What are Soulbound Tokens? Discover all about SBTs!

With Soulbound Tokens (SBTs), a new development has emerged within the crypto market that is expected to play a major role in the future. Soulbound Tokens were first named in January 2022 by Vitalik Buterin, the co-founder of Ethereum (ETH). The world of crypto and blockchain brings with it several new concepts, including Soulbound Tokens.

These unique tokens are called non-transferable non-fungible tokens (NFTs), which in web3 can prove a person’s identity and achievements. This is also possible with the NFTs we know today, but Soulbound Tokens work in a different way. In this article you can learn all about Soulbound Tokens. What exactly are SBTs? What are the dangers? And how will SBTs play a major role in the future? You will discover it all on this page!

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Do you prefer to discover all about crypto through videos? Below you can find a detailed explanation about Soulbound Tokens!

What are Soulbound Tokens (SBT)?

Soulbound Tokens are unique tokens that are non-transferable. Already in the introduction, one could discover that the concept was discussed for the first time at the beginning of 2022, so we are dealing with a new understanding. This term comes from the game World of Warcraft (WoW), where objects that could not be transferred are called ‘soulbound items’.

The idea of ​​Soulbound Tokens was further developed and a paper on this was published in May 2022. This paper was titled “Decentralized Society: Finding the Soul of Web3.” This describes the role these digital tokens will play in a decentralized society, which is abbreviated as DeSoc.

Cryptowalls in this decentralized community contain SBTs, which reflect the obligations, employer, and credentials of the respective account. SBTs can therefore be a kind of digital CV, where the social relations are confirmed by other wallets.

To actually realize this decentralized world, it is important that companies, educational institutions and other governments also start with Soulbound Tokens. In this way, the relevant tokens gain value for the holder, the publisher and, for example, a recruiter or other parties who would like to know more about your background.

What are NFTs?

NFTs are tokens on the blockchain that are fully referred to as non-fungible tokens. Both an SBT and an NFT are located on the blockchain, making the information transparent and securely locked on the blockchain. An NFT is something unique and cannot be replaced. This means that an NFT is non-fungible, but what is fungible?

When something is fungible, it means that something is easily replaced. It is therefore not a question of a unique object which represents a unique value. A good example of this is banknotes or beer bottles. There are many of these items, so there is nothing unique involved. Every note or bottle looks the same.

However, these examples can contain unique codes, so even a bottle of Heineken or a 10 euro note can be unique. The big difference is that you cannot simply exchange an NFT for another copy, whereas this applies to banknotes of the same amount or bottles from the same beer crate.

Non-fungible items are much more unique and therefore irreplaceable. A watch and painting are examples of non-fungible tokens. You can’t just exchange them for another one, as this is not a problem with banknotes of the same amount. Tickets for a football match are also non-fungible because they represent a unique seat.

The difference here is that NFTs are recorded on the blockchain. Not only can you track the NFT collections, such as Bored Ape Yacht Club (BAYC) and CyberKongz, on the blockchain. Physical objects, such as paintings and watches, are also stored on the blockchain. In this way, collectors and appraisers can easily find out if they are dealing with an original copy.

Want to know more about NFTs? My colleague Matt has written a comprehensive explanation about this before, which you can consult via this link. He also made a video on this topic for AllesOverCrypto, which you can check out below!

The difference between an SBT and NFT

The differences between SBTs and NFTs are minimal, but I was able to find a few for you! The main difference is that an SBT cannot be traded or sold, while you can do whatever you want with an NFT. Because of this, the use case for both tokens is completely different. NFTs are digital certificates that prove you own something, while SBTs store non-transferable data about a specific person.

As a result, SBTs are not focused on trade and investment, but on product usability. As the popularity of NFTs grew, more and more use cases were devised for these non-fungible tokens. You could link almost anything to the blockchain with NFTs and the modalities seemed endless. Many of these ideas are consistent with the rationale behind SBTs. Examples include gym memberships or attending events.

What can you use SBTs for?

Since SBTs are non-transferable, SBTs do not appear to be a good investment. And that is right. SBTs are a means of communication which is associated with the crypto wallet. But why can SBTs be of added value? Fortunately, there are several ways that SBTs can come from.

As the world moves more and more to web3, SBTs will be very useful. Claims become verifiable via Soulbound Tokens. Today, anyone can say that they have completed certain surveys to boost their resume or LinkedIn page. With the advent of SBTs and the adoption of web3, these claims will be much more difficult if you cannot substantiate them.

As a result, SBTs provide a verifiable reputation system that you will have to deal with in various areas. The big advantage of this is that you can prevent problems or start reliable collaborations with this system. Thanks to SBTs, you can also recognize less reliable people and in this way be careful with the contact.

