Soulbound tokens- The most transformative move in crypto?

The crypto space has witnessed exemplary and exponential evolution and has certainly accomplished various tasks in a decentralized manner. One of them is decentralized identification. As we all know, recent developments and constant advancement in the crypto space render multiple novel ideas and philosophies, which result in the Defi space reaching new highs and the crypto community yielding high returns. With this arises a thoughtful question: Are the soulbound tokens, the talk of the town these days, on the way to becoming the next big trend in the crypto space? Well, let’s find out and answer this question in this video!

Hi Cryptopreneurs! What is your favorite crypto? Let us know in the comments!!
If you like making crazy money with crypto, this is the place for you; here, we explore new gems and explain the best new tiny undervalued cryptos with 100X or 1000x potential. You will also find all the news of the crypto space every day. So, make sure to subscribe and activate notifications for all the upcoming videos. Follow us on our social channels and join as members for added perks!!
Now without further ado, let's get straight to the point.

But before that, a quick disclaimer, this video is meant for only educational and informative purposes; this should not be considered financial advice. Crypto investments are made at one’s own risk.

The frenzy about the soulbound tokens initiated from the research paper recently published on the Social Science Research Network network co-authored by Vitalik Butrerin, Puja olhava and E Glenn Whale titled decentralized society- finding web3's soul.

Vitalik Buterin also tweeted that a different type of Non-fungible token is the future of Ethereum, and this tweet took the crypto community by storm, leaving the investors wondering about the mysterious and promising “Soulbound tokens.”

So cryptopreneurs, here we are to break down all the points regarding soul-bound tokens, and in this video, you will find everything you need to know about the next most transformative move in crypto, soon to arrive!

The paper proposes a digital identity revolving around a non-fungible token.
The research paper begins with the fact that many use cases of crypto can't be accessed at present due to the absence of proper identification mechanisms.
The solution offered is soulbound NFTs, finding non-fungible tokens that cannot be transferred from an individual's crypto wallet.
Soulbound NFTs can be connected to various diverse fields like work experience and education.
The issuance of such tokens to the crypto community members enables the creation of a distinctive society referred to as Desoc or Decentralized society.
This move shall be highly transformative.

There are various use cases of these soulbound NFTs, as presented in the paper.

First: The soulbound tokens can be used to prove the origin of anything, be it a picture or a video. This particular use case shall be critical as deep fakes are advancing.

Second, the soulbound tokens can be used as collateral loan credentials instead of credit scores.

Third: The soulbound NFTs can be beneficial for recovering the crypto wallets in case the private keys are lost.

Fourth: The soulbound NFTs unlock a better and more comprehensive mechanism of conducting airdrops as it shall be easier to check the affiliation of a cryptocurrency wallet with a cryptocurrency by simply checking the soulbound token it holds.
Interestingly, these airdrops shall be called soul drops.

Fifth: Soulbound NFTs shall facilitate better voting in decentralized governance in decentralized autonomous organizations or DAOs.
As we all know, most of the protocols use one token equals one vote governance mechanism, which offers a different set of problems.
People with power, money and influence can acquire more tokens to vote on proposals that benefit them rather than the community.
The concept of soulbound NFTs shall eliminate this problem completely.

Sixth: The soulbound NFTs shall assist in identifying the extent of decentralization in a decentralized protocol.

Seventh: Another important use case of soulbound NFTs is their ability to decompose property rights. It is possible when land and real estate are tokenized, and small portions can be bought as tokens.
The pre-existing use cases provide a solution, but the rights of the land or property, including the right to rent, renovate or sell the property, still lie with the owner.
This problem is solved by the lack of transferability in the case of soulbound tokens.

So these were the use cases of the soulbound tokens. If this knowledge proves to be valuable to you, don’t forget to hit the like button and share this video with other crypto community members! Subscribe to the channel for more informative videos and updates!

Now that we have discussed the use cases of these unique non-fungible soul-bound tokens, let’s discuss the advantages and disadvantages!

This system implemented by the soulbound NFTs renders various advantages.

Firstly, such a system would result in acquiring quality and relevant data, which could be leveraged to produce better predictions of outcomes of various events. Not only this, the soul-bound tokens would also enable people to have more control over what's being done with their data.
One of the primary challenges the crypto space faces is privacy and identification issues, isn’t it? The soulbound NFTs shall solve this problem effectively as the high-quality data
derived from soulbound nfts would give extensive data-related rights to the associated wallets facilitating the preservation of privacy, thanks to the consent about information sharing which comes with soulbound tokens.
Another associated advantage would be better voting practices in decentralized governance.

The soulbound NFTs offer the precise combination of the best elements of physical and virtual reality, specifically crypto-related technologies. With this, it becomes possible to bring exponential growth and efficiency to this essential element of a decentralized world.

According to the authors, the economic growth is created by the networks, and most of these networks are captured by either corporate monopolies or powerful governments.
Here is where Soul bound tokens come into play!
Soul-bound nfts offer a viable alternative to these two extremes.

Moreover, soul-bound nfts can provide stronger identity than the government-issued identities, thanks to their pseudonymous identity. This further implies that these unique tokens can be utilized to prevent personal attacks too! Soul-bound nfts make it possible to
prove the origin of the piece of media. They also provide proof of personhood that involves verifying the uniqueness of an individual.

Moving on, let us discuss the disadvantages and challenges. The authors point out that various dystopian scenarios could result from the use of soulbound nfts.
The first challenge is privacy
The authors have presented a series of technical solutions to the privacy
problem, which includes keeping sensitive information off-chain and providing a
the hash of that information instead and using a bunch of complex
zero-knowledge-based protocols.
The second challenge of implementing a decentralized society is catching cheaters or rather entities that disguise themselves in a way that makes them appear that they are a part of a crypto community by acquiring the required soul-bound nfts while secretly using another crypto wallet as their primary account.
The authors concede that addressing this issue requires more research. Even though they propose a series of solutions including issuing soul-bound nfts only to those who are well-known in a crypto community. Another solution offered was to punish any abnormal behavior from crypto community members and encourage whistleblowers to identify any cheaters lurking in crypto communities.
Well, these solutions aren't exactly ideal but they might work too!

So here is the breakdown of the research paper and the soulbound tokens; what future do they hold? Do the cons outweigh the pros? What are your thoughts? Let us know in the comment section below!

We hope we were able to provide some value and helped you to move a step ahead in your crypto journey. Be sure to check out our Crypto Brand called Cryptopreneur, get yourself the highest quality Crypto Merch available right now on the market, and make sure to subscribe so that you don't miss out on any of our content. Till next time, Goodbye.