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joel saidman

Understanding Soulbound Tokens: The Future of Cryptocurrency

soulbound tokens

As blockchain technology continues to evolve, new concepts and innovations are emerging to revolutionize the world of cryptocurrency. One of these new concepts are the soulbound tokens (also known as SBT token), which have the potential to improve use cases of digital assets. In this article, we will explore what soulbound tokens are, how they work, and what they can be used for.

What are Soulbound Tokens?

Soulbound tokens are a special kind of digital asset that is linked to a user or  wallet and cannot be moved or exchanged. They are unique non-fungible tokens (NFTs) that are created on a blockchain network and are designed to be permanently associated with the user that mints this token.

SBT vs NFT –

As you can see, NFTs can be resold in secondary markets or transferred between addresses while soulbound tokens will stay in the minted address. As soulbound tokens cannot be transferred or traded to other users, they are highly secure and immutable.

How do Soulbound Tokens Work?

Soulbound tokens are created on a blockchain network using smart contracts, these smart contracts contain the logic that determines the ownership and usage rights of the soulbound token. Once a soulbound token is created, it is linked to a specific user or account and will belong to that user forever.

What Can Soulbound Tokens (SBT token) be Used For?

SBT token have a wide range of potential use cases due to their unique properties. 

Lets see some real examples of their uses:

Gaming: SBT token can be used in the gaming industry as in-game assets or to represent the actual player’s gaming identity. We are in an early stage but there are platforms developing this concept of gamers identity such as Dequest or Soulbound. This kind of platform provides you two major benefits, in one hand, it awards you NFTs and levels up your soulbound token while you complete quests in different games. On the other hand, it lets you build a reputation as a gamer across different games. I believe that players will have the ability to identify fellow individuals who share similar gaming experiences and proficiency levels.

Digital Identity: Soulbound tokens can be used as a form of digital identity, where each user has a unique token that represents their identity on a blockchain network. This can help prevent identity theft and fraud by providing a secure and verifiable way to prove ownership of digital assets. Binance use this concept for users who finished their KYC process:

Read the full article here

There are plenty of more use cases that are still under development, for example:

The common factor between all these examples is that a user needs legitimate proof of an event or ownership that they have and cannot be transferred.


Soulbound tokens are a groundbreaking innovation in the world of blockchain technology and have the potential to transform various industries by providing unique and secure ways to represent ownership and control over digital assets. 

We mention some real use cases that are in their first stages and many others that still need development. In my opinion, to see soulbound tokens in our daily lives, we still need time and development for the technology to evolve so it’s more user friendly and the masses can adopt them.

During my recent interaction with the Dequest dApp, I had the opportunity to utilize soulbound tokens and it was really easy to do the account setup process and receive my initial soulbound token. I did some initial quests but since the app is still in beta I didn’t have the opportunity to play a game, win a quest and see some in-game rewards but for sure, when a first release is available I will give it a try. 

I have high expectations for the integration of this technology with other web3 concepts, such as zero knowledge proof, as I believe they will complement each other exceptionally well.