Transitioning to Web3 will require an upgrade in the ways we think about identity. The concept of soulbound tokens hit the Web3 scene in January of 2022 when Ethereum co-founder Vitalik Buterin wrote a blog riffing on how a World of Warcraft player can acquire “soulbound items” that are non-transferable and stay with that particular user account forever (or until the user deletes them).
In a Web3 world, where our digital wallets announce not only our financial transactions but our artistic tastes (through NFTs) and reputation (through POAP badges and social tokens), the concept of soulbound tokens is intriguing. Ahead, Mitchell Travers cofounder of Soulbis explains how soulbound tokens might solve some common reputation problems on popular Web2 platforms like LinkedIn and Twitter. We also discuss how identity might work in a future in which individuals — not Facebook — owns their own user data.
Edited excerpts:
The most simple way to explain it is that Web1 was read only, so there wasn't really any need for identity too much. Everything was decentralized in a way, but there was sort of permission layers and you needed technical capabilities in order to even read the Internet. And then we went to Web2 — read and write — which is where social media popped up. That ability to write meant that we needed some level of identity on the Internet. That became a federated identity system where there were lots and lots of different platforms. It started off with Myspace, then Bebo, and then Facebook ran the ran the game. Everyone had an account with these specific platforms, and those platforms ran their own databases. Those databases controlled identities, information logging, credentials and access.
So then we get towards theorizing, "Hey, how do we make this all connect together?" Now with Web3, it's kind of like login with your wallet, your sort of federated — but not totally federated — self-sovereign identity. The one that can control value as well as identity on the Internet.
Part of the problem — and why it's taken so long for for people to wake up to self-sovereign identity being super important and having this user-based approach to owning your data (rather than multiple honeypots of data) — is, in my opinion, a commercialization problem. It's really hard to sell something where the user owns all the data because, unfortunately, the way the Web2 worked out, we were given products for free because we were creating data which gave value back to the large organizations. Whereas now in Web3, we've got this opportunity to give the value back to the user and for them to take control of their data. However, convincing people of this idea is really, really difficult.
Yeah, it's kind of an inertia of convenience. We've been so happy to have this convenience and conditioning that we don't necessarily need to have as much ownership of the data that we create. However, I think long-term that has to change. I think especially given the events of the last couple weeks — people's fascination with ChatBGT. One thing about AI that I like to tell people is that unless you feed it well, it's not going to be any better. So taking control of your data is going to have these profound impacts in the future when you're trying to feed a personal assistant AI — but that's getting into a different topic. I think it's quite interesting though.
I want to caveat this: The technology is still early. The concept was introduced at the start of this year, and we had our first paper a few months later. Now there's a lot of experimentation. Currently there's nine or maybe 10 Ethereum proposals around soulbound tokens, and only two of them have passed.
As for use cases, one is employee credentials — pretty much fixing LinkedIn. It's this meme on LinkedIn that you can pretty much put any reputation, get anyone, just validate it once, and then people believe that everyone is a Harvard graduate. The "Harvard problem" is solved fairly well with soulbound tokens because every Harvard alumni would have a unique soulbound token. It would be from a collection that was issued by a Harvard wallet so people could verify that I had a particular university degree and then that credential could be listed or read by LinkedIn.
For more insights, listen to the full conversation with Mitchell
This is not financial advice. If you don't want to spend money investing in crypto or Web3 — you don’t have to. The intent of this article is to help others educate themselves and learn.
