Putting users in control of their data, identities, and finances is the grand online dream of web3. Soulbound tokens (SBT) are the most recent innovation enabled by blockchain development services, Previously, the blockchain space has been represented by cryptocurrencies and NFTs.
Soulbound tokens can transcend NFTs and create new opportunities for both developers and users.
Before the SBTs formally become accessible for development, Oodles is keeping a close eye on the market as a blockchain development company
SBTs, also known as soulbound tokens, are digital identity tokens that represent an entity's or a person's features, accomplishments, and qualities. By utilizing blockchain technology, it advances NFTs applications.
We can sell or transfer NFTs but we cannot fake or copy them since they are connected to a blockchain by a special identification code. An NFT developed to serve as a soulbound token, however, cannot ever be removed from your soul (identity). The Soul in this case is a wallet. The goal of SBTs is to transform the idea of NFTs into something that goes beyond funds and bragging rights to a unique and non-transferable token.
Thus, we can refer to soulbound tokens as non-transferable NFTs too as they only describe our identities. They are linked to a blockchain network that stores the distinctive identifying information of an individual or an entity, including personal information and histories like age, qualifications, education, health records, and professional successes.
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The next question after "What is a Soulbound NFT?" would be "How does it work? ". Though soulbound is comparable to other NFT programs in terms of non-transferability, SBTs can be created and stored via souls or blockchain wallets and accounts. Souls can also provide themselves with self-certified tokens.
The primary highlight of how soulbound NFTs function is an SBT soul/creator issuing and sending a token to the address of another Soul/entity. Open verification of the SBT, issuers, and Soul address is a feature of such transactions. As a result, it is simpler to check or monitor the reliability of the trust circles connected to a particular Soul.
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Soulbound tokens have several important advantages, including the fact that they cannot be sold or transferred, guarantee the legitimacy of papers, and considerably minimize dependency on centralized institutions. Here are some more specifics on the capabilities of SBTs.
The majority of services are currently centralized, allowing businesses to access and gather our data for marketing and other uses. Data sovereignty is possible with soulbound tokens. Users will be in charge of controlling who has access to their personal information and for what purposes.
SBTs don't provide that, in contrast to NFTs, which are simple to acquire, gather, or hoard. Why is this advantageous? Since obtaining soulbound tokens will entail work, they will be used for purposes other than simple profit-making, such as reputation-building, loan eligibility, and access to particular projects.
Soulbound tokens will often include digital verification and documentation, which will be advantageous to both individuals and institutions. Your documents will be simple to store and carry with you wherever you go, and agencies will be able to quickly confirm their validity.
DeSoc members will be able to check each other's reputations thanks to SBTs. It will ultimately increase their level of trust in one another over informal online contacts and digital project collaboration.
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Soulbound tokens could represent digital identification documents like passports or licenses. SBTs could potentially be used to issue membership cards. Thus, the technology has the potential to dramatically speed up identification verification procedures.
Based on merit or success, employers, schools, universities, and other educational or sporting institutions may provide SBTs to individuals. Thus, SBTs may make it simpler for people to display their accomplishments while making achievement fraud more challenging.
Medical records could be kept in soulbound tokens. Medical service providers might be able to provide their patients with considerably better customer service by decentralizing this information onto the blockchain and connecting it to other identity-verifying information.
The digital reputation of an individual could be built via soulbound tokens. One frequently stated instance is the possibility that SBTs may create web3's interpretation of a person's credit history. Such data could be used by decentralized lending protocols to more effectively establish interest rates, minimizing their own credit risk and possibly the borrower's interest burden.
A strong web3 credit history, as shown by a person's SBT borrowing history, may also enable borrowers to use a lower collateral/loan value ratio.
As an alternative, individuals within a community could amass SBTs through their contributions to that community.
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Autonomously decentralized organizations (DAOs) are susceptible to Sybil assaults. When a person or group works together to acquire a significant portion of the DAO's governance tokens, they can negatively manipulate governance proposal voting.
By somehow connecting governance votes to SBTs, DAOs could reduce the likelihood of this form of a hostile takeover.
SBTs may be awarded to people based on their achievements (for instance, by universities). They may also be given to people for attending specific events, whether they be actual or virtual. People may compile a library of SBTs, documenting and attesting to significant life events.
In a decentralized society described as a "transformative, pluralist future" where social connections and interactions are essential building blocks for your Web3 identity. Souls and SBTs will serve as the cornerstone for it.
By establishing provenance and reputation, soulbound tokens can assist in resolving the problem of trust in Web3. There is less probability that people will try to control the ecosystem by buying status or manufacturing successes because they cannot be transferred. It will result in a more complex process of identity theft and impersonation. It will ultimately lead to reducing the severity of Web3 scams.
Have a project in mind related to soulbound token development? Connect with our blockchain developers for more information.