Not For Sale: Soulbound Tokens
A new type of NFT has recently been conceptualized and found some utility on Web3. The idea comes from Ethereum’s Vitalik Buterin, and the token seems to be catching on. We3 takes a peek.
In World of Warcraft (WoW) parlance, a “soulbound” weapon is something that is inextricably linked to your player avatar. It can’t be traded or exchanged. This “soulbound” concept has now found a use on Web3 as a use-specific NFT.
By now, anyone who has any sort of interest in crypto probably knows what an NFT is and about the BAYCs and the Beeples and the millions of crypto and fiat that flow in and out of the NFT industry via OpenSea and other marketplaces. Those with Bored Apes flaunt them like their Bugattis and million dollar mansions. It is very much a case of wealth and status signaling to boost and boast.
That is, as they say, one “use-case”. But, it seems there might be more ways for NFTs to expand and fill in the gaps as Web3 moves towards the dream of a decentralized society (aka DeSoc).
Something you can’t buy e paper entitled “Soulbound”, Buterin expands on the notion of an SBT and what they could be used for. In a nutshell, it’s the same concept of WoW gameplay, but only now for use in real life. So, instead of getting a badge in Karazhan for a WoW quest, in real life you’d get a Soulbound Token issued by Harvard once you complete your Honors Degree in Applied Economics.
So, what’s are the differences between Soulbound Tokens (SBTs) and other digital tokens: Firstly, SBTs are not for sale, not ever. In the same way that you can’t buy a Masters Degree from someone who completed one. Secondly, they’re not transferable to someone else’s wallet. In other words, they’re yours and yours only.
So what’s the use of something you can’t make a buck out of? Just to get our heads around it, let’s look at some early examples of how SBTs could be used, as reported in this CoinDesk article.
An SBT a day
Switching doctors or medical care providers is inconvenient and time-consuming at best, but fatal at worst. Now consider a multi-language medical SBT that holds your medical records, allergies and full medical history, accessible at all times by doctors or ER staff from anywhere. This would replace the cumbersome and time-consuming process of filling out the same medical information over and over, verifying your medical history and doing insurance checks — all while you might be bleeding out in quietly in the corner of the ER.
It’s Legit
SBTs can help certify achievements like your degrees earned, courses you aced or previous jobs you held. This is most certainly an improvement on the current situation, in which any degree certificate can be forged, placing the onus on the employer to verify all professional claims made by potential employees.
Personal information
Imagine your ID card gets lost, stolen, or your house gets flooded, bombed or if there is a mass event like an earthquake or a war in which tens of thousands of people lose all their personal documents. All this identifying information and documentation can be verified and safely stored as SBTs.
Verifying attendance
Proof of Attendance Protocols are already in use. Whereas a current PoaP is just a verifiable “badge” that you attended an event, an SBT would go a step further in providing information about attendance, contribution and organization.
Digital Rep Sheet
There’s medical history, but what about credit history? Like a digital credit score linked to your identity, an SBT would allow you to build a verifiable and always available digital reputation based on your past actions and events. It would make it easier to track your decentralized finance (DeFi) borrowing history for loans, and accessibility to grants.
Rep plays a big role in Web3. Suppose an NFT creator is a serial rug-puller, it stands to benefit the Web3 community to have this information publicly available so the community would be able to check if an individual is trustworthy before they back their projects.
So, will there be “gold star SBTs” and “black dot SBTs” like teachers use in primary schools. The answer is that we don’t know yet, because the mechanics are still being figured out.
SBTs could help with reputation-based voting for decentralized autonomous organization (DAO) governance models. This could also help DAOs mitigate Sybil attacks. A Sybil attack on a DAO happens when an attacker creates a large number of pseudonymous identities and uses them to gain disproportionately large voting influence. The term was coined by Brian Zill at Microsoft Research back in 2002 and comes from the name of the book, which is an early case study of a woman diagnosed with dissociative identity disorder.
Ok, so SBTs can help keep out liars, posers, attackers and be used as a tool for verification. Because they are not transferable and theoretically lower the risk of people manipulating the ecosystem by buying status or lying about their achievements, they would make Web3 a safer, less scammy place. Right? Right. But also no.
Lost Souls
What happens if you lose the key to your Soul address or if your Soul wallet gets hacked. Right now, no one knows, but it is concerning. For SBTs to find real use and become a part of how things are done on Web3, we’ll need safeguards and contingency plans. Otherwise SBTs could become the instrument to take identity theft to the next level, and create more problems than they would actually solve.
In his white paper, Buterin proposes a “social recovery model”. This relies on community-wide adoption and would work something like this: A user appoints a set of individuals/institutions as “soul guardians”. These guardians would be able to access and change the private keys of a user’s wallet, in case it gets hacked — Very much like a financial trust works with trustees. Of course, it’s easy to poke holes in this: What if your guardians have died? What if your guardians are angry at you, or decide to gang up on you and deny you access to your SBT.
In a nutshell
As with much of Web3, SBTs and what they can be used for are still in their infancy. Understandable, since Buterin only dreamed up the concept of an SBT just over a year ago. So, for now, we can just sit by and see if it grows and where it finds uses because, as the internet specifically and the world at large so often shows us — no one knows what’s gonna happen before it happens.
