When we begin to assume what next can emerge in the blockchain-powered realm beyond what already exists, a fascinating innovation suddenly arrives to thrive in the crypto landscape. Now, the Soulbound Tokens have created a buzz among crypto enthusiasts. Soulbound tokens(SBT) are often referred to as nontransferable or non-tradable tokens, unlike the NFTs. Once issued to a person’s wallet, they remain associated with the owner and cannot be moved from the wallet to anyone, representing the person’s achievements in the digital world.
Soulbound tokens possess distinct features to set them apart from traditional tokens, and they emphasize the owner’s reputation based on ownership rights and achievements in the identity-oriented crypto ecosystems. Soulbound tokens can be the next thing to fully revolutionize the web3 ecosystem and major industries such as real estate, education, healthcare, etc.
If you are not yet familiar with this new entrant in the market, no worries, we will take you into a deeper understanding of what Soulbound tokens are, their significance, and their unique nature and role in the different industry verticles.
Understand Soulbound Tokens (SBTs) & Characteristics
Soulbound tokens are tied to the owner’s identity and are non-interchangeable, exactly the opposite of the nature of NFTs.Talking about their originality, this out-of-the-box concept was brought by the Ethereum co-founder Vitalik Buterin, as per the media reports.
In simple words, we say that these are the tokens bound to the soul of the owner till the end, as the name signifies. The idea is inspired by the game “World of Warcraft,” according to the resources. In this game, the digital items earned by the players stay linked with them throughout and can’t be sold. Therefore, Soulbound tokens redefine the concept of ownership and identity innovatively.
Soulbound tokens are classified into two categories:
Self-certified: Self-certified Soulbound tokens carry personal details, including education, experience, credentials, achievements, etc. The owners have overall control over their details. They can choose what to share with other parties and keep the other information private as they want.
Soul-issued: Soulbound tokens issued by organizations, companies, and institutes to other people for credentials, subscriptions, and memberships.
Let’s explore its impeccable characteristics:
Ownership Control
Soulbound token is the most legitimate source highlighting the tamper-proof ownership. It builds trust among the users with transparent ownership verification, mitigating the possibilities of identity fraud.
Non-fungible
Non- fungibility is the essence of Soulbound tokens, which makes them unique. The non-transferable nature makes them distinct and carry their metadata and properties. The non-fungibility of the SBTs makes them applicable in gaming, digital art, etc.
Immutable
Immutability is the core trait of the Soulbound tokens, just like the other tokens but with greater significance. Once a Soulbound is created, it is secure from unauthorized altercations, making it a reliable source of identity and reputation in the crypto space.
How Do Soulbound Tokens Work?
Soulbound tokens are backed by blockchain development, which is an intricate and unique process however, we have outlined the basic working process of the SBTs below. These are designed on Ethereum blockchain technology, inheriting the properties of the traditional tokens while supporting non-transferability, unlike the NFTs.
A blockchain development company follows a systematic process for the development of Soulbound tokens, considering the overall requirements of the project. The most time-consuming factor is constructing the right blockchain infrastructure, including choosing blockchain technology and integrating smart contracts.
Generally, SBTs are built over Ethereum blockchain technology, a superpowerful distributed ledger. The next step is writing smart contracts that contain self-executing conditions for the government’s purpose. Smart contracts enable the SBTs to be transfer-resistant and scarce.
Minting Process
Creating a new SBT over the blockchain network involves a minting process that has associated charges as gas fees. The minting process is the same as the traditional minting process for the rest of the tokens.
Wallet Assignment
Once the SBT is minted, it is meant for the same owner; no transfer of the token is possible. Once the token is minted, it is associated with the unique wallet address. The wallet could be personal or institutional, which represents verifiable ownership.
Transfer Restrictions
The smart contracts of SBTs include transfer restrictions, which help restrict moving the token to different wallets. Specific conditions are embedded in the smart contract code to enable the transfer. These restrictions are customizable and foster the purpose of the Soulbound tokens.
Importance of Soulbound Tokens In Crypto Landscape
The emergence of the Soulbound tokens has reshaped the blockchain development industry with its unique features like authenticity and permanence. Various industries are ready to experience the unmatchable significance SBTs bring to the table.
Better Security
Now you have understood that SBTs are not for exchange like the traditional cryptocurrencies and NFTs also. It represents significant achievement gained by the users, which stays with them lifelong. So, ultimately, every owner would put all efforts to not lose it but secure it.SBTs core nature ensures that your identity is tamper-proof and restricts unauthorized access from any part.
Rising Demand in the Market
Soulbounds have rising demand every day across various business domains like gaming, healthcare, and real estate. Most crypto entrepreneurs are showing keen interest in Soulbound Token development. SBTs strengthen the idea of ownership of real-world objects also through tokenization in crypto, making it more efficient and secure. In the coming times, SBTs are expected to rule most business sectors.
