to your soul”.
Don’t worry, it’s not as scary as it sounds. Let’s find out how Soulbound tokens (SBTs) work and how they can potentially change our society, or at least the NFT ecosystem.
Table of Contents
- Discover the Fascinating World of Soulbound NFTs
What are Soulbound NFTs?
Soulbound NFTs can be very meaningful to the owners and can represent important milestones in one’s life such as a birth or a wedding. Creators can use Soulbound NFTs to represent significant milestones with text, images, and even videos. The Soul bound token hinges on a more decentralized society, but in the meantime, they have pioneered the concept of non-transferable tokens.
Standard NFTs are created, bought, and sold – sometimes for a profit. What makes Soulbound tokens stand out is they are non-transferable. These tokens serve as a way for an individual to create an identity digitally, update it, and even create workflows.
How Do They Work?
Soulbound tokens work similarly to regular NFTs. The Soulbound token takes verification to the next level in terms of identity and qualifications. SBTs can be issued to represent things like medical history and education credentials.
Soulbound items are created on a blockchain, just like other NFTs. Ownership of the SBT is coded onto the blockchain which guarantees veracity, it cannot be copied, and safeguards against identity theft.
Soulbound NFTs Utility and Use Cases
If you’re not too sure what SBTs can offer, let’s break down more Soulbound token use cases. These NFTs can be for personal or enterprise use. The aim is to digitize credentials, documentation, and identification.
Utilities for these digital assets include:
- Identity verification – Issued by government authorities to verify your ID
- Employment history – Issued by employers to prove work history and experience
- Attendance protocol – For schools, employment, and any organization that needs attendance
- Exclusive memberships – Private clubs and parties can provide SBTs for select individuals
- Professional certifications and credentials – Resumes and certificates issued by proper authorities can verify your abilities
Soulbound NFT Security (Social Recovery Model)
So, what happens if your Soulbound tokens are compromised or lost? Online scams, thefts, and hacks still happen, which means there has to be proper safeguards against these problems. Luckily, there is an answer, and it comes in the form of a social recovery model.
In Vitalik Buterin‘s social recovery model, users can appoint certain individuals to become their Soulbound guardians. The guardians have the ability to go into the holder’s private wallet and change the private keys. Since there can be more than one guardian, it would require a majority consensus to make the change.
This can be seen as a counter to a decentralized society because those who hold the most power still have control. However, the aim of this model is to provide a recovery process and an added layer of security at this time.
Downsides to Soulbound Tokens
Soulbound NFTs are a trailblazer and further advancement of ownership verification, but there are still some drawbacks.
As we mentioned, appointed guardians may disagree on what and how to change things, and the original SBT holder has to have full trust in the guardians. There is always a chance that a person isn’t who you thought they would be and use the situation against you and refuse to help recover the lost SBT.
In order to invoke the social recovery model, there is a certain level of privacy that the SBT holder would have to give up. The holder may have to share sensitive information that could be of concern to some.
Also, there is a level of centralization with the social recovery model, which may make a lot of crypto and NFT supporters feel uneasy.
The idea of Soulbound tokens itself is appealing, but the recovery model is where it may see its downfall and delay mass adoption.
Conclusion
Soulbound tokens and their innovative approach to securing digital assets are very inviting. The digital token is something that is highly unique, represents each individual user, and also utilizes an extra layer of security. The social recovery model also offers a way to recover lost digital assets that didn’t exist before. Exciting new developments in the digital world are accelerating, with the Soulbound token playing a crucial role in ownership and security.
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Sources:
- https://www.coindesk.com/learn/what-are-soulbound-tokens-the-non-transferrable-nft-explained/
- https://cointelegraph.com/news/what-are-soulbound-tokens-sbts-and-how-do-they-work
- https://www.kaleido.io/blockchain-blog/why-soul-bound-nfts-matter
- https://nftnow.com/guides/soulbound-tokens-sbts-meet-the-tokens-that-may-change-your-life/
