According to Ethereum’s founder, Vitalik Buterin, SBTs are the “future of Ethereum.” But what does this technology mean?

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Have you heard the term “soulbound” tokens or SBTs?

According to Ethereum’s founder, Vitalik Buterin, SBTs are the “future of Ethereum.” They would be made available for early use on the Ethereum blockchain by the end of 2022.

Soulbound tokens (SBTs) become non-transferable once received, which means that a user would hold them in a Soul wallet for good. At first sight, you may not see any benefits of such technology but you are totally wrong!

Think about all the unique and personal information you receive in life: your birth certificate, your ID card, your driving license, your university degree, for instance. All of these (many more) are things you do not want to transfer to someone else. They are yours! Here comes the first use case of SBTs.

Imagine receiving your university degree as an SBT, for instance. This would increase transparency and traceability, which would be beneficial even for employers. 

In addition to storing all sorts of personal information, SBTs can be used for ticketing as well as for creating exclusive airdrops, i.e. Souldrops as Buterin calls them. Imagine a DAO that wants to create a community and to issue tokens only to individuals who attended specific events, for example. Since the participants have an SBT entry token, it would be easy for the DAO to recognize to whom to souldrop tokens.

SBTs could also be used in credit reports. Wondering how this may work? It is simple. First, an SBT would be created for each loan. Once the loan is repaid, the respective SBT would be burned and replaced with a proof of repayment. This would ensure more transparency and protect lenders. 

The major question that may stay unanswered for you is what would happen if you lose the keys of your soul address. Don’t worry because users would be allowed to have a number of “guardians” who could authenticate the owner of the soul wallet in a number of ways like a conversation or a face-to-face meeting, for instance. The concept of soul wallets’ having “guardians”, however, is still vague and needs more work and improvement. We believe more answers would be available once SBTs become a reality later this year.


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