What Are Soulbound Tokens (SBTs)? How Do They Work

Introduction : Soulbound (SBT)

Soultoken resemble one of many newest things currently happening in the cryptocurrency market. This dynamic term that might become a hot topic within the cryptocurrency industry can say a lot about in part by the issues we’ll be dealing with for a long time.

New methods, options and services may be available specifically based on these so-called Soulbound Tokens or SBTs, which individuals can use to gain access to the various Blockchain Store offerings.


We will reveal all the details about Soulbound Tokens, beginning with what these so-called tokens are and how they work. Then, we’ll assess the Soulbound tokens utilizing a variety of requirements that are based on blockchain understanding. Last, there will be details about the conditions for using Soulbound tokens that will help us better understand them.

A proposal made in June 2022 by Ethereum cofounder Vitalik Buterin, lawyer Puja Ohlhaver, and E. Glen Weyl, an economist and social technologist, for distributed labor on the Ethereum platform using energy bound tokens (SBT).

What are Soulbound (SBTs)?

Soulbound tokens (SBTs) represent a person’s identity using blockchain technology. This could include medical records, work history, and any information that makes up a person. The wallet that holds the records of this item is known as soul.

People can have multiple wallets (or the Souls) that represent different aspects of their lives.

For example, someone might have a Credentials Soul for their work experience and a Medical Soul for their medical history. Each Wallet and SBT would allow individuals to build a verifiable, secure reputation based on their previous actions and experiences.

Some entity can act as an entity that allocates Souls. For example, a company can be an entity that allocates Souls to all of Its employees. A digital country club may also incorporate Souls into a process to permit members to check in.

The reasoning behind soulbound is derived from a popular online game titled Warcraft Station.

Only player-owned soulbound items are currently able to trade and reassign. Once picked up, these items are permanently tied to the player’s soul.

Soulbound (SBTs)

Now, imagine this concept applied to NFTs (non-fungible tokens). Today, most NFTs are a digital report card for art or collectibles, such as bored ape yacht club. People will buy, trade, or show off NFTs as a symbol of status and wealth.

SBTs attempt to expand the concept of an NFT beyond just being an indicator of wealth and financial gains. Even though an NFT represents property and possession, an SBT is a reputation symbol. Unlike an NFT, however, an SBT does not possess a usable or exchangeable cash value and can not be publicly traded once given to another person’s directing wallet.

How are Soulbound different from NFTs?

As the name suggests, Soulbound tokens are similar to Non-Fungible tokens (NFTs) in that they are unique, but, in contrast to NFTs, they have a key difference relating to transferability.

SBTs and NFTs differ, with NFTs being able to be sold, traded, and bought, while SBTs cannot.

As full-bodied securities or equities can’t be bought and sold, SBTs are ideal for situations in which a receipt must be checked for completeness.

What are some examples of SBTs?

Examples of popular Soulbound Tokens include academic degrees, non-expiring certifications, and professional references.

For example, instead of a hiring manager calling from a previous employer or school to validate your enrollment, they may just request to see the Soulbound Token you received upon graduation or departure from that workforce.

Pros and Cons of Soulbound Tokens

Come now is a time to reflect on the positives and negatives of Soulbound tokens.

Pros – SBT

  • Inbound Soulbound tokens package new options for customers to join in on the world of cryptocurrencies.
  • These tokens can be used to give greater value to cryptocurrency ecosystem participants.
  • NFTs are enhanced SBTs associated with particular Souls or accounts.
  • SBTs boost lending, artwork, and the distribution of airdrops, among other issues.
  • Builders and initiatives may provide new services and/or options.

Cons – SBT

  • They are non-transferrable
  • If a proper platform isn’t established, they won’t take off.
  • Each type or class of programmable asset can be subject to system bugs.
  • It may be difficult for a new segment to learn about the crypto market.


The term soulbound shares a similar identity to other buzzwords that are associated with cryptocurrency. Thus far, we have advised you in this space about the pros and cons of a trend, which can involve various uses in finance or other kinds of society.