Apart from art and collectibles, NFTs have a majority of use cases.

When you read the word “NFTs”,

what is the first thing that comes to your mind?

• You can exchange a bitcoin for a bitcoin, meaning many individuals can hold the same BTC asset.

• You are selling the BTC to someone who is willing to match the offered price for the same BTC you sold.

• Bitcoin is a fungible token.

• For non-fungible tokens, you can not trade the same token. You need to sell it in some pairs, e.g. $100 or 1 Ethereum for an NFT, because it is a unique transferable token.

Now, Soul-Bound Tokens, or SBTs, are a step beyond. SBTs are non-transferable and have the potential to bring a lot of real-world time-stamping use-cases mainstream.

One of the best things Vitalik Buterin said is, “NFTs can represent much more of who you are and not just what you can afford.”

As Vitalik Buterin quoted, “While transferable NFTs have their place and can be really valuable on their own for supporting artists and charities, there is also a large and under-explored design space of what non-transferable NFTs could become.”

In the same way NFTs can be utilised in all industries to make any process more organised, I believe Soul-Bound Tokens will be the starting point of the future of mainstream blockchain and crypto adoption.

“Very bad things can easily happen to governance mechanisms if governance power is easily transferable, thus many core economic activities are built on persistent, non-transferable relationships.”

The true power of this mechanism emerges when SBTs held by one account can be issued — or attested — by other accounts. Who are the counter-parties to these relationships? These counter-party accounts could be individuals, companies, or institutions, which can bring richer use cases mainstream.

• By design, an account can be completely pseudonymous with a range of SBTs that cannot be linked easily. Meaning there have to be multiple SBTs generating robust historical data.

• Transferable assets fail to capture a lot of use-cases. For example, if you trust someone to use our backyard, that doesn’t mean you’ll trust that same person to sub-license it to someone else.

• SBTs that reflect membership of a data cooperative would have multi-signature or more sophisticated community voting permissions, where all or a qualified majority of SBT holders must consent to disclosure.

- Communication is perhaps the most well-known form of shared data. Today’s communication channels lack both user control and governance and, at the same time, auction user attention to the highest bidder — even if it’s a bot.

• Networks are the most powerful engines of economic growth, yet the most susceptible to dystopian capture by private actors (e.g., web2) and powerful governments.

To deal with over-publicity, there are a number of solutions with different levels of technical complexity and functionality.

The simplest approach is that an SBT could store data off-chain, leaving only the hash of the data on-chain.

• Zero-knowledge proofs can be computed over SBTs to prove characteristics about a soul (e.g., that it has certain memberships).

• This technique can be extended further by introducing multi-party computation techniques such as garbled circuits, which could make such tests doubly private: the prover does not reveal who they are to the verifier, and the verifier does not reveal their verification mechanism to the prover.

• Instead, both parties perform the computation together and only learn the output.

Another powerful technique is designated-verifier proofs. In general, “data” is slippery: if I send a movie to you, I cannot technologically prevent you from recording and sending it to a third party.

Workarounds like Digital Rights Management (DRM) have, at best, limited effectiveness and often come at great cost to users. Proofs, however, are not slippery in the same way.

• If Amma wants to prove some property X about her SBTs to Bob, she can make a zero-knowledge proof of the statement “I hold SBTs that satisfy property X, OR I have the access key to Bob’s Soul.” Bob would find this statement convincing: he knows that he did not make the proof, and so Amma must actually have SBTs that satisfy property X.

• But if Bob shows the proof to Cuifen, he will not be convinced: Bob could have created the proof with his own key.

• This can be made even stronger with verifiable delay functions (VDFs): Amma can make and present a proof that can only be made with the required SBTs right now, but anyone else will be able to make five minutes from now.

• This means it is possible to represent sophisticated access permissions to trustworthy proofs about data despite the impossibility of making the same kinds of selective permissions to the raw data itself, which may simply be copied and pasted.

This may take us quite a distance nonetheless. Just as blockchains offer traceability in transactions that prevents someone from right-click copy-and-pasting a valuable NFT (and sybil attacking the original owner), similarly, SBTs can offer traceability in social provenance, which at minimum can reduce the value of copy-and-pasted data with unverified origins.

This article was inspired by https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4105763

Thanks,

Here’s my twitter handle to stay connected :)

https://twitter.com/divyvaid

Apart from art and collectibles, NFTs have a majority of use cases.

