Vitalik co-published a paper predicting Ethereum’s future, his paper focused mainly on soulbound tokens (SBTs). I unwrap what SBTs are and why you should care.

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The current limitation of tokens that power web3 is that fungible tokens are an excellent way to represent financial assets such as equities and governance rights, and non-fungible tokens could improve ownership rights using the power of blockchains. However, there is no built-in infrastructure to represent a digital identity and reputation.

SBTs could be the way to solve this issue by allowing minters to send tokens to a receiver who cannot send the SBT to another party. If the minter lost their trust in the receiver, the minter holds the right to burn the token.

At first, SBTs might not seem revolutionary, but they could represent and digitize many of our interactions in the real world.

Universities could give SBTs to their graduates, and in the case that the employer needs to see the certification, they could check the student’s wallet that they, indeed, attended the school. This has the potential to remove fraud in many sectors.

A person’s CV could be built by a collection of SBTs issued by the employers that verify that the person worked for that employer.

A visa application currently requires a lot of paperwork. Imagine a scenario where the government issues an SBT, and you provide a wallet address to get a visa to travel to a country.

SBTs have the potential to solve many inefficiencies in our society when it comes to digital identity and reputation on-chain. With so many builders in web3, I am excited to see how we apply SBTs in the short future.

submitted by /u/Zijdehoen
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