Support for Web3 Applications
Web3 applications have been facing certain limitations that restrict their growth before Soulbound tokens. The biggest one still is trust among the users about their rights and ownership. But now, the stakeholders are in relief with the invention of SBTs. With integrations of the Soulbound tokens, the trust gap will be removed while maintaining privacy.
Explore the Benefits of Soulbound Tokens
The non-transferable nature of the SBTs offers several benefits to major industries. It supports better decentralization credential management, prevents fraud, and a lot more that leads to demand for Soulbound token development. Let’s explore the key benefits of Soulbound tokens:
Enhanced Control and Authorization
Soulbound tokens can be used to grant access to system resources based on the ownership of SBTs or the identity of the person. It promotes secure, selective access without any risk of access transfer, as every identity associated with SBTs is unique.
Employment Decentralization
SBTs can be applicable in the verification of the skills of employees, including achievements, experience, education, and more, with unique SBT-powered accounts. Employers can unleash the power of trustless professional verification processes.
Support Community Building
In the world of DAOs, the use of Soulbound tokens can create temper-proof identities that represent the memberships of the users. It will boost accountability and engagement for better outcomes.
Use Cases of Soulbound Token Development
Medical Records
Patient records can be secured with the implementation of the SBTs. SBTs help in maintaining the integrity of the records, and patients can feel assured. Medical centres can offer unique SBT to each patient into the patient’s wallet. Only authorized members can access the wallet. Moreover, vaccination certifications can be linked with the SBTs in the patient’s wallet account. It helps in retaining the medical records and credentials of the patients.
Loyalty Programs
Loyalty programs can leverage the power of SBTs to overcome existing issues like swapping and selling. Soulbound tokens can diminish scams by offering rewards and incentives that are non-transferable and cannot be accessed by any third person by any means. The businesses can offer exclusive offers and prizes considering the prior engagement and interest of the users.
Voting
The conventional digital voting system has various loopholes that comprise security, ownership, and privacy. The introduction of SBTs helps in overcoming the complex challenges of identity verification and safety. As we know, the Soulbound tokens have unconventional features like transfer restrictions; they can preserve the integrity and identity verification process of the electronic voting process.
Educational Records
Educational institutions can issue SBT-powered certifications when passing out to universities. Every student and the institute will possess the credentials of student accounts, which can be used for a unique attendance marking system. The university memberships will be attested by the SBTs only, which maintains a seamless ecosystem.
Managing Social Media Bots
There is a rapid increase in automated bots on social media networks extracting personal data from unsuspecting users using malicious strategies. Soulbound tokens can help in creating a strong identity-based environment where verification happens through Ethereum Name Services. It will create a more authentic and open atmosphere to protect user privacy and maintain anonymity.
Digital CV
An innovative concept of creating a digital CV backed by SBTs can be the next revolution across the educational and professional domains. The SBTs ensure that the digital CVs are verifiable and can speed up the hiring process. Employers would also benefit from this use case by checking the previous working history of the employees mentioned by the previous employers.
How to Choose a Token Development Company for Created Soulbound Token?
Considering the possibility and benefits of the Soulbound tokens, industry experts are stepping forward to adopt this buzz-creating trend to skyrocket their business growth. However, before choosing the right Token Development Company, conduct deep research and pay attention to certain aspects as mentioned below:
Technical Experience
Examine the company’s expertise in blockchain development. Explore the portfolio and channels, and check the client testimonials first. If your project scope comes under their expertise, then consider consulting with them.
Customized Approach
Every crypto project compasses unique complexities and requirements. One approach does not go well with every project. Find blockchain experts that offer you customized service plans to meet your goals.
Transparent Costing
The pricing policy should be transparent and cost-effective. The cost should only vary depending on the project goals and business needs. Collaborate with a company that fulfils this condition.
Shedding Light on the Future of Soulbound Tokens
Soulbound tokens are anticipated to bring a paradigm shift across blockchain-powered solutions in the upcoming times. With the intense power of the SBTs to restrict malicious activities and web3 scams, it can be the solid foundation for the Defi applications and Web3 environment.
As it encourages a sense of pride with ownership, we hope to unfold the exceptional applications and use cases of Soulbound tokens in today’s ever-evolving tech realm.
Wrapping Up
The emergence of the Soulbound tokens has revamped the mechanisms of digital ownership and anonymity. The unique properties of SBTs can disrupt giant business domains like gaming,web3, finance, education, real estate,e, etc. Seeing the hype, the crypto enthusiasts have started rolling out their own Soulbound tokens for crypto exchange platforms and blockchain-based platforms. However, certain challenges, such as security transparency, are yet there to be handled carefully by the blockchain development companies.
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