On the other hand, you can also find suitable employees or business partners on the basis of SBTs, both professionally and privately. The more widely SBTs are implemented, the more you can learn about someone through their digital wallet. This can give a lot of confidence beforehand. But how can SBTs be spread more widely?

Not only crypto-related things can be displayed via your wallet, but other aspects of life can also be shared this way. In this way, you can show various certificates or demonstrate that you have been present at certain events. You can also build a reputation in terms of creditworthiness, which is shown on the basis of an SBT.

In addition to the examples above, there are many more, such as:

  • Handling of records
  • Storage of digital ID cards or memberships
  • Implement reputation-based voting in decentralized autonomous organizations (DAOs)
  • Using social recovery to access someone’s lost private keys

The last one is perhaps the most interesting! It is the nightmare of many crypto investors and in the past people have lost thousands of BTC because of it. By losing your private keys, you can no longer access your crypto wallet and you can consider the coins lost. Thanks to a social recovery, more is possible in cases like this!

Are there already Soulbound Tokens?

The first Soulbound Tokens are already a fact! Crypto exchange Binance, the exchange with the most services, has started working with SBTs. These decentralized identity tools are implemented to certify verified user status on Binance’s platform. These tokens are called Binance Account Bound (BAB) tokens by the exchange itself.

With this, Binance itself has issued the first SBT on the BNB Smart Chain, the decentralized branch of Binance. In the future, this SBT will fulfill more functions, but with the KYC function, the first step is taken for now. This allows you to show your Binance identity through your wallet, making it easier to track bots, vote and distribute airdrops fairly.

Initially, the BAB token will be used as a trial version via Binance’s mobile app. When users go through KYC via the mobile app, they get their own BAB directly in their Binance wallet. Changpeng Zhao (CZ), CEO and founder of Binance, is positive about SBTs. He believes these tokens will change the way we connect and give blockchain technology more authority.

Wondering how to get the BAB token? Find out in the video below!

The Future of Soulbound Tokens

Writing about the future of Soulbound Tokens now feels a bit like writing about NFTs in 2014 or Bitcoin in 2010. The potential is clear, but the adoption is not there yet. Yet today, partly due to the adoption of NFTs and cryptocurrencies, it is easier to imagine the utility of SBTs.

The unique tokens are seen as an important part of the decentralized society of the future, where social contacts and relationships will be important parts of everyone’s web3 identity. The document on Soulbound Tokens, which was released in May 2022, was not only written by Vitalik Buterin. Eric Glen Weyl was also among the authors of the document.

Weyl expects to see more use cases for SBTs by the end of 2022. The more the adoption in web3 will increase, the bigger role Soulbound Tokens will become. These non-tradable tokens show someone’s credibility and interests, providing several benefits. In this way, SBTs contribute to the trust problem, which is a human problem.

Thanks to SBTs, you know the actual identity belonging to that crypto wallet and you can find out if the companies and studies on someone’s CV are correct. The caveat here is that privacy can be reduced because this can make a lot of data about someone transparent. The challenge is to maintain the advantages of SBT, while avoiding the disadvantages as much as possible.

In addition to the many advantages of SBTs, there are also a number of challenges that require great consideration. Privacy is an important challenge here because many people value privacy and public disclosure of personal data can also create dangers.


The fact that Vitalik Buterin, a person with Ethereum has shown his vision for the future and smart, is starting to talk about Soulbound Tokens, says a lot. These tokens can now play an important role and there is a chance that this role will become many times bigger in the future. Web3 is seen as the future, and in the web3 world there is room for SBTs.

In order for Soulbound Tokens to be of value, the adoption of these tokens is important. In addition, it is important that crypto projects get started with the problems that SBTs currently present. That Vitalik Buterin and Binance are working on these tokens is in any case good advertising for SBTers!

At the moment (October 2022), most of the world’s population does not have a crypto wallet, so the adoption of these tokens is still far away. Bitcoin, DeFi and NFTs show that this adoption did not happen overnight. However, getting to know SBTs early also means you can reap the benefits early! These fruits will not be the profits, as with cryptocurrencies or NFTs, but can benefit you during a job application or networking.

Looking for more information or have questions about SBTs or web3? Or would you like to meet other crypto enthusiasts? In our product’s free Discord channels Money Mastery from AllesOverCrypto you can ask questions and meet thousands of other crypto enthusiasts. Have other crypto-related questions? The easiest way is to look up your question in our FAQ. Another thing you can do is google your question + All about crypto. Let us know what you think about the future of web3 and SBT’s role in it!

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