SoulBound NFTs

August 2022

In the crypto world, security and authentication are of utmost importance. Most of us know about NFTs due to their trading values and ofcourse from celebrities showing them off. However, NFTs can have a wide range of other use cases. One such way in which NFTs can be used to revolutionize authentication is through soulbound tokens.

But what are Soulbound NFTs?

Vitalik Buterin, the co-founder of Ethereum, recently co-published a paper explaining Soulbound tokens and their applications. The best approach to understanding the concept behind Soulbound NFTs is through video games. Even though most items in video games such as Valorant can be bought, most special items are obtained only by completing special tasks. For example, the Riot gun buddy is only awarded to those who leave a positive impression in the game and demonstrate good sportsmanship. These special items cannot be traded afterward and signify an accomplishment. As said earlier, NFTs often have an intrinsic social value and hence their price depends on their trading value. Crypto coins also have been historically in the news due to financial speculation. Thus the cooler NFTs often go to the highest bidder, hence becoming a symbol of wealth. NFTs that are obtained only through special activities or accomplishments are also often bought out and this is where Soulbound NFTs come into play. Soulbound NFTs can well represent a wave of new crypto applications to take Web3 to the next level. Soulbound tokens are non-transferable in addition to being non-fungible. This means that a particular Soulbound NFT cannot be traded or transferred and can belong only to a particular individual. They are thus harder to obtain than tradeable items and hold the ability to become the credentials of the future on the Web3.

Soulbound NFTs for authentication

Current authentication services on the web provided by companies such as Google or Facebook (Meta) use multi-factor authentication to authenticate users on their portal. However one can easily gain access to sensitive credentials to gain unauthorized access to sites. Soulbound tokens on the other hand solve this problem once and for all. They are a reflection of your identity and can be used as your digital KYC. A problem that can plague any authentication portal, especially those on the blockchain is the loss of credentials. While losing credentials on existing auth services by Google or Facebook can be solved just by clicking on the “Forgot password” link, getting back credentials of your soulbound NFTs can be a bit tricky. It involves a consenting community of soulbound NFT holders to come up and vouch for you. Applications of soulbound NFTs are endless. From digital resumes to university diplomas on the blockchain, soulbound NFTs can be used as an authentication tool almost everywhere. Government rights can be distributed only to the deserved and this would ensure true decentralization. Soulbound NFTs can also be used to streamline the process of lending on the blockchain and to maintain a credit score. However the most common applications these days include attendance in community meets (POAP — Proof of attendance protocol) and Proof of Humanity attestation.