Soulbound – Next-Level NFT: Challenges, Prospects, and the New Digitalization Era

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Soulbound – Next-Level NFT: Challenges, Prospects, and the New Digitalization Era

Non-Fungible Tokens, or simply NFTs, although they have seen better days, they managed to turn the tides of the blockchain world in their finest times. Even still they catch the eye of the average crypto enthusiast. Nevertheless, the enormous hype around NFTs is long past. The technology, whose usage potential was almost limitless, found its utilization in art, economics, marketing promotions, and many other walks of life. The world however is constantly moving forward, and the question of shaping a new, more advanced technology, was simply a matter of time. Fortunately, this time has come.

What is Soulbound, and How the NFTs Are Related

It all began with the World of Warcraft (WoW). The legendary RPG had a distinct attribute in its gameplay design, which was granted to the players for defeating “bosses” and fierce rivals. The gig about Soulbound items is that it is impossible to be sold, exchanged, or dumped. Also, it can not be bought or received in any other way except dealing with difficult enemies. 

The exclusivity of those trophies, which became the hallmark of WoW, later turned out to be the basis for an eponymous real-life concept. The foundation was laid by a man, who needs no introduction to the crypto community – Vitalik Buterin.

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The creator of Ethereum got inspired by the in-game Soulbound and coined the idea of creating the on-chain Soulbound – a blockchain-based decentralized technology, whose pillars are non-transferability, unchangeability, and uniqueness. Just like World of Warcraft’s Soulbound, the code embedment on the blockchain is simply impossible to be altered in any way. 

Soulbound technology unlocks the potential for creating Soulbound Tokens (SBT) – the tokenized assets, which obtain all the previously mentioned characteristics of unchangeability and non-transferability and contain specific data. 

So, what does NFT have to do with the Soulbound?

Simply put, SBTs are literally NFTs, but impossible to be changed, sold, or transfer.

Notably, the potential of Soulbound integration is quite vast. As a matter of fact, Soulbound can level the manipulations with DAO government rights, or genuinely indicate the academic skills, medical documentation, and qualification, by and large – part and parcel of a person’s identity.

Significantly, Soulbound is becoming an integral element of the Web3 dimension. The most recent case in point: WhiteBIT, one of the largest European crypto exchanges, created WB Soul – the Soulbound-based ecosystem, a technological basis of their upcoming native blockchain WB Network and a requirement for participation in its retrodrop.

The utilization of Soulbound is promised to be represented in two ways:

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  1. Soulbound Attributes, referring to the variables (i.e. balance on the exchange),
  2. SBT (which can serve as event passes, achievements, and other unique and non-changeable characteristics of the user).

What is more, the exceptionality of Soulbound technology lies in a more advanced approach to KYC. The credentials and digital identity of users can be represented in Soulbound tokens. 

Still, it is pivotal to point out that Soulbound can become a transforming driver for NFT technology. Let’s regard this idea deeper. 

Soulbound as NFT Enhancer

In this day and age, NFT has a signaling meaning within the social layer. The possession of exclusive collections, dedicated to a certain brand, piece of artwork, or event, is indicating the users’ engagement in pop-cultural initiatives, and sometimes, access to something exclusive.

The latter point is a basis for heated debates. In fact, the NFT could be received or could be bought, hence the definition of exclusivity here is doubtful and obscure. Consequently, it is a bit complicated to understand what each piece of NFT is trying to indicate. 

What if NFTs genuinely indicate that a certain piece item is received uniquely? What if the creation of a sort of NFT would not need to be signaling solely wealth? Similar perspectives have been tried to be figured out for quite a long time, and the closest to its achievement is POAP (Proof of Attendance Protocol).

What Is POAP, and What Soulbound Picks from It?

Regardless of Soulbound, the most advanced example of contributing to the new meaning of NFTs is POAP, or the Proof of Attendance Protocol. Its crucial concept is to actually prove and represent the participation of the user in certain events. 

Although POAP is limited only to events, it voices the foremost benefits of Soulbound technology. Despite the more detailed monitoring of the attendees, the technology would clearly indicate whether the NFT is obtained exclusively by taking part in a distinct initiative. Simply put, the users would be more interested in the fact of a person’s engagement, but not in the way how a NFT was purchased or obtained. 

Although POAP implies a basic understanding of the Soulbound and its goal, it is not perfect. The latter is much more versatile, given the fact that it is not confined to the events, but can be utilized in many other realms.

Conclusion

Soulbound is with no exaggeration a technology representing the zeitgeist. Whilst the majority of users seek more control over their digital identity, Soulbound is a comprehensive answer to this concern, allowing users to represent their vital information in a secure and decentralized way. Remaining in a stage of leaving the papers, we simply can not be acquainted with all challenges which soulbound would unlock, but should it be the obstacle on the path towards a better future?

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I am a crypto-enthusiast with 5-year experience in copywriting. Worked for web3 companies and cryptocurrency exchange, which drove my keen interest towards the industry. Been writing for different publications on cryptocurrency, technology, economics and politics.