SBTs: Let's Break it Down To You

	If we want to explain it as simply as possible, Soulbound Tokens- or SBTs- are a modern take on what a CV represents.<br role="presentation" />

Soulbound Tokens are non-transferable, publicly-verifiable and non-financialized digital tokens . They show an individual’s credentials, academic achievements, and their social milestones. Unlike NFTs, you cannot buy or sell them; you can only acquire them.

In their whitepaper, Glen Weyl, Puja Ohlhaver, and Vitalik Buterin described SBTs as a means to decrease “hyper-financialization" of the Web3 ecosystem. Therefore, their main purpose is to create a decentralized society. This decentralized  society does not only run on finance, but on social relationships of trust as well.

		## What inspired Soulbound Tokens?

	Vitalik Buterin, founder of Ethereum, clarified in a blogpost on his website that the idea of Soulbound Tokens is originally inspired by World of Warcraft. He explains that this video game embodied a concept where players get to exclusively own items that they could not sell or give away.<br role="presentation" />

Buterin adds that SBTs are an innovative token design of non-transferable NFTs that serve a newer purpose. But what does that mean?

Well, NFTs clearly indicate financial value meaning that an NFT owner must be wealthy. Owning an NFT shows that its owner has the skills and the knowledge to acquire an NFT. And since you can earn money through trading them, NFTs have become a sign of financial wealth.

This is one of the reasons why Buterin’s vision extends beyond the financial spectrum of Web3. "What if we want to create NFTs that are not just about who has the most money, and that try to signal something else?" he asked. ( Read more about NFTs in this article: What is a Non-Fungible Token? How to get NFTs?)

		## How do SBTs work?

	Vitalik Buterin refers to SBTs as non-transferable NFTs because both tokens types have similar aspects despite their differences. Both of them are non-fungible and blockchain based, however, SBTs cannot be sold, bought, or traded. And so to earn an SBT, you’ve got to complete a certain task.

Unlike cryptocurrencies and NFTs, Soulbound Tokens are non-transferable because they are permanently bound to a wallet or an account. In other terms, SBTs cannot be traded on the open market or transferred from a wallet to another. This is because they are permanently attached to a wallet known as “Soul”. These kinds of wallets specifically host Soulbound Tokens.

A Soul wallet is a blockchain account – a digital address – where you can store immutable records, including your SBTs. For instance, you can add your employment history and your educational credentials. Therefore, SBTs are a representation of your skills, abilities, and qualifications in the DeFi space. Ideally, you are building yourself a CV via SBTs which allow you to create a digital fingerprint for yourself on the Web3.

Souls can issue self-certified SBTs to themselves, but can also receive SBTs from other Souls or SBT creators. The issuer of an SBT, the SBT itself and the Soul’s address are all public and verified on the blockchain which provides trust and legitimacy.

		## So why use a non-transferable token?

	Anyone can see the SBTs in your Soul all while keeping your identity unrevealed. So you get to keep your privacy and to build trust, affiliation, legitimacy and credentials through your SBTs.

Keeping up with the rapid development of decentralized solutions in the Web3 ecosystem is a challenge for industries with traditional norms. Although proof-of-work, proof-of-stake, and smart contracts have helped solve many of its issues, Web3 still has a lot of limitations that prevent it from giving out its full potential.

In Web3 protocols, the high level of privacy and anonymity cause some issues when it comes to interactions between individuals and businesses who need more transparency to build more trust. For this reason, Web3 protocols rely heavily on Web2's centralized platforms instead of replacing them.

And so, Soulbound Tokens offer the missing solution to fill in for the trust gap in Web3. SBTs serve as a tool for you to provide individuals and businesses with credible clarifications about you – therefore building more trust- without having to give up your privacy.