SoulBound tokens paves a new path for using an NFT, unlocking fresh opportunities for both brands and consumers.
SoulBound tokens emerge as a cutting-edge addition to the realm of blockchain-based assets, along with other crypto tokens and NFTs. These tokens represent one of the latest evolution in blockchain technology and expand the horizons of decentralized token development.
Introduce a game-changing concept, Soulbound tokens can transform user retention and consolidate their digital identity in new ways. While NFTs have gained prominence in fields like art, real estate, play-to-earn gaming and collectibles, their primary focus has been on ownership rather than showcasing earned attributes such as ability, experience, or knowledge.
Read more: NFT Utility & Rewards – The Ultimate Guide to Empower NFTs
A definition of a Soulbound Token NFT
A SoulBound token stands as one-of-a-kind blockchain asset, possessing a distinct nature that sets it apart from others. These tokens serve as tangible proof of ownership or the completion of specific actions, ensuring that the rightful owner is the one who earned it, not just someone who purchased it. Soulbound tokens are the in fact, non-transferable tokens.
These tokens, fortified by blockchain measures, securely store crucial information such as identity cards, medical or any other records, employment history, academic achievements, and more. The data remains unalterable and securely encrypted. Moreover, the SoulBound token’s functionality extends to the development of dedicated wallets called Souls, further fueling the demand for web3 wallets.
The non-transferable nature of soulbound tokens eliminates the ability to sell them to the highest bidder. It thus significantly reduces the monetary incentive for creating multiple accounts. Soulbound tokens or SBTs provide a transformative solution by ensuring that all data is either privately owned by the individual or publicly displayed for everyone to see.
When an individual acquires a soulbound token, it becomes an integral part of their personal wallet and identity, incapable of being sold or transferred to another person. This unique attribute makes SBTs an ideal digital representation of assets that cannot be acquired through traditional means.
Owners of a Soulbound token have complete control over who can access the data it contains, and can revoke access at any time. This empowers individuals seeking maximum control over their personal data, enabling them to manage their data in token form instead of relying on centralized databases. As a result, they forge a path toward a more decentralized and inclusive digital future.
Read more: Token Gating: How does it unlock the Power of Exclusivity?
How does it work?
The soulbound token resistance lies in the calculation of the number of soulbound tokens held by an account, as previously mentioned a “soul.” Individuals have the flexibility to possess one or multiple Souls, each dedicated to storing different categories of data. For instance, one Soul can securely hold academic records, while another Soul can safeguard medical records.
Identity Soul related to personal identification documents such as social security numbers, licenses, national ID, can be added. Furthermore, the integration of multiple Soul wallets enables the consolidation of a person’s comprehensive details onto a single dashboard.
However, while users still have the option to create multiple accounts for different soulbound tokens, it becomes impractical to accumulate sufficient reputation and soulbound tokens from reputable issuers across multiple accounts.
Souls can also serve as representations of entities that distribute SoulBound tokens. For instance, brands can adopt Souls for a specific campaign and issue SBTs to each loyal customer or member. This is to ensure secure verification of their affiliation and prove the membership status. SoulBound tokens can encompass multiple achievements such as graduation degrees, badges and even more.
Read more: NFT platform – Why do brands and creators need it?
What fundamental differences lie between an NFT and a Soulbound Token?
NFTs and SoulBound tokens diverge in their nature and capabilities within the realm of blockchain-based assets. While NFTs are renowned for their uniqueness and indivisibility, SoulBound tokens introduce an additional layer of functionality.
NFTs, as standalone digital assets, represent items such as collectibles, ownerships and more. Their distinctiveness lies in their ability to be owned, bought, and sold, but not easily divided or replicated. On the other hand, SoulBound tokens present a new paradigm by primarily function as proof of identity, enabling the tokenization of various qualifications. They incorporate a unique recovery model through social recovery, allowing for the retrieval of lost tokens.
