Soulbound Tokens (SBTs) have the potential to override NFTs. They are non-transferable and provide official digital identities to individuals, says Ty Smith, Founder and CEO of Coinbound.
Vitalik Buterin, who’s best known for being the co-founder of Ethereum, has a new and exciting project in the works. Heading toward further revolutionizing the Web3 sphere, he brings Soulbound Tokens (SBTs) into the mix to find “Web3’s soul.”
Despite non-fungible tokens (NFTs) having various use cases, SBTs can override NFTs completely, eliminating the possibility for participants to speculate on such digital assets.
Unlike NFTs, SBTs are non-transferable and provide identity. The tokens break down pieces of an individual’s personal information before storing it in their blockchain wallets.
So, let’s dig into this new token invention and its possible use cases:
Soulbound Tokens: What is an SBT?
First and foremost, to grasp the need for SBTs, it’s essential to understand how the digital assets differ from NFTs. Both NFTs and SBTs have an identification code and metadata that make them unique. However, SBTs have critical differences in terms of transferability.
Anyone active in the Web3 sphere will be aware of industry challenges that often arise. A vital issue includes crypto scams, which commonly intertwine with the selling of NFTs following fake accounts.
This is where SBTs come in. The tokens are a new blockchain-enabled protocol that represents credentials, non-transferable commitment and affiliations of holders.
Other benefits include:
- Less Web3 scams following more complex identity theft and impersonation
- Includes DeFi protocols that are ideal for under-collateralized loans and personal loans
- Access to shared data and assets
- More governance for community incentives
- Verification of attendance at events, university graduations, etc.
It’s important to note that, unlike NFTs, SBTs live on the marketplace “Soul.” Although NFT curators and collectors can link Soulbound tokens on other marketplaces – providing proof of ownership is authorized and detectable.
Soulbound Tokens: Potential Use Cases for SBTs
SBTs allow individuals to verify and document all personal information – employment proof, education, government-issued identification, lifetime affiliations, etc. – through blockchain technologies.
According to Staderlabs, the use cases of these digital assets can be the foundation of a decentralized society:
But what are the most notable use cases behind these digital assets?
Proof of Employment
SBTs have self-certifying abilities, similar to how we share our resumes while job hunting –claiming to work in specific industries and possess various skills.
The digital assets help confirm the experience of a candidate before pursuing employment. For instance, managers can scope an individual’s educational background and skills to help understand their experience and whether it benefits their company.
SBTs can act as various real-life achievement badges for verifying accomplishments to others – like a physical medal that states an achievement but is digitized. Institutions can even issue degrees through such assets, thanks to its governance.
So, rather than a hiring manager contacting an educational institution to verify enrollment, they can check the person’s Soulbound token received upon graduation.
Another possible use case for SBTs is to store all government-issued identification, such as driving licenses, passports and birth certificates. Then, for example, a person’s verification can automatically be identified when showing their Soulbound tokens at conferences or other events.
On the plus side, event runners can hold attendees’ Soulbound tokens to grasp their target market better.
These types of identifications may also keep people in check. Consequently, individuals will be accountable for their behavior due to SBTs serving as identity. Thus, people cannot get away with below-the-belt practices.
Evidence of Lifetime Affiliations
Moreover, SBTs have the potential to showcase evidence of lifetime affiliations to organizations and institutions. This is particularly useful for others wanting to see how devoted a person is to a particular sector or project before moving business forward.
Many Web3-related organizations welcome members and provide them with benefits, including tickets to exclusive events based on their ownership. The SBTs can be used to access such events while holding and supplying a history of other events attended to anyone interested.
Soulbound Tokens for Marketing
In the past year, NFTs have been used for tons of different applications including NFT Marketing. Popular companies like WaWa, for example, have used NFTs in their marketing as a quick way to excite their consumers. It is wise to believe the Soulbound Tokens will also be used for marketing.
The most common SBT marketing use case would be for fan and customer engagement or as a token of appreciation for buying a product or attending an event. To facilitate such marketing options, companies like Versify allow brands to easily send NFTs and SBTs to their customers.
All Things Considered
The opportunities SBTs can bring to the world and Web3 space are tremendous.
SBTs give all members governance rights. By showcasing employment proof, education certification, government-issued identification and lifetime affiliations, safer business and personal relationships are made.
SBTs eliminate issues regarding financial power. The tokens also reduce the likelihood of scams regarding fake accounts thanks to users being able to observe the immutable history of people.
The tokens can enable the realization of a completely decentralized society. Despite sounding cliche, the advantages of SBTs are limitless.
About The Author
Ty Smith is the Founder and CEO of Coinbound, a Web3 marketing agency. He has been passionate about and investing in Web3 and crypto spaces for a number of years. With his determination and strong belief in the power of cryptocurrency, he’s achieved significant accolades in these nascent industries. Ty and his team have worked with some of the biggest names in the crypto space: MetaMask, eToro, Nexo, Voyager, Cosmos, ShapeShift, and OKCoin. He not only bootstrapped Coinbound to become a 7-figure agency, but Ty is also the host of The Crypto Marketing Show with 50k+ monthly listeners and 20k+ followers on Twitter.
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