NFTs, or non-fungible tokens, are unique, one-of-a-kind tokens that can represent anything from digital art to in-game items. Soul-bound NFTs are a special type of NFT that can never be transferred from the wallet that they're given to. This means that soul-bound tokens are not tradeable, which gives viewers confidence that the wallet who owns the item really did the thing, attended the event, or took the action that the token is meant to represent. Once you own a soul-bound NFT, no one else can have it—making it a truly unique and identifying asset.
Soul-bound NFTs are still relatively new, so there’s not a lot of information out there about them yet. But we’ve put together this guide to help you understand what soul-bound NFTs are, how they work, and why they might matter to your business.
NFTs exist on a blockchain. As the name implies, they are not interchangeable—each NFT is unique and cannot be replicated. They can represent any type of digital asset from images and music to game items and even real estate ownership. NFTs have become increasingly popular in recent years due to their versatility, as well as their ability to ensure the originality of an asset. On platforms like ours, NFTs are easy to mint at scale.
With so many applications, NFTs have caused a stir in the business world. From helping protect online creators against plagiarism to transforming the way we trade in virtual goods, NFTs are proving themselves as invaluable tools that may just revolutionize how we track ownership and authenticity.
Soul-bound NFTs are the latest concept to emerge from the web 3 landscape and aim to create exclusivity and permanence in a fluid online world.
Soul-bound NFTs are a new construct. They create a forever lock between the digital asset and its owner. This ensures not only that the token is linked to a specific individual but also that their access rights are immutable.
Because of this permanence, soul-bound NFTs are akin to a social security number but dynamic, as they can be programmed to take action or update regularly. This feature of soul-bound NFTs serves as an effective way for anyone to digitize their identity or personal brand, possibly to create workflows attached to it.
Some examples of unique soul-bound NFTs include a token given for attending an event, a membership for an exclusive club, or anything that represents proof of a person doing a thing or getting a one-time reward.
Soul-bound NFTs can also be used in a number of enterprise settings to make the way we live and work more efficient through digitization:
A key aspect of soul-bound NFTs is that they don’t mean anything if they aren’t attached to a soul. In a technical setting, this is similar to browser certificates in modern web computing. SSL certificate providers can generate linked certificates for an organization and our browsers can automatically check whether we’re connecting to the correct, verified domain. In more personal terms, we mentioned that it's like a social security number, as it’s a record attached to a person through a lifetime.
A project like Proof of Humanity might establish top level identities or “souls”. Then from there, a company can start attaching soul-bound tokens to users. We can see how this helps establish reputation, provenance, and reality in the metaverse. We can also see how the traditionalists might shudder at the thought of a digital record of souls.
Soul-bound NFTs offer a new way to bring permanence and ownership to the metaverse. It takes a technology that began as a techy jpeg and elevates it to the function and importance of a birth certificate. Soul-bound NFTs allow people to truly immortalize events, ideas, and secure ownership indefinitely in a digital world.
Imagine you have a company that wants to reward people with an NFT each time they attend an event, but you don’t want those NFTs to be transferable to non-attendees, diluting the value of actually attending. A soul-bound NFT would make digital events more tangible, rewards more lasting, and, in the end, bonds with customers more permanent.
Simply put, soul-bound NFTs are digital assets that exist on a blockchain and are attached directly to a person. They can be used to represent anything from an ID to a trophy, and stay with a person for a lifetime. It’s an interesting construct that should be explored by enterprises that want to bring the value of web 3 to their business but are worried about fluidity of assets and more focused on clear, immutable identity.
Kaleido is your easy button for developing next era blockchain based business applications.