SBTs are non-fungible tokens that are associated with an individual and are not transferable. As a result, several uses, and some concerns.
Do you think you’ve seen it all with non-fungible tokens (NFTs) that are unique and non-exchangeable? You had not thought of soulbound tokens (SBT) yet! In fact, SBTs are not only unique but also non-transferable. In other words, they are associated with your person.
If use cases can be abstract at first glance, they are numerous and can revolutionize everything related to a person’s characteristics. This aspect calms as much as it worries some. A brief overview.
How to define soul-bound tokens (SBT)?
History and creation of soul-bound tokens (SBT)
SBTs are the latest in the galaxy of tokens issued and held by blockchain technology. It was the founder of Ethereum (ETH), Vitalik Buterin, who first mentioned a mysterious project on his blog, Soulbound, in January 2022. For the sake of good order, he explains that the term Soulbound comes from the World of Warcraft game, where Soulbound are the most powerful items in the game. Buterin speculated about making non-fungible tokens (NFT) soul-bound.
Four months later, the founder of Ethereum joins forces with other partners to reveal in a document the concept of soul-bound tokens or SBT. If translated literally, it means “soul-bound tokens”. This is how SBTs were born, and although they are technically NFTs, they nevertheless have their own characteristics.
Characteristics of soul-bound tokens (SBT)
To fully understand what an SBT is, it is necessary to make a comparison with classic NFTs. First of all, the NFT is attached to an object or item. SBT corresponds to a person’s characteristics. For example, a work of art according to this distinction cannot be in the form of an SBT, and passing an exam cannot be an NFT.
Next, both NFT and SBT are unique and non-fungible tokens. They are not interchangeable with other tokens of the same type. Both are identified and authenticated with a unique signature and stored in a tamper-proof ledger using blockchain technology. However, the comparison stops there.
Unlike NFTs, SBTs cannot be traded. Thus, once issued and sent to a purse, they can no longer leave it. This is quite logical as SBTs are attached to a person and not an object. But a person has no monetary value, unlike an object.
Finally, if the SBTs are unique, their losses are not necessarily irreversible. For example, if you lose access to your wallet where your NFTs are located, you will never have access to your NFTs again. However, if you place your private key in the wallet that holds your SBTs, it is possible to create new SBTs.
Use cases for soulbound tokens (SBT)
Reinforcing the accuracy of information
Now that you have understood the main characteristics of SBTs, what are use cases? Again, it is quite abstract and one has to look at Vitalik Buterin’s project, Decentralized Society or DeSoc. According to Buterin, DeSoc represents perfect equality and democracy, where all individuals are on an equal footing. In this DeSoc, each person can prove to others their successes, show their projects, vote or even define what they really are.
To do this, Buterin envisioned the creation of soul addresses to which the SBTs are sent. Let us take a concrete example, namely the certification of diplomas. You are a university student and have just completed your master’s degree. To certify this achievement, the soul address of the university in question will create an SBT and send it to your own soul address. This will allow you to prove your success to everyone.
Based on this example, the use case related to the accuracy of information is numerous, ranging from proof of ownership of property or marriage, to birth certificate issued by a municipality or storage of medical records. Each time, the soul address of the institution or practice issues an SBT to a person’s soul address.
Although these characteristics are interesting, it should nevertheless be clarified that at present SBT will only be available on this DeSoc as Buterin wants. There are actually no other projects involving SBTs. To return to the case of the loss of the private key to the wallet that retains the SBT, for example, the creation of an identical SBT would only be adopted by a majority in society.
Concerns about privacy
Some readers may first be shocked to understand that SBTs are very close to a person, being able to reveal part of their intimacy. That is what is most criticized for this project, which is still in the imaginative phase.
SBTs are intrusive in nature. They exist only to prove who you are, your successes, your state of health or even your marital status. And all of this could potentially be seen by everyone in DeSoc. If some are in favor of absolute transparency, others believe we would be in the completion of the 1984 Surveillance Society by George Orwell.
Beyond this debate, one may wonder what would be the real benefit of SBTs beyond DeSoc. In fact, a “classic” NFT of the ERC-721 standard can fulfill the role of certification and authenticity. Likewise, NFTs can self-destruct when a code is used or a person has voted.
We are only at the emergence of SBTs and the future will tell us whether on the one hand they will find a place outside DeSoc and whether their characteristics on the other hand have a particular interest in distinguishing them from NFT ‘is.