Are SBTs the next big Crypto Thing after NFTs?

Recently, crypto legend and Ethereum co-founder Vitalik Buterin co-published a 37-page paper that revolves around soulbound tokens in short SBTs.

According to the paper, these play a crucial role in Buterik’s plans to develop Ethereum towards an ecosystem for a decentralized society.

Therefore, will 2022 be the year of SBTs after 2021 was the year of NFTs?

Soulbound Tokens or SBTs in a nutshell

Let’s start with a brief overview of the idea behind SBTs.

The name comes from the gaming world. In World of Warcraft, soul-bound items are bound to a player forever. This means that the player cannot pass on or sell the items.

It is supposed to be similar with SBTs. In fact SBTs are non-fungible tokens. But with the restriction that they can not be transferred but may be revoked.

A first understandable use case are e.g. university degrees and other certificates.

Especially in the crypto space, which is plagued by scams and thefts. SBTs could be an interesting answer to some problems like identity fraud.

Paving the way to a Decentralized Society (DeSoc)

The dream of Web3 has always been more decentralization. Be it in Finance (DeFi) or in the way we work (DAOs). And it is in the hiring process among the latter that Buterin outlines another idea, which he calls “souldrops”.

For example, a tech company might gather people for a hackathon, or even a specific goal. Participants then receive an SBT via airdrop, more or less as an award. This can be compared to LinkedIn Skills, but more universal.

But let’s come back to decentralization. According to Buterin, the lack of social identity in Web3 today means that the gap is being filled by central Web2 structures. With all its disadvantages.

For example, NFTs are marketed primarily through OpenSea and Twitter. And even the big crypto exchanges like Coinbase or Binance are anything but decentralized.

Bottom Line on SBTs and their role in Crypto

Ultimately, the paper says that we are still in the very early stages of the journey to DeSoc

Nevertheless, SBTs are an interesting building block in the Ethereum ecosystem, which increasingly sees itself as a toolset for the Decentralized Society.

What do you think? Are SBTs a the next big crypto thing or will they rather fade into oblivion? Let me know your thoughts here or on Twitter.

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Header Image Source: Pixabay, Pixabay License

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