Soulbound NFTs (SBTs): the Soul of Our Digital Identity

Vitalik Buterin, the creator of Ethereum, first discussed the concept of ‘soulbound’ in 2022. He explained that in the popular game World of Warcraft, soulbound items are permanently linked to a player’s account to showcase their progression and achievements from quests and special events.?

Much like soulbound items in WoW, Soulbound NFTs (SBTs) are a type of non-fungible token (NFT) permanently tied to a specific digital identity. Unlike traditional NFTs, which can be bought, sold, or traded, SBTs cannot be transferred. This means you can’t exchange or sell them on marketplaces.

The purpose of SBTs is to represent the owner’s digital credentials and certifications. They can also verify qualifications, memberships, or contributions to a community.

Although the name comes from Buterin, the first SBTs were minted in 2021 by Idexo. Its First Adopter NFTs are tied to the holder’s Telegram account. Still, the concept is much younger than NFTs that exist since 2014.?

How Do SBTs Work?

SBTs share several characteristics with NFTs, namely:

• Digital assets: Both are digital assets stored on a blockchain.
• Use of smart contracts: Both are created and managed using smart contracts.
• Non-fungibility: Both are unique and cannot be replaced with identical copies.

However, SBTs can’t serve as collectibles or stores of value due to their non-transferability. Instead, they can enhance trust and credibility within a community, acting as the backbone for reputation and verification systems. For this reason, they’re particularly valuable for applications that require a high level of trust, such as decentralized governance, healthcare, or education.

Why Are SBTs Gaining Popularity?

SBTs provide tangible proof of a person's identity and qualifications. This way, they reduce fraud and scams and create a more reliable and trustworthy online environment.

Additionally, SBTs can improve governance and decision-making. For example, SBTs can represent voting rights to prevent manipulation, so that only eligible members can participate in community decisions.

Lastly, SBTs create new revenue streams for crypto enthusiasts. Although SBTs have no market value, they can be used to develop new business models, like decentralized identity verification services.?

SBT Use Cases

Now, let’s take a closer look at specific use cases of SBTs:

• Verifying academic degrees, certifications, or licenses to streamline the hiring process and reduce fraud.
• Verifying membership status in clubs, organizations, or online communities to prevent unauthorized access.
• Representing a player's achievements or progress within a blockchain game. SBTs can also represent unique in-game items.?
• Storing and sharing patient medical records for data privacy.?
• Tracking the provenance of products throughout the supply chain to ensure authenticity and quality.?
• Checking products’ carbon footprint to support sustainable consumption.?
• Using social recovery to regain access to lost private keys to a crypto wallet.?

Are SBTs the Future??

Buterin’s vision for SBTs was to create a truly decentralized society built on trust and reputation. SBTs have the potential to minimize crypto scams and impersonation by generating a verifiable, tamper-proof digital identity.?

However, SBTs are still a relatively new concept, so the main challenges are low adoption and lack of integration with existing identity verification systems.