cft

SoulBound Tokens - NFT2.0

Imagine having a blockchain account (Soul) that stores immutable records like educational credentials, employment history, or works detailing a person's experiences. Similar to a CV, SBTs can help to build a user's digital reputation among web3 solutions.


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Rohit Changediya

2 years ago | 2 min read

What is NFT ?

non-fungible token (NFT) is a digital token of information (data) that lives on the blockchain. Every NFT has its own identification code and metadata, meaning that every NFT is unique and the data it contains cannot be falsified. Regular NFTs can be sold or given away for free. In other words, they aren’t tied to one specific person or organization.

Soulbound tokens (SBT) are just permanent, non-transferable NFTs, meaning that they can’t be given away or taken from wallet.

How SBT works ?

Imagine having a blockchain account (Soul) that stores immutable records like educational credentials, employment history, or works detailing a person's experiences. Similar to a CV, SBTs can help to build a user's digital reputation among web3 solutions.

However, their true potential is revealed when one Soul can issue an SBT (that can be attested by other Souls) to another Soul, meaning a community could be a Soul that issues SBTs to natives or a company that issues SBTs to shareholders.

Soulbound tokens function in a similar manner to NFTs apart from their non-transferability, which is also why Ethereum creator Vitalik Buterin refers to them as non-transferable NFTs. They are non-fungible i.e they can't be interchanged, with each token being unique and non-transferable.

Souls can issue self-certified SBTs to themselves. However, a prevalent process is when other Souls or SBT creators issue an SBT to another Soul's address. The SBT, its issuer, and Soul's address can be publicly verified on the blockchain. Hence, anyone can easily track or prove the trust circles of a particular Soul. 

What happens if you lose your Soul?

What happens if your Soul wallet is hacked? Or what if you lose the key to your Soul address? This is, unfortunately, a very valid concern.

Thefts are rampant within the NFT community. So when it comes to SBTs, it’s vital to have proper safeguards or contingency plans in place to prevent bad actors from taking identity theft to a whole new level.

In answer to this problem, Buterin proposed a community-wide adoption of something known as the “Social Recovery Model” With social recovery, users can appoint a set of individuals or institutions as “guardians.” These guardians have the ability to access and change the private keys of a user’s wallet, should it get compromised. With this model, the authors note that recovering a Soul’s private keys would “require a member from a qualified majority of a (random subset of) Soul’s communities to consent.”

SBT will be a game-changer in the blockchain domain, and this will increase adoption for the NFTs by the governments as well. SBTs could be available by the end of 2022

Article Credits

https://nftnow.com/guides/soulbound-tokens-sbts-meet-the-tokens-that-may-change-your-life/

https://www.axi.com/int/blog/education/blockchain/soulbound-tokens

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