NFT REVIEW NEWS Soul-Bound NFTs: Everything You Need to Know

Soul-Bound NFTs (SBT) are digital assets like normal NFTs, they are built on the blockchain, non-replicable, and one of a kind. What sets them apart from standard NFTs is that they are not transferable. In this article, we look at this unique digital asset class and its potential. Let’s dive in!

What are Soul-Bound NFTs (SBTs)?

The idea of an SBT came from World of Warcraft, where users could acquire rare soul-bound items. Not only were these items difficult to get, but they were also non-transferable between users. Viitalik Buterin and some others built on this idea to release a whitepaper on non-fungible soul-bound tokens.

According to the whitepaper, SBTs are non-transferable forms of NFTs. That means they are built on the blockchain and used to represent something. Essentially, SBTs are digital tokens used to represent a person’s or entity’s characteristics, identity, traits, and several other features unique to them.

Take, for instance, the academic qualifications of an individual. That information is unique to that individual. Thus, it cannot be transferred or sold to another person. So when that information is minted into an SBT, it stays permanently in the person’s private wallet.

For this reason, SBTs aren’t built for trading or monetary purposes. It is a unique identifier used to permanently represent information about a person or an entity. That information could be a person’s name, age, driver’s license, or location. Likewise, it could contain information about a company’s address, operating license, or anything else unique to them.

What are the Benefits of Using Soul-Bound Tokens?

In a vastly decentralized and anonymous world, verifying the identities of parties in the ecosystem doesn’t come easy. It is for this reason that scams and fraudulent activities are common. According to Vitalik, SBTs represent a path to a decentralized society (DeSoc). Like how humans are unique from one another, SBTs could help achieve that in the Web3 ecosystem. That would make it hard for people to impersonate others or give false information about themselves.

In the following, we consider some of the benefits of using SBTs:

Digital Verification and Documentation

Digital verification is one of the best advantages of SBTs. Since information is permanently recorded on the blockchain, it makes it easier for people and companies to verify the identity of the people they are dealing with. Likewise, it makes authenticating information about such a person easy to confirm.

In addition, SBTs improve the digital documentation process. Users can easily mint information about them on the blockchain and make it public for everyone to view or confirm.

Increased transparency

SBTs improve the ease of interaction and doing business in the Web3 ecosystem, with verified identities, people will be more willing to deal with each other. An added benefit is that it makes it easier for people within very large communities to know if they are dealing with a legitimate person. It is not uncommon to have people impersonate celebrities to scam others. So, with the SBT permanently attached to the wallet of such a celebrity, it reduces the chances of fraud or scams.

Reduced fraudulent activities

Identity theft is not uncommon in the Web3 space. One of the reasons is due to the novel nature of the Web3 ecosystem and the number of newbies entering daily. As a result, scammers often prey on the naivety of newbies to trick them of their money or digital assets. However, with SBTs in play, the identity of those the users are dealing with can be confirmed and verified. The ability to do that will lower fraudulent activities within the Web3 space.

Popular SBT Use Cases

Despite the immense possibilities associated with SBTs, it is a novel concept that hasn’t received much adoption. Binance is one of the few entities to have used SBTs on their platform. So far, the whitepaper by Vitalik shows the technology’s true potential. Nonetheless, let’s consider some of the areas where SBT will receive massive adoption.

Everything You Need to Know About Soul-Bound NFTs

Educational History

SBTs are an easy way for people to mint their educational history and other relevant information on the blockchain. The usual practice is that certificates are issued to students after completing a degree. Often, people who didn’t attend that school could falsify a certificate and tender it to unsuspecting users.

With SBTs, educational institutions can mint these certificates on the blockchain and issue them to graduating students. Not only does that improve transparency, but it also makes it easier for third parties to verify such certificates or qualifications.

Personal records

Users can create SBTs to store their records on the blockchain. Minting them on the blockchain means the information can easily be accessed by the user and any third party seeking to verify it. Records such as health records, CVs, driving licenses, and even tax returns can be represented as tokens stored on the blockchain. Likewise, credit scores can also be made into soulbound tokens, which would assist lending institutions in verifying the user’s creditworthiness.

NFT Trading

In no other area will SBTs be more beneficial than in NFT trading. Even though NFT trading is transparent, unsuspecting users could sometimes be hoodwinked into buying knockoff NFTs from scammers. It is common to see replicas of popular NFT collections like the BAYC, CryptoPunks, and MAYC. With SBTs, users can easily verify the creator’s identity and avoid scams.


The Web3 gaming ecosystem is filled with fascinating use cases and digital assets. Soul-Bound NFTs could improve the gaming experience for users through its increased opportunity for personalization. As seen in the World of Warcraft game, SBTs can introduce more exciting experiences into the gaming ecosystem.

The future of Soul-Bound NFTs

SBTs will undoubtedly gain more ground in the years to come. The world is fast approaching a full virtual reality where digital characters and information form a users on-chain identity. Digital verification and documentation will be crucial and essential in such decentralized virtual worlds. As a result, the idea of SBTs will develop more as more attention is drawn to virtual reality. However, it will only come into its own when users are unable to sell or transfer wallets or login accounts to each other.

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*All investment/financial opinions expressed by NFT Plazas are from the personal research and experience of our site moderators and are intended as educational material only. Individuals are required to fully research any product prior to making any kind of investment.

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