Proposed by Ethereum co-founder Vitalik Buterin in May 2022, Soulbound Tokens (SBTs) introduce a groundbreaking approach to digital identity. Unlike traditional digital assets, SBTs are non-transferable and non-tradable credentials permanently linked to an individual’s blockchain wallet. Think of them as digital medals, secure, verifiable representations of achievements, qualifications, and milestones that resist fraud and manipulation, unlike conventional certificates or badges.
A New Era of Trust and Transparency
SBTs are poised to integrate with digital passports and decentralised IDs, creating a unified hub for professional credentials, academic achievements, and personal milestones. This could revolutionise trust and transparency across sectors like education and employment. Beyond personal use, SBTs could also enhance financial regulation by acting as “regulation tags” for crypto assets, enabling users to distinguish compliant cryptocurrencies from unregulated ones on exchanges. In business, SBTs could serve as verifiable endorsements, digital badges of honour that confirm an entity’s legitimacy and trustworthiness.
As digital identity grows ever more critical in our interconnected world, Soulbound Tokens offer a robust, tamper-proof solution for proving credentials and fostering trust online. They could even provide protections against fraud in business and luxury markets, much like Digital Product Passports (DPPs).
Wearing Your Credentials on Your Sleeve
The potential applications of SBTs are vast, and their adoption could transform how we verify identity and competence. Imagine a future where cryptocurrencies carry soulbound badges certifying their legitimacy, putting retail customers and investors first with easily verifiable credentials. Let’s explore some broader possibilities:
- A Registry in Your Pocket: No more digging through complex registries to verify a business acquaintance. SBTs could enable a tiered system based on regulatory rigour, like the Moneyval evaluation, badging individuals or entities by the jurisdiction they’re regulated in and their credibility level.
- LinkedIn, Reimagined: While LinkedIn relies on connections and endorsements (which can be faked), passport verification is a step forward. Still, a soulbound identity tied to your profile could offer a simpler, more intuitive way to prove who you are and what you’ve done.
- Immutable Career Credentials: CVs can be embellished, but what if employees earned soulbound credentials as they progressed? “You say you can code, Mr. Smith? Oh, I see Mr. Evans from Codesoft issued you an SBT for it—and he’s certified by the University of Code.” Why prolong the questioning when we could wear our credentials openly?
- Trailblazer Recognition: Visionaries often go unnoticed because they’re ahead of their time, lacking the resources to wait for mainstream adoption. SBTs could acknowledge thought leaders with “trailblazer credentials,” and AI could play a key role in identifying and validating these pioneers.
Trusted Networks as Verification
The success of community notes on platforms like X (and Meta’s adoption of similar systems) proves that trusted networks are a powerful form of verification, LinkedIn’s secret sauce. SBTs could take this further by weighting badges based on proximity to the issuing authority or recognised expertise in a field. This expands their utility, creating a dynamic, trust-based ecosystem for credentials.