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Ethereum co-founder Vitalik Buterin wrote a lengthy paper in part about "soulbound tokens," or SBTs.
They're non-transferable NFTs that he says could bolster people's social identities to fight scams.
Colleges could issue degrees via SBTs, and event organizers could verify a person's attendance.
Get ready for a new buzzphrase to take over the crypto space.
Ethereum co-founder Vitalik Buterin co-wrote a 37-page paper this month laying out how Ethereum's future will center around an ecosystem called a Decentralized Society.
A key aspect of this theoretical future is "soulbound tokens," which will be available for use later this year. (Yes, the name is likely derived from the World of Warcraft's "soulbound items," which Buterin has previously praised.)
SBTs are non-fungible tokens (NFTs) that a person can earn based in part on their job and education history. Unlike regular NFTs, they're non-transferable (though people can revoke them if they choose.) SBTs would represent a person's reputation and accomplishments, a kind of "extended resume," Buterin wrote.
The idea is to bolster people's social identities by customizing them with unique, non-exchangeable badges. In theory, the tokens could help solve some of the problems ravaging decentralized finance, like scams and theft.
College degrees and 'souldrops'
There are a few ways we could use these tokens in real life, according to the paper.
Suppose universities started issuing degrees as soulbound tokens, employers began giving SBTs to workers, or event organizers dole out SBTs to attendees, those credentials could make it more difficult for scammers to impersonate someone and easier for prospective employers to verify history or training when considering hiring.
The tokens could help Decentralized Autonomous Organizations, or groups without a hierarchy or singular leader, more easily summon members for an event or cause. An environmentally-minded DAO, for example, could airdrop SBTs to people that already have environmental action SBTs as a recruitment tactic. Buterin has dubbed these as "souldrops."
A person's SBTs would then be validated by other "souls," or people who can vouch for you and the credential or accomplishment you're earning a token for, similar to how a LinkedIn connection can verify a skill of yours. All of these would be stored on a "souls" wallet on the blockchain, not unlike software wallets used for crypto and NFTs today.
So... what's the point?
According to Buterin and his co-authors, SBTs could specifically help push Web3 forward by decreasing reliance on centralized companies and giving people more ownership of their digital selves.
NFT artists are often forced to rely on centralized places like Twitter or OpenSea to sell their work, the paper says, and many crypto users depend on software wallets controlled by the companies like Coinbase instead of truly decentralized wallets.
SBTs could also help distribute some of the wealth-obsessed aspects of crypto culture that have infringed upon what enthusiasts say is the real decentralized movement.
For one, NFTs are transferable and whoever owns them can sell them to others. For example, if colleges doled out degrees in the form of NFTs, they could theoretically also sell them online to people who didn't attend college and complete their programs.
That risk is, in theory, abated with SBTs — it'd be more difficult for people to buy their status and achievements.
As Buterin wrote in his January post discussing World of Warcraft's soulbound items, "making more items in the crypto space 'soulbound' can be one path toward an alternative, where NFTs can represent much more of who you are and not just what you can afford."
Read the original article on Business Insider