Ethereum’s creator thinks Soulbound tokens are the next big crypto innovation
The answer: It’s both. You may have heard of non-fungible tokens (NFTs). But have you heard of soulbound tokens (SBTs)? Better pay attention because veterans think the next crypto cycle will focus on them.
The next web3 use case
Ethereum’s creator Vitalik Buterin has a good track record of creating valuable innovation; just look at how far Ethereum and automated market makers (e.g., Uniswap) have come. His words carry a lot of weight — so when he ideates a new concept, expect entrepreneurs and money to follow.
In a research report published in May, Vitalik Buterin proposed a new type of token: soulbound tokens (SBTs).
- NFTs vs. SBTs: Both digitize ownership — except SBTs can’t be transferred once received.
- Use-cases: University degrees, educational/course credentials, employment history and web3 credit scores.
Communities or games could issue SBTs for completing achievements. Some are even comparing this to China’s controversial “social credit system,” — which ranks and punishes citizens based on their actions.
NFTs haven’t even picked up mainstream adoption yet, and the crypto industry is already moving on to its next innovation. However, there are many problems and unanswered questions with SBTs.
- Can you hide an SBT if you don’t want others to see it?
- Can you delete an SBT if someone sends you an unwanted token?
Having your educational or employment credentials readily accessible on the blockchain could lead to discrimination or targeted cyber attacks.
Unlike NFTs, users won’t be able to profit from trading monkey jpegs. If SBTs do take off, it could drive more fees to layer 1 blockchains like Ethereum — and birth new platforms and infrastructure.
Investors: Leading the next crypto bull market?
Web3 reporter Jason Levin interviewed the report’s co-author, Glen Weyl — who expects the first SBTs to be available by the end of 2022.
- Past: The crypto bull market in early 2021 was centered around NFTs. The jump in NFT trading volume drove a surge in revenue on Ethereum’s network.
- Future: Weyl suspects the “2024 up cycle will focus on them [SBTs].”
Are we finding a solution to a problem or a problem to a solution? Regardless, expect many crypto startups emerging this year to focus on SBTs.