When you read the word “NFTs”,

what is the first thing that comes to your mind?

• You can exchange a bitcoin for a bitcoin, meaning many individuals can hold the same BTC asset.

• You are selling the BTC to someone who is willing to match the offered price for the same BTC you sold.

• Bitcoin is a fungible token.

• For non-fungible tokens, you can not trade the same token. You need to sell it in some pairs, e.g. $100 or 1 Ethereum for an NFT, because it is a unique transferable token.

Now, Soul-Bound Tokens, or SBTs, are a step beyond. SBTs are non-transferable and have the potential to bring a lot of real-world time-stamping use-cases mainstream.

One of the best things Vitalik Buterin said is, “NFTs can represent much more of who you are and not just what you can afford.”

As Vitalik Buterin quoted, “While transferable NFTs have their place and can be really valuable on their own for supporting artists and charities, there is also a large and under-explored design space of what non-transferable NFTs could become.”

In the same way NFTs can be utilised in all industries to make any process more organised, I believe Soul-Bound Tokens will be the starting point of the future of mainstream blockchain and crypto adoption.

“Very bad things can easily happen to governance mechanisms if governance power is easily transferable, thus many core economic activities are built on persistent, non-transferable relationships.”

The true power of this mechanism emerges when SBTs held by one account can be issued — or attested — by other accounts. Who are the counter-parties to these relationships? These counter-party accounts could be individuals, companies, or institutions, which can bring richer use cases mainstream.

• By design, an account can be completely pseudonymous with a range of SBTs that cannot be linked easily. Meaning there have to be multiple SBTs generating robust historical data.

• Transferable assets fail to capture a lot of use-cases. For example, if you trust someone to use our backyard, that doesn’t mean you’ll trust that same person to sub-license it to someone else.

• SBTs that reflect membership of a data cooperative would have multi-signature or more sophisticated community voting permissions, where all or a qualified majority of SBT holders must consent to disclosure.

- Communication is perhaps the most well-known form of shared data. Today’s communication channels lack both user control and governance and, at the same time, auction user attention to the highest bidder — even if it’s a bot.

• Networks are the most powerful engines of economic growth, yet the most susceptible to dystopian capture by private actors (e.g., web2) and powerful governments.

To deal with over-publicity, there are a number of solutions with different levels of technical complexity and functionality.

The simplest approach is that an SBT could store data off-chain, leaving only the hash of the data on-chain.

• Zero-knowledge proofs can be computed over SBTs to prove characteristics about a soul (e.g., that it has certain memberships).

• This technique can be extended further by introducing multi-party computation techniques such as garbled circuits, which could make such tests doubly private: the prover does not reveal who they are to the verifier, and the verifier does not reveal their verification mechanism to the prover.

• Instead, both parties perform the computation together and only learn the output.

Another powerful technique is designated-verifier proofs. In general, “data” is slippery: if I send a movie to you, I cannot technologically prevent you from recording and sending it to a third party.

Workarounds like Digital Rights Management (DRM) have, at best, limited effectiveness and often come at great cost to users. Proofs, however, are not slippery in the same way.

• If Amma wants to prove some property X about her SBTs to Bob, she can make a zero-knowledge proof of the statement “I hold SBTs that satisfy property X, OR I have the access key to Bob’s Soul.” Bob would find this statement convincing: he knows that he did not make the proof, and so Amma must actually have SBTs that satisfy property X.

• But if Bob shows the proof to Cuifen, he will not be convinced: Bob could have created the proof with his own key.

• This can be made even stronger with verifiable delay functions (VDFs): Amma can make and present a proof that can only be made with the required SBTs right now, but anyone else will be able to make five minutes from now.

• This means it is possible to represent sophisticated access permissions to trustworthy proofs about data despite the impossibility of making the same kinds of selective permissions to the raw data itself, which may simply be copied and pasted.

This may take us quite a distance nonetheless. Just as blockchains offer traceability in transactions that prevents someone from right-click copy-and-pasting a valuable NFT (and sybil attacking the original owner), similarly, SBTs can offer traceability in social provenance, which at minimum can reduce the value of copy-and-pasted data with unverified origins.

This article was inspired by https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4105763

Thanks,

Here’s my twitter handle to stay connected :)

https://twitter.com/divyvaid