New Introductions - Ethereum 2.0
I have been intrigued by the idea of soulbound tokens (SBTs) ever since Vitalik Buterin and his authors published the whitepaper "Decentralized Society: Finding Web3's Soul". The many applications for soulbound tokens will be crucial to realizing the goal of a completely decentralized society. I expect the term "decentralization" to become more popular soon.
We were raised in a culture where we kept our important papers in files, safe from danger, and hoped nothing beyond our control would happen. As a result of technology, digital storage systems were introduced. Official documents are still printed on paper in most third-world countries, including mine. For instance, all of my academic credentials are printed on sheets. This is one of the reasons I'm curious about soulbound tokens. What if blockchain technology could be used to transmit important data like education, employment history, credit score, medical history, professional credentials, etc.? What if my school records could be transferred to my wallet address via a quick and reliable procedure? In addition to being cool, that would make it very simple for me to preserve such a document because it would be safe from hazards and easier to retrieve.
WHAT ARE SOULBOUND TOKENS?
A crypto token is a form of virtual currency or a unit of measure. The digital equivalent of a specific item or utility in a blockchain is represented by tokens. In addition, tokens are fungible and tradeable. Tokens could represent financial assets, utilities, stocks, exchanges, or NFTs. The web3 space is becoming more diverse as more individuals from various backgrounds join it, opening up new opportunities and leading to the discovery of more solutions and products in that field.
Unlike other tokens that are available, soulbound tokens cannot be transferred. The reason for this module is the anticipated use cases. As non-fungible tokens (NFTs), soulbound tokens are anticipated to contain data such as academic and medical records, associations, and any other kind of information that makes up an individual or an institution. These tokens are stored in wallets referred to as "Souls."
Reputation, recognition, and soul-bound tokens
The President of Nigeria will always be regarded as a one-time leader, Even after his term in office. A soulbound token will inscribe this honor on his provided "Soul" on the Blockchain. He could always show others that accomplishment with his SBT. Recognition and reputation.
Another great use for soulbound tokens would be in a decentralized autonomous organization (DAO), as most such organizations base governance, voting, reputation, and recognition on tokens. Fair governance is achievable with soulbound tokens. DAOs could issue SBTs that assign voting power based on users' engagement with the community rather than the existing governance approach, which is dependent on how many tokens a member possesses. This concept would provide the most devoted users with the best reputation and the greatest voting power.
Law enforcement organizations could also keep criminal records using soulbound tokens. Imagine if a corrupt politician had to live his entire life with that record attached to his soul and displayed for everyone to see on a ledger. I doubt anyone would continue to embezzle public funds.
Additionally, your favorite performer might decide to introduce an NFT with tickets to his shows included as a utility. How could one accomplish this? That's right, soulbound tickets!
The list of data that needs to be verified is unlimited, as are the applications for soulbound tokens. The essential point to keep in mind is that soulbound tokens are all of the verifiable facts that are saved in your private blockchain wallet, split into separate NFTs.
Controversies surrounding Soulbound tokens
The "soul" is vulnerable to digital threats like hackers while it is stored on the blockchain. The keys to a user's Soul address may also be forgotten. The team has revealed that in such situations, a social recovery model will be used. Transactions can be approved using a single "signing key" in a social recovery system. There is also a set of at least three "guardians" whose majority could agree to modify the account's signature key (and maybe a much higher number). The signature key is the owner of the soul. The signing key can add or remove guardians. . With social recovery, users can "appoint guardians"—a group of people or organizations. If a user's wallet is compromised, these guardians have the authority to access it and modify the private keys. The authors state that using this paradigm would "need a member from a qualified majority of a (random subset of) Soul's communities to consent" to obtain a Soul's private keys.
The development is also the subject of a great deal of debate and controversy.
As an example, consider the problem of malicious actors targeting members of specific communities by leveraging information. There is also a chance that somebody may send an address unsolicited SBTs, which could damage the owner's reputation.
Conversations about SBTs have become more frequent in web3 because of the merge already being close. By the end of 2022, soulbound tokens should be completely operational. The adoption of this new development would undoubtedly enable web3 enthusiasts to explore and optimize it, helping the space to make the most of it.
Thanks for reading. What are your thoughts on this technological innovation? Please let me know in the comments!
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