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<p>Due to their recent emergence, there is limited information available regarding soulbound NFTs. However, we have created this comprehensive guide to provide you with a clear understanding of what soulbound NFTs are, their use cases, and their potential in the industry.</p><h2 id="header-0">Understanding soulbound tokens(SBTs)</h2><p>The idea of SBTs draws inspiration from World of Warcraft, where players could obtain rare and powerful soulbound items. These items were not only hard to gain but also bound to the player who acquired them, making them non-transferable. Building upon this concept, Viitalik Buterin and others presented a whitepaper on non-fungible soulbound tokens.</p><p>Basically, soulbound NFTs are a type of non-transferable NFTs. They leverage blockchain technology to represent something of significance. Essentially, SBTs serve as digital tokens that represent the distinctive qualities, identities, attributes, and various other distinctive features of a person or an entity.</p><p>Consider, for instance, an individual&#39;s academic qualifications. This information is exclusive to that individual and cannot be transferred or sold to another person. Therefore, when this information is tokenized as an SBT, it becomes permanently associated with the person&#39;s private wallet.</p><p>SBTs are therefore not intended for trading or financial use. Instead, they act as enduring identifiers that capture important data about a person or thing. This data may include personal information like name, age, driver&#39;s license number, or location. Similar to that, it could contain important information about a business, such as its address, its operating license, or any other distinctive characteristics unique to the entity.</p><h2 id="header-1">Benefits of these non-transferrable NFTs?</h2><p>Verifying the identity of people within the ecosystem presents a huge difficulty in an increasingly decentralized and anonymous society. Because of this issue, scams and other fraudulent actions are increasing day by day. According to Vitalik Buterin, SBTs provide a route to a decentralized society (DeSoc), similar to the uniqueness of people. SBTs in the Web3 ecosystem make it more difficult for people to impersonate others or give incorrect information about themselves.</p><p>Let&#39;s explore some of the benefits associated with using SBTs:</p><h3 id="digital-verification-and-documentation">Digital verification and documentation</h3><p>Soulbound tokens provide a valuable advantage in terms of digital verification. Since information is permanently recorded on the blockchain, it becomes easier for individuals and companies to verify the identities of the parties they are engaging with. Furthermore, authenticating the information associated with a person becomes a streamlined process.</p><p>Additionally, SBTs enhance the digital documentation process. Users can effortlessly tokenize their information on the blockchain, making it publicly accessible for verification purposes.</p><h3 id="increased-transparency">Increased transparency</h3><p>SBTs contribute to improved ease of interaction and business transactions within the Web3 ecosystem. With verified identities, individuals are more inclined to engage in transactions with each other. Furthermore, SBTs enable members of large communities to ascertain whether they are dealing with legitimate individuals. Impersonation of celebrities for fraudulent purposes is a common occurrence, but by permanently attaching an SBT to the wallet of a celebrity, the likelihood of fraud or scams diminishes.</p><h3 id="reduced-fraudulent-activities">Reduced fraudulent activities</h3><p>Identity theft is common in the Web3 industry, partly because of the ecosystem&#39;s innovative nature and the constant influx of newcomers. Scammers frequently take advantage of the ignorance of these newcomers to trick them and steal their money or digital assets. However, the prevalence of fraudulent operations in the Web3 environment can be reduced by utilizing SBTs to validate and verify user identities.</p><h2 id="header-2">Prominent use cases for SBTs</h2><p>Despite the significant potential associated with SBTs, this innovative concept has not yet seen widespread adoption. Binance stands as one of the few entities that have implemented SBTs on their platform. Nevertheless, let us explore some areas where SBTs are expected to witness extensive adoption.</p><h3 id="educational-history">Educational history</h3><p>SBTs provide a simple way for people to tokenize their educational background and related data on the blockchain. Normally, students receive certificates after earning a degree. However, people who did not attend the relevant educational institution may falsify these diplomas. Educational institutions can improve transparency and make third-party qualification verification easier by creating educational certificates as SBTs on the blockchain.</p><h3 id="personal-records">Personal records</h3><p>Users have the capability to create SBTs to store their personal records on the blockchain. By tokenizing records such as health records, CVs, driving licenses, tax returns, and even credit scores, individuals can easily access and share this information with third parties seeking verification. The use of SBTs in this context aids lending institutions in verifying a user&#39;s creditworthiness.</p><h3 id="nft-trading">NFT trading</h3><p>SBTs can be immensely valuable in the realm of NFT trading. While NFT trading is generally transparent, unsuspecting users may fall victim to scams involving counterfeit NFTs. Replicas of popular NFT collections like BAYC, CryptoPunks, and MAYC are not uncommon. With SBTs, users can readily verify the identity of the creator, enabling them to avoid fraudulent transactions.</p><h3 id="gaming">Gaming</h3><p>The Web3 gaming ecosystem presents captivating use cases and digital assets. SBTs have the potential to enhance the gaming experience by offering increased opportunities for personalization. As exemplified in the World of Warcraft game, SBTs can introduce more thrilling experiences into the gaming ecosystem.</p><h2 id="header-3">The Future of Soulbound NFTs</h2><p>In the upcoming years, soulbound tokens are expected to gain greater popularity. Digital verification and documentation are essential as the world quickly moves toward a fully immersive virtual reality environment where users&#39; on-chain identities are shaped by digital characters and information. The idea of SBTs will likely change as virtual reality gains momentum. However, when users are unable to switch login accounts, sell items, or move wallets, the true potential of soulbound tokens will be revealed.</p><p>Disclaimer: The information herein is for reference purposes only and should not be considered financial, investment, or trading advice. Please conduct your own research and due diligence before making investment decisions. You understand that you are using the Information provided at your own risk.</p>

Soulbound tokens: A potential trend

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