For the past several months, a revolutionary form of NFTs dubbed “Soulbound Token” (SBT) has garnered attention from across the ecosystem. These one-of-a-kind tokens are nontransferable and use blockchain technology to store personal information related to identity and data storage – providing an effective solution for such issues. Although this idea is extremely promising, it needs some adjustments before implementation.
What Are These Soulbound Token?
In January 2022, Vitalik Buterin introduced the Soulbound Tokens (SBT) concept. On May 11th, he unveiled a powerful manifesto: “Decentralized Society: Finding the Web3’s Core.” These NFTs are attached to an address when distributed; as such, they’re non-transferable and will stay in possession of their owner for eternity. They do not contain any monetary worth and can’t be traded or swapped after being issued into one’s wallet.
Blockchain technology allows a company to easily utilize personal identities, such as medical records, for employee referencing and memberships in associations or other organizations. These records are invaluable sources of information that can be effectively utilized with the help of blockchain technology.
From Health to ID Authentication, There Are Countless Uses of Souldbound Tokens
Imagine how much easier healthcare, education, and job applications could become with the help of Soulbound tokens. This system would streamline updating and sending CVs across sectors. With SBTs issued by previous employers or institutions, applicants can present all their work history & professional certificates – enabling doctors to change quicker, making appointments more swiftly; appointment reminders will be sent in no time! You no longer need to go through long, complex, expensive processes for information validation— Soulbound tokens do it for you.
Moreover, with SBTS, the profile of participants participating in a DAO can be ensured due to its public and verifiable nature. If the purpose is the massive distribution of governance power, transferability must be avoided, as powerful interests are more likely to acquire governance rights from others. Additionally, numerous potential uses of Soulbound tokens, such as banking systems or subscriptions, could benefit from this technology, like copyright protection, etc.
However, Soulbound Tokens Have Problems That Need to be Solved
Utilizing Soulbound tokens carries certain risks, such as potential privacy breaches. Depending on the type of the token issued, a holder may have sole permission to access it and its contents; this includes passports or medical records that are classified as confidential information. Other types of tokens can be made public if an individual wishes since data is stored off-chain.
Discrimination and targeted cyber attacks present a major hurdle to recovering lost “Souls” and precious single-issue Soulbound tokens, such as diplomas. As such, it is important to have reliable recovery solutions in place. Purists are advocating for a network validation solution that would allow accounts to be voted back into existence.
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