What are Soulbound Tokens (SBT)?

Soulbound Tokens (SBT) are a type of non-transferable tokens that represent a person's identity using blockchain technology. These types of tokens are like an innovation of non-fungible tokens, which allow certifying the ownership of works of art or other types of objects. Soulbound tokens have multiple use cases, ranging from storing employment data, medical records or academic certificates. Let's see what Soulbound tokens are and how they work.

What are SBTs?

Soulbound Tokens (SBT) are a kind of non-transferable tokens that represent a person's identity using blockchain technology. Its uses can range from medical records, employment documents such as a resume or any type of document related to a person or entity. One of the clearest examples we have to understand how these tokens work are non-fungible tokens (NFT). NFTs are characterized by their usefulness as a digital certificate of works of art or collectibles, as is the case with the Bored Ape Yacht Club monkey collection, which is attributed to a status symbol within the community.

How SBTs work

these tokens They are stored in wallets that are better known as "Souls". Therefore, to use this type of tokens we could have a wallet for each type of token, such as, for example, an “Identity Soul” wallet to store information about our work life and at the same time have another “Medical Soul” wallet to save information about our medical history. At the same time, also can represent roles or entity membershipsFor example, issuing an SBT to each member of an investor club to verify membership. One of the main characteristics of these tokens is that They cannot be sold or transferred, since once a soulbound token has been transferred it is bound perpetually to the person's soul. The main objective of the SBT is convert the concept of NFTs into something that goes beyond social status and speculating on their value. The concept of SBT is intended to be unique, non-transferable tokens to represent the reputation of a person or entity, while NFTs seek to represent assets and certificates of ownership. Unlike an NFT, SBTs They have no monetary value and cannot be exchanged once they are issued into someone's wallet.

What use cases do SBTs have?

SBTs can be used for a wide variety of use cases, and new ones continue to emerge. The main uses for SBT are included in the following cases:

Identity

In order to travel or to identify ourselves in public administrations to carry out certain procedures, we need our identity document to be able to identify ourselves. Through the SBT we can have our identity document issued on the blockchain, which allows us to not be able to alter the data and not have to carry it with us to avoid losing it or having it stolen.

world of work

If we are looking for a job and we want to send our resume to a company, we could send our application through an SBT that is issued by the companies in which we have worked and the studies we have completed. This would allow the use of SBT as a certificate of our studies and work carried out, which could not be altered.

Studies

When we have completed our studies, we receive a certificate or diploma that verifies that we have completed the studies and acquired the skills that were taught. The study center would act as a Soul wallet that would issue SBT tokens to the students (who would also be Souls) who would receive these tokens to certify that they have completed their studies. The SBT would be stored in the student's wallet, which would serve as a certificate of completion of studies and at the same time demonstrate that the person in question has been part of the study center.

Medical history

Through an SBT we can also have a person's medical history, where it can be stored from medical treatment processes, the health center where they were performed or previous pathologies. By using SBT for the healthcare sector We could accelerate processes that are currently inefficient, which require filling out paperwork, long calls with their waiting time, and sometimes medical history is not available at all medical centers.

What challenges do SBTs face?

Trust is one of the biggest challenges affecting the cryptocurrency ecosystem, based on trust between users. Like traditional bank credit scores, SBTs Could Track a User's DeFi Lending History, as well as other metrics that determine your risk profile. The SBTs They also aim to combat the problems that we may encounter when directing the governance of a Decentralized Autonomous Organization (DAO). The current DAO governance model is based on the number of tokens in possession to grant weight in the organization. Through SBTs, voting power could be assigned based on the interactions of users in the organization. In this way, SBTs would prioritize the voting power of users who actively collaborate and have a creditable reputation. At the same time, SBTs Could Improve Voting Integrity in the DAO, that is, being a defense against Sybil attacks, one of the biggest threats to the current DAO governance model. Those with the most voting power can manipulate voting proposals and steer projects in their favor. SBTs could help detect and prevent members who want to act maliciously from accessing a DAO and be able to use them as a deterrent so that corruption and Sybil attacks do not happen.