Digital identification seems to be growing in importance with regard to current virtual landscape. From what it’s understood, Soulbound Tokens (SBTs), which refer to non-fungible tokens (NFTs) which preserve digital identities, have gradually become vital for the decentralised society. Since they’re non-transferable, these tokens can provide safety of an individual’s digital traits from external factors.
“I believe SBTs, unlike traditional NFTs, possess a characteristic: they are non-transferable and bound to the user’s crypto wallet. In essence, they establish a connection between the token and its owner,” Rajagopal Menon, vice-president, WazirX, a cryptocurrency exchange, told FE Blockchain.
It’s believed that SBTs can be utilised for different NFT-backed applications tied to users’ interests. According to thirdweb blog, a blockchain and Web3.0 based platform, SBTs can ensure enhancement of the Web3.0 scenario beyond financial incentives. The platform also stated that benefits such as Know Your Customer (KYC) needs, Electronic Government Voting, credit scoring, assured credentials, among others, can be supplied through SBTs. However, SBTs have been upheld for limitations such as non-fungibility, reliability, interoperability, and privacy.
“I think NFTs are popular for authentication and addressing concerns within the digital asset landscape. However, the emergence of SBTs offer an alternative that can contribute to adoption and popularity of NFTs. In blockchain-based games, when a player obtains a weapon, they also receive a SBT that becomes a component of the player’s identity,” Alankar Saxena, co-founder and CTO, Mudrex, a crypto investing platform, mentioned.
As of June 5, 2023, CoinMarketCap, a crypto price-tracking website, mentioned that SBT’s price stood at $0.2557 (12.07 pm, Indian Standard Time), with a $256.62 fully diluted value (FDV). Various exchanges have explored SBT-based applications. For example, Binance, a cryptocurrency exchange, devised its SBT called Binance Account Bound (BAB) that helps manage Web3.0 identity verification based problems.
Overall, future predictions indicate that SBTs can help with decentralisation of digital identities with regard to industrial needs. Vitalik Buterin, founder, Ethereum, a decentralised blockchain, has highlighted the need for SBTs in development of a decentralised landscape. Insights from LeewayHertz, a software development company, stated that SBTs’ impact on decentralised finance (DeFi) and Web3.0 can increase NFTs’ concept beyond art and bragging rights.
“With everything in Web3.0 space, SBTs have a part to play, especially when we are talking about attributes and accolades that need to be attributed to people. We can expect to see SBTs such as experience certificates, work recognition, certifications, among others,” Ramkumar Subramaniam, co-founder and CEO, Guardianlink, an NFT marketplace, concluded.
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