Inversely, NFTs are designed for proof of ownership over assets, such as tokenized real estate records, and lack the ability to be recovered once lost. On top of it all, SoulBound tokens are non-transferable, firmly bound to their respective Souls, while NFTs can be freely bought and sold on various marketplaces.
Some use cases of the Soulbound Token
In the current landscape, centralized entities hold the power to monetize and control users’ data, limiting long-term value creation and access to data profits to a select few. This monopolistic control undermines the potential for widespread data ownership and hampers innovation. Soulbound tokens offer a groundbreaking solution by enabling individuals to own their data privately or display it publicly.
Consolidating User Digital Identity
With their inherent characteristics, SBTs present an opportunity in the realm of digital identity. While not exclusively tied to individuals, these tokens enable enhanced verification through their intricate network of connections. Soulbound tokens, residing on immutable blockchains, possess an inherent resistance to tampering and falsification.
Inclusive Voting Systems and Enhanced Governance
One of the long-term implications of SBTs lies in their potential to transform voting systems and governance within Web3. Through the issuance of Soulbound tokens, every community member gains governance rights, fostering inclusivity and illustrating their level of involvement. SBTs become the measure of participation, attendance, and regular voting, empowering more engaged individuals with higher weighted votes.
This revolutionary approach resolves the challenges associated with vote manipulation by influential entities. Financial status no longer dictates power, as Soulbound tokens prioritize genuine involvement over financial muscle. More than that, the effectiveness of bot attacks diminishes, as fake accounts fail to earn contribution or participation SBTs.
Transforming Property Rights with Non-Transferable and Revocable Tokens
Web3 often faces limitations when it comes to property rights, as they are intrinsically intertwined. Traditional real-world contracts, such as rental agreements, prove challenging to replicate in Web3 due to the inseparability of property rights. However, the introduction of non-transferable and revocable tokens, like Soulbound tokens, presents a viable solution. These tokens break new ground, enabling the creation of rent contracts, where property usage can be granted without compromising ownership or profiting through subletting. Such innovations bring blockchain closer to mainstream adoption, revolutionizing the way we engage with property rights in the digital realm.
Unleashing the Power of Non-Transferable Assets in Gaming
The potential of non-transferable assets comes to the forefront, particularly in the gaming realm. Within the crypto gaming industry, the transferability of high-value in-game assets has caused various issues. Some speculators can easily purchase these assets at a premium, swiftly entering the game at an advanced level and reaping immediate profits. This not only disrupts the game’s equilibrium but also creates an unsustainable play-to-earn economy.
By transforming the most valuable and sought-after in-game assets into soulbound items, a more balanced and fair gaming environment can be established. This shift ensures that those who actively engage with the game and contribute their skills and efforts are the ones who reap the greatest rewards. Preventing the dominance of capital-backed “whales” in economic loops fosters a healthier and more sustainable gaming ecosystem.
French luxury fashion house Louis Vuitton is gearing up to release a new physical-linked non-fungible token (NFT) collection called Via Treasure Trunks, paving the way for exclusive members-only products and experiences.
These collectibles will be sold as soulbound tokens, which implies that once purchased, they become non-transferable. While NFT holders won’t have the option to sell their Treasure Trunks as a whole, they will still be able to sell individual items they mint in the future. This approach adds a level of exclusivity, as the soulbound nature of these tokens limits their circulation and enhances the value of the individual items within the collection.
In a nutshell, SoulBound tokens offer a revolutionary approach to digital ownership, identity verification, and property rights within the blockchain ecosystem. For brands, SoulBound tokens present a game-changing opportunity to leverage the power of blockchain technology and enhance their strategies. By adopting SoulBound tokens, brands can transform user retention and establish unique and secure relationships with their customers, issuing tokens that represent exclusive benefits, achievements, and rewards. Take the leap into the world of SoulBound tokens with METAV.RS and embrace a future where ownership, identity, and engagement are seamlessly intertwined in the blockchain-powered landscape.
