.png){kind=logo}
- Insights
- Cryptocurrencies
- Stocks
- White Papers
- Industry
- Geography
- Insights
- Cryptocurrencies
- Stocks
- White Papers
- Industry
- Geography
In the recent research paper titled Decentralised Society: Finding Web3s Soul, Ethereum (ETH) co-founder Vitalik Buterin, alongside authors Glen Weyl and Puja Ahluwalia Ohlhaver, introduced the concept of Soulbound Tokens (SBTs) as a brand-new take on digital identity. The paper speaks about the importance of digital identity within Web3 and meeting the hyper-financialization of Web3 with equal amounts of trust and social relationship building. Soulbound tokens are based on a concept first popularized by online role-playing multiplayer games like World of Warcraft. In that system, a gamer would gain collectibles that are bound only to their unique character and are therefore non-transferable. Self-sovereign identity (SSI) is already leading the way towards building a credible society.
In their simplest form, SoulBound tokens are non-transferable fungible tokens that can be displayed in a digital wallet. These tokens are issued by one spirit (individual) to another. They cannot be traded with anyone else.
SoulBound NFTs are tokens containing all information related to you. "Imagine a world where most participants have Souls that store SBTs corresponding to a series of affiliations, commitments, and credentials," the authors wrote. Spanning across academic records, work credentials, personal achievements, and community membership, SoulBound NFTs would reflect you as a whole – almost like an extended resumé – except it's non-transferrable and permanently recorded on the blockchain.
In the case of losing your SoulBound NFT -or strictly speaking, your private key-, a community recovery process is proposed, where trusted and self-appointed 'guardians' collectively agree to unlock your soul access. These guardians can be anyone – certificate issuers like universities, a DAO you participate in, or even the "last 20 people you took pictures with".
There has been very little work done with this recovery model, but further expanding on this idea could help the perceived risk of digital asset ownership. The community recovery process can also have big implications for property rights, for example, allowing verified co-ownership of public or private properties such as homes and cars.
Soulbound NFTs have recently garnered much attention among crypto enthusiasts – and one of the most interesting use cases is their functionality in the area of digital identity.
One significant property of Soulbound NFTs is their uniqueness. A single Soulbound NFT can only be tied to a single holder and can therefore be used to prove a user's individuality on Web3 and Metaverse platforms.
Since Web3 and Metaverse platforms are based on the principle of value-sharing among users, verifying the individuality of users will be essential. Otherwise, real users will have a disadvantage against bots and Sybil attacks run by bad actors in the system.
According to Namachain, similar to Web2, even access to Web3 services and apps requires digital identities for registration and verification. But the use of third-party centralized single sign-on like "login with Facebook" or "login with Google" will not be in line with Web3 because that would require putting thrust on centralized servers of Facebook and Google, which have an economic interest in amassing such large databases. The idea of Single-sign is great functionality for delivering better UX, but it needs a reformation to ensure the security, privacy, and sovereignty of users.
Extension of the Web3 principles of privacy, user sovereignty, openness, and interoperability to digital identity leads to self-sovereign identity (SSI) – a fully private digital identity owned exclusively by the user. Only the user has hold of it, and only he decides who gets to see the identity. Blockchain technology, Verifiable Credentials, and Decentralized Identifiers are the three current standards of Self-Sovereign Identity.
