On soulbound tokens (SBT) translated into French “soul-bound tokens” are a new type of non-transferable crypto assets. Thus, soul bound tokens represent a person's digital identity. These tokens are then unique and non-transferable.
Unlike the non-fungible tokens (NFT), they cannot be used or belong to other people. This is the whole point of SBTs: they are unique and refer to a unique entity (person, object, diplomas, etc.).
Before even imagining the challenges that such technology could face, it is clear that its success could increase the level of decentralization of our societies.
This article is written to explain to you what soulbound tokens are and how do they work?
What is a Soulbound token (SBT)?
Soulbounds are linked to a “Soul” address, which acts as a wallet dedicated to Soulbound tokens (SBT). Users will therefore be able to own Souls which store the SBTs they hold.
In fact, anything that cannot be transferred can be considered a soul bound token. For example, your identity, your diploma, your health passport are unique objects. They cannot be transferred.
Soulbound tokens (SBT) are a type of non-fungible (NFT) and non-transferable token that allows you to trace a person's social provenance in a decentralized way. Yet another use case for blockchain which could serve our immigration services much better than our often falsified passports. This is just one concrete example of what the soulbounds tokens.
—>Read: NFT royalties: Lifetime commissions on the sale of your works
How did World of Warcraft bring about the idea of SoulBound tokens?
The concept of soulbound tokens (SBT) appeared during theYear 2022. They are the fruit of the imagination of three big figures in the crypto ecosystem, the best known of whom is Vitalik Buterin, le co-founder of Ethereum.
So, the idea is that people could have portfolios (souls) with elements that include several elements of their lives. This can be the medical records, diplomas, professional skills, etc.
The idea comes from the online game World Of Warcraft. Players do not have the ability to sell or even transfer items tied to a player's soul. Items picked up by players are forever tied to the player's soul.
This is how the idea of soul bound token was born in the mind of Vitalik Buterin. However, you should know that in reality, the question of digital identity and even that of transferable tokens has often been debated in theecosystem and among cryptographic researchers.
What can Soulbound tokens be used for in concrete terms?
The use cases are numerous and here are some concrete examples:
–> Diplomas : Certificates and diplomas will most likely be the most well-known and used forms of Soulbound tokens. The SBT would then store all the student's information and irrevocable proof that the diploma is valid and legitimate. How many people use fake diplomas? With SBTs, the problem of fake diplomas will be solved.
–> Health records : Here again, it is a practical case that medical records. We all have a unique medical record with a unique history specific to us. Thus, a health record could ultimately heal the lives of millions of people through the practical side of this technology. Abroad, for example, all hospitals could have access to a patient's health history in just a few clicks. This would make it easier to monitor a person's treatment.
These are just two examples, but there are many more practical cases. Likewise, it is also on web 3 that soulbound tokens could find a major and very useful use.
SBTs, a practical case for Web3?
Vitalik Buterin says he sees the future of digital identity and a unique springboard for the development of Web3, in general.
Indeed, as we have seen with the need for doxing (revealing the identity) of certain developers is sometimes essential if not indispensable. For example, we could have the necessary "trust" for certain protocols. The crypto industry has suffered far too much from Rug Pull, rectly and others scams facilitated by theanonymity. SBTs could then clean up the crypto industry thanks to easier identity verifications.
Web3, this new generation of internet technology, which is based on a decentralized infrastructure, has indeed forged an alternative financial system to the traditional system, but it remains (still) dependent on Web2. Indeed, decentralized finance (DeFi) does not yet offer successful solutions such as unsecured loans. For example, in this specific case of crypto loan, SBTs could provide information on people's credit scores. We could track borrowing history, etc. in order to provide more relevant financial services.
Most developers and artists who create NFTs still rely on platforms like OpenSea et Twitter. DAOs (decentralized autonomous organizations) are still dependent on centralized entities like Discord. For Vitalik, SBTs are there to solve all of these problems.
What are the SBTs that can be used today?
If you are looking for an SBT that you can use now, know that Binance was the first exchange to launch its own SBT. This is called the Binance Account Bound (BAB). It is the first SBT token launched on the BNB chain. This token is used for digital identification on Web3. For example, users who have completed the KYC process can then use SBTs for verification on other services in a simpler way.
What is the difference between SBTs and NFTs?
Non-fungible tokens (NFTs) are used today primarily as certificates of ownership. So, in essence, NFTs are transferable and this is even what makes them so useful and relevant for the art world. Certificates of ownership must be transferable. This is not the case for identity, for example, or diploma. This does not transfer and that is why soulbound tokens are so useful. An SBT has no monetary value and cannot be traded unlike an NFT.
Once it is issued to a wallet, an SBT cannot be moved.
Note: There is no financial advice in this or any other article on this site. This is information of which you are the sole judge and master. Be responsible with your investments and only invest as much as you are willing to lose.
Our affiliate links:
Buy cryptocurrencies (the easy way):
- Speaking on Binance (Get 10% off)
- Buy cryptocurrencies on bybit !
- The tutorial for buy cryptos on Bybit
Generate interest on your cryptocurrencies:
- Speaking on Youhodler (Earn up to 12% interest)
Secure your cryptocurrencies:
To have fun and play
- The best for Esport and bitcoin sports betting : CloudBet
- Discover the bitcoin casinos
