Fraser Edwards may be the Co-Founder and CEO of cheqd, a network for creating digital credential businesses.
In the recent research paper titled Decentralised Society: Finding Web 3s Soul, Ethereum (ETH) co-founder Vitalik Buterin, alongside authors Glen Weyl and Puja Ahluwalia Ohlhaver, introduced the idea of Soulbound Tokens (SBTs) as a brand-new undertake digital identity. The paper speaks concerning the need for digital identity within Web3 and meeting the hyper-financialisation of Web3 with equal levels of trust and social relationship building.
We, however, couldnt help but notice how close SBTs use case would be to what self-sovereign identity (SSI) does. SSI has already been paving just how towards developing a trusted society. We wished to compare Vitalik et al.’s Soulbound tokens hypothesis against SSI to see which carries probably the most validity once we enter Web3.
Within their simplest form, soulbound tokens are non-transferrable fungible tokens which can be displayed in an electronic wallet. These tokens are issued by one soul (individual) to some other. They can not be traded with other people. Once an SBT is obtained, it really is bound compared to that person, hence the name soulbound.
SSI uses the partnership between issuers, verifiers, and holders of data to produce a user-centric model. In this model, the holder gets the option to tell the verifier the precise information they want (rather than more). The verifier may then cross-reference the info with the issuers signature (sometimes stored on a blockchain) to guarantee the holder’s data is valid.
The draw to SBTs is their non-transferable nature, they’re bound with their recipient. They may be useful for declaring credentials and forming an online identity with respect to their owner. Much like a couple of scout badges, you might have multiple SBTs for various credentials, which range from a driver’s licence to a token that represents a concert ticket.
However, SSI differs for the reason that their default visibility is private and off-ledger, whereas SBTs are proposed as public and on-ledger automagically.
SSI targets allowing an individual to manage their data and hold issued documents in an exclusive digital wallet. The default private mode provides holder more control over their personal data and how it really is accessed.
