[Concept] Soulbound Tokens: What is the difference between NFTs?

Farah Diana Patcha . June 30, 2022

Photo: blog.cryptostars.is

TechSpace - One of the biggest Blockchain companies, Ethereum Foundation, planned to launch a new token project called ‘Soulbound’ (SBTs) at the end of this year. In his 36-page-long Whitepaper uploaded in May, 2022, Vitalik Buterin, Founder of Ethereum Foundation, talked about the missing spot of Web 3.0 and De-Fi with future visions on it, collaborating with E. Glen Weyl and Puja Ohlhaver. These tokens are created to  shape the path of Web 3.0 development. Maybe it would change someone’s life because in the future, Web 3.0 would be a part of human’s real life. To know more about SBTs, here is some basic information you need to know about SBTs.

What is exactly Soulbound Tokens?

Soulbound Tokens are non-transferable and publicly visible tokens that are connected with the soul address. Soulbound is made to help people define the ‘social identity’ that represent “commitments, credentials, and affiliations” in the Decentralized Society (DeSoc) or Web 3.0. Thus, these tokens would be important tokens as someone’s identity. The idea of the ‘Soulbound’ name came from World of Warcraft, which was announced by Buterin back in January 2022.

How will SBTs work?

Currently, there is no detailed information how the Soulbound Tokens will work, because the experts still work on SBTs. The whitepaper only includes the idea how these tokens would exist in Web 3.0. But non-transferability in SBTs would change the trends of current tokens that are fungible- SBTs will not have a market value, and cannot be transferred to another wallet. SBTs can be someone’s resume and portfolio in Web 3.0 by showing the owner’s skill and qualifications, then build the owner’s reputation in dApps, protocols, NFT marketplaces, and DAOs by enhancing SBTs’ integrity. In conclusion, SBTs represents its owner’s identity to gain trust, credentials, affiliations, and legitimacy for social relations in Web 3.0.

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What is the difference between SBTs & NFTs?

Even though these tokens look the same, there are few differences between them. The first difference is the transferable ability. NFT is able to be transferred to another wallet, while SBTs can only be kept in one wallet forever.

The second difference is the function, because SBTs can be the proof of transaction in Web 3.0, but NFT is only for the digital art asset. The next difference is SBTs are representing the owner’s social identity that can be the guarantee of lease or lend agreement, meanwhile NFTs could be used to prove product’s originality, medical records, identification, etc.  Another difference is SBTs define Soul’s membership that can be recovered in every community, whereas once NFTs are losts, it could not be recovered. And the last difference is SBTs have detailed security verification that provide for any confidential document access, meanwhile NFTs can be used for event passes without any identity verification required. 

What is the speciality of SBTs?

As the main branding of SBTs, actually the non-transferable tokens is not something special in Web 3.0, because there are several projects that already used this concept. And if we talk about the speciality of SBTs, then the answer is the Soulbound position in Web 3.0 is going to be an atomic building blocks that can be the fundamental of democratic, composable and decentralized society in DeSoc, as stated in the Whitepaper. 

Read also: YouTube Participates in NFT!

Can you show the illustration on how SBTs will work?

For example, a university can give SBTs as degree certificates to their graduated students. This does not mean that students can sell their SBTs, because SBTs contain the student’s information, therefore it could not be sold. 

The Web 3.0 revolution is going beyond day by day, potentially changing people's real life into a digital environment. The presence of SBTs as one of the valid tokens in the future will be a green light and highway for secure transactions in Web 3.0 that completed a “social identity’ characteristic in DeSoc. But you should be patient, because Buterin planned that SBTs will launch in 2024. 

(FDP)

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