Soulbound Tokens — the Ultimate Proof of Belongingby@pbhelsz
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Soulbound Tokens — the Ultimate Proof of Belonging

by PbhelszFebruary 17th, 2023
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Soulbound tokens are a type of cryptocurrency token that are uniquely designed to provide a unique approach to identity verification and preservation. Soulbound tokens capitalize on an excellent combination of rarity and immutability (using blockchain technology), to provide exceptional security levels. The technology behind the soulbound tokens is the blockchain, which can be used to manage access to particular resources.
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No, this isn’t a token that you’ll need to physically bind to a soul… at least not yours.

The name “Soulbound token” is pretty cool, isn’t it? You should however know that there’s a whole lot more to Soulbound tokens than just a cool name.

Interested in discovering what Soulbound tokens are and what relationship they have with providing ultimate proof of belonging? Read on to find out! Before we delve into what soulbound tokens are, however, let’s first take a look at the concept of proof of belonging.

Proof of Belonging: What does it really mean?

Proof of belonging is a commonly used concept in the crypto space and it more or less refers to a method of ascertaining that an individual is a legitimate member of a specific group or community. Although it appears quite simple, you should know that the proof of belonging concept plays a huge role in the improvement and maintenance of security in the web3 space.

With proof of belonging, an individual who wants to gain access to a particular resource or community has to first “prove” that they have the necessary authorization required to grant them access to such restricted resources and privileges. Of course, the proof of belonging process usually includes “identity verification” thus ensuring better security.

Now that you have an idea of what the proof of belonging concept is, let’s take a look at soulbound tokens.

What are Soulbound Tokens?

Soulbound tokens are a type of cryptocurrency token, or NFT (in some cases) that are uniquely designed to provide a unique approach to identity verification and preservation. Simply put, a soulbound token is quite literally a “one of a kind” token that’s assigned to a particular individual or soul. A “soul” with respect to soulbound tokens can represent an individual, entity, or even company. In addition to this, a soul could also represent the many aspects of a particular person’s identity… for example, you can have a “soul” representing your academic persona and still have another representing your social persona. So it should go without saying that an individual can have multiple souls. Who needs nine lives right?

Soulbound tokens are usually stored in accounts known as souls and once a soul already holds a soulbound token, you won’t be able to store another SBT in that account. Again, just like you can’t transfer a “soul” from one body to another, SBTs have the defining characteristic that they are non-transferable. Because soulbound tokens are one-of-a-kind and they’re non-transferable, it makes them the perfect solution for providing proof of belonging in a Web3 space that’s sorely in need of fool-proof identity verification security measures.

Soulbound Tokens vs Traditional Tokens

It’s important to mention that although soulbound tokens could be viewed as a type of NFT, they are actually very different from other token types. Here are some of the differences between soulbound tokens and other token types:

  • Permanence: By virtue of their design, soulbound tokens are literally “bound” to a specific individual or account. As such, unlike traditional token types, they are non-transferable. Putting this in perspective, it means you won’t be able to buy, sell, or trade a soulbound token on an exchange. This actually makes sense since soulbound tokens are usually tied to a single identity.
  • Security: Speaking of non-transference, this feature is the major thing that makes soulbound tokens perfect for use in identity security meanders. Soulbound tokens capitalize on an excellent combination of rarity and immutability (using blockchain technology), to provide exceptional security levels. In addition to this, they are also publicly verifiable. Thanks to this, soulbound tokens are a lot more hack-proof and fraud-proof than traditional tokens, thus they offer an amazing level of security.
  • Use: Unlike traditional tokens which are usually a store of value and a medium of exchange and value transfer, soulbound tokens have no market value “in the traditional sense” so they can’t be bought or sold on exchanges. Instead, they are majorly used as a means of identity and ownership verification and they could be used to manage access to particular resources. A typical example of this is the Alchemy University early access pass where each pass is tied to a particular wallet address and is used to regulate access to the university courses.

The Technology behind Soulbound Tokens

The primary technology behind soulbound tokens is the blockchain. Simply put, the blockchain is a distributed ledger that allows for the secure and transparent logging and tracking of transactions and data. Now you’re probably wondering, “what does all that have to do with soulbound tokens?”

Well, it’s simple, soulbound tokens are built or integrated into the blockchain such that it becomes quite easy to identify and keep track of them. Since the blockchain is an “immutable” record, it means that soulbound tokens and the information contained in them enjoy the security of being tamper-proof. This is one of the main features that makes soulbound tokens ideal for identity verification. In addition to this, soulbound tokens are also decentralized and as such, are more transparent and resistant to manipulation and fraud since there isn’t a central authority controlling the supply.

Other advantages of soulbound tokens include:

  • Security and Immutability: As earlier mentioned, Soulbound tokens are built on the blockchain and as such, they cannot be tampered with by virtue of the immutability blockchain technology offers.
  • Transparency and Traceability: Because the blockchain in its most fundamental state is a public digital ledger, it stands to reason that “items” built on it will be available for easy public viewing. As such, soulbound tokens are transparent and traceable, allowing for easy verification of identity.

Use Cases of Soulbound Tokens

Soulbound tokens offer a lot in terms of possible applications. Here are five possible use cases for these tokens:

  • Decentralized Identity Verification: Imagine a world where you have complete control over your personal information, without having to rely on centralized organizations to prove who you are. That’s exactly what you get with Soulbound tokens (SBTs). These digital assets are bound to their users, allowing them to easily prove their identity for a wide range of purposes, such as accessing financial services, participating in online communities, or exploring new virtual worlds.
  • Human Resource Management: Finding the right person for the job can be a challenge, but with SBTs, the process becomes a breeze. By using SBTs to store and verify an individual’s professional credentials and qualifications, potential employers can easily access this information and make informed hiring decisions. No more searching through stacks of resumes or guessing about someone’s skills and experience. SBTs make it simple and straightforward to find the perfect candidate for the job.
  • Decentralized Lending: Say goodbye to traditional banking and hello to decentralized lending with SBTs. These digital assets can serve as collateral for loans, reducing the risk for lenders and enabling the creation of unsecured loans on decentralized platforms. With SBTs, you have the power to access financial services without having to surrender control of your assets to a centralized organization.
  • Supply Chain Management: Have you ever wondered where your products come from, and how they ended up in your hands? With SBTs, you can finally get the answers you’ve been looking for. By using SBTs to track the origin and journey of products through the supply chain, you can verify the authenticity of products, reduce the risk of fraud, and improve the efficiency of the entire process. No more worrying about where your products come from, or if they’re truly what they claim to be.
  • Voting Systems: SBTs can be used to enhance the security and transparency of voting systems in decentralized autonomous organizations (DAOs). By tying each vote to a unique SBT, the risk of fraud and manipulation is reduced, ensuring that the outcome of the vote accurately reflects the will of the community.


While soulbound tokens are still quite uncommon, currently, their many use cases and the sheer quality of their contribution to a web3 space where there’s improved security and trust means they are guaranteed to be a widely accepted improvement on current conditions.