What are Soulbound Tokens & Why Does Ethereum Co-Founder Believe They Are The Future?

Ethereum co-founder Vitalik Buterin co-wrote a 37-page paper this month mentioning “soulbound tokens” (SBTs) as a key aspect of crypto space’s future. Soulbound tokens are NFTs which are non-transferable and are collected on the basis of one’s job and education history.

Ethereum devs are innovating again with Soulbound tokens.

The goal is to strengthen people’s social identities by personalizing them with one-of-a-kind, non-transferable badges. In theory, the tokens could aid in the resolution of some of the problems affecting decentralised finance, such as fraud and theft.

Vitalik Buterin predicts that Soulbound tokens (SBTs) will be available for early use by the end of the year. This is all part of his larger plan to create a “decentralized society” by 2024.

Soulbound Tokens: Utility and The Future

According to the paper, there are several real-world applications for these tokens.

First, universities can issue SBTs as degrees or employers can also grant SBTs to staff members on the basis of their performance. Likewise, when event organizers hand out Soulbound tokens to attendees, scammers may find it more difficult to impersonate them, and prospective employers may find it easier to verify their history or training when considering hiring.

Second, Soulbound Tokens might also allow DAOs to gather members for a specific event or cause. As a recruitment strategy, environmentally conscious DAOs could airdrop SBTs to people who already have environmental action SBTs.

Similar to how a LinkedIn connection can verify a skill, people can bid for you through the tokens. All of the tokens will be stored on the blockchain in a “souls” wallet, equivalent to the current crypto wallets. Users can appoint “guardians” to change the keys to their soul wallet. These “guardians” can be close friends, family members, trusted institutions, and so on. Many methods can serve the purpose of verifying the owner of the soul address, such as conversation or a face-to-face meeting.

SBTs, according to Buterin and his co-authors, have the potential to help advance Web3 by reducing reliance on centralized companies and giving people more control over their digital selves.