Your whole identity could soon live in ‘Soulbound tokens’ on web3, Ethereum’s co-founder says

Early this month, Vitalik Buterin coauthored a paper outlining his vision for a “decentralized society” (DeSoc) where individuals accrue a permanent record of merits and attributes that are stored in private blockchain wallets as non-tradable crypto assets.

The writers dub those achievement badges “soulbound tokens” (SBTs).

“Imagine a world where most participants have Souls [digital wallets] that store SBTs corresponding to a series of affiliations, memberships, and credentials,” the authors write, suggesting that their idea for SBTs could resemble something of a Web3-based CV.

“For example, a person might have a Soul that stores SBTs representing educational credentials, employment history, or hashes of their writings or works of art,” the paper says.

Unlike a non-fungible token (NFT), which is a collectible digital asset that can be traded or sold, SBTs are designed to be untradable—a little more like a Boy Scout badge than a baseball card.

According to the paper, an individual would gain SBTs from other Souls within the decentralized society. A university, for example, might issue SBTs to its alumni to verify that they have graduated from that school.

To be clear, that also means SBTs aren’t really going to replace NFTs. The two digital assets, theoretically, serve different functions. While an NFT is designed to be tradable and act as a financial asset, an SBT, Buterin suggests, is supposed to serve as a proof of character, rather than a proof of wealth.

But as the authors attest, there are major dangers to the proposal.

For starters, the whole thing sounds similar to China’s idea of building a “social credit system” that would supposedly punish citizens for demonstrating bad ideological behavior. Since SBTs are issued to individuals without their consent, the system could be used to brand “scarlet letters” on people, making the technology an ideal tool for authoritarian states.

A society built on SBTs could even reinforce discrimination indirectly. A database of SBTs could provide a marker to “automate red-lining of disfavored social groups or even target them for cyber or physical attack, enforce restrictive migration policies, or make predatory loans,” the authors write.

For that reason, Buterin and his coauthors consider individuals might need the option to “burn” or hide their SBTs from the public, choosing to reveal them only when necessary.