Imagine someone graffitied your front door. You’d want to get it scrubbed away, right? Now imagine they graffitied your front door with hate or a slur. You’d want to get it scrubbed away even faster.

Now imagine they used a permanent paint— meaning you can never remove the graffiti nor stop people from adding more.

That is the reality of Soulbound NFTs.

Yes, people can graffiti your house with nice words and praise about you, but do you want to always have people’s thoughts about you— even if they're good— on display for the public? Or would you rather have some choice over who gets to know certain things about you?

When the term NFT comes to mind most people think of a digital image that they can buy and sell on a platform like OpenSea. That’s a very valid idea to have of NFTs, but a new type might soon be among us: Soulbound tokens (SBTs).

Like the name suggests, SBTs are inherently linked to your personal soul. In other words, they are issued to your wallet and remain there forever. They may not be transferred or sold.

Why on Earth would you buy a picture of an alpaca wearing a jean jacket if you can’t even sell it, for a 90% loss three months later?

Well, SBTs will likely not manifest themselves as decked out cartoon animals.

Instead, they will likely be text documents declaring something about you– the eternal owner of that NFT. Imagine that instead of requesting copies of your university diploma from your university, you could show a prospective employer your diploma issued by the verified school wallet. Your mentors could leave verified letters of recommendation publicly visible in your wallet too.

Sounds well and dandy, right? Well, yes— SBTs allow for people to know something about the actual person behind the web3 wallet because they know the token has not just been bought and sold.

But there are legitimate downsides you ought to consider.

Just like your previous employer can send you an SBT praising your amazing work in the office, a disgruntled party can leave slander in your wallet for everyone to see. Soulbound NFTs turns every person’s wallet into a personal Yelp page where people are free to leave comments about you with no recourse.

Currently, if someone leaves something in your wallet you don’t want, you can “hide” it from being seen on centralized platforms like OpenSea or “burn” the asset by transferring ownership of it to a wallet nobody has access to. So, if someone chooses to leave a hateful message as an NFT in your wallet, you can simply remove it.

With SBTs that’s not possible since they are non-transferrable. Someone can drop compromising photos of you in your wallet, and you can never remove them. Considering other people can drop things into your wallet fully pseudonymously, the risk of very extreme and hateful drops is quite possible.

The benefits of SBTs are there and valid to acknowledge. They provide a way to show that someone has a specific real-life trait or qualification, and you can know someone didn’t just buy that acknowledgement. However, simply ensuring that a transferable NFT went directly from the verified source wallet (like the college) to the current wallet would provide the same result. By creating a class of non-transferrable NFTs, the risk of hate mail and other spam becomes great.

If web3 wallets exist as ways for users to show off what they are all about, then should they not have the ability to curate what’s inside?

This is where the opportunity for Decentralized Identifiers (DIDs) and Verifiable Credentials (VCs) come.

If you recently had a baby, your hospital would issue you a birth certificate that includes identifiers: tags that point to the very information about your baby being born (name, date and time of birth, etc.). The ‘birth certificate’ doesn’t contain your baby’s personal data or wallet information. Rather, they’re a string of random letters and numbers that contain information about the public key and verification information. In other words, they’re solely a means for you to prove cryptographic control over it. And just like your crypto wallet, you can have a DID for professional use (public-facing) and personal use (confidential). And you can spin up as many DIDs as you want, one to prove you’re a member of a DAO, a student at a university, your marriage certificate, and so forth.

One way to verify DIDs is through a “claim” or verifiable credentials (VCs). This is the work Evin McMullen and her team are tackling at Disco. Using zero-knowledge privacy, VCs can verify that you are indeed the owner of the identifier without compromising your private data on a public blockchain (like Ethereum).

Within Disco, you have three parties: the issuer (entity or organization issuing the VC), the recipient (owner of the VC), and verifier (to verify that the VC is legitimate and tamper-proof). Suppose a university (issuer) sends you an off-chain encrypted VC. Your acquaintance at work doesn’t believe that you actually graduated (gasp!) To refute your acquaintance, you send that VC, which was signed by my alma mater's decentralized identifier. Since the DID is unique and tamper-proof, your acquaintance now knows you did in fact graduate.

Last but not least, Proof of Personhood (PoP) takes a completely different turn from Disco and Dock[c]. It's a permissionless consensus participation mechanism that verifies your existence as a human being, using methods such as identity verification (KYC), social trust, Turing tests, and/or biometric modalities. Notable projects include Proof of Humanity (PoH), BrightID, and HumanNode.

While useful in establishing personhood, their lack of identifiers and credentials fall short in painting us as multi-faceted, complex beings in the different milestones and activities we participate in.

DIDs can also be used as a way to keep parts of your identity private and only revealable with your consent. One of the most popular types of NFTs are POAPs— or Proof of Attendance Protocols. These are collectible badges you can get at crypto related events. By having one of these in your wallet, you are revealing a part of your identity. But it’s important to think about the implications of this. By putting that POAP in your wallet— even if it’s transferable— you are telling the world something about who you are and how you spend your time. Do you want everyone in the world to know that?

Especially for sensitive events, like social activism, POAPs could instead be issued as DIDs. This way, you still have a record of your involvement with a certain cause but only have to reveal that information with people you feel comfortable sharing it with.

Overall, the idea behind SBTs is an important one— there should be records about tasks specific people have done that they cannot. However, since this technology is accessible to all, there is a legitimate risk of abuse and thus alternatives should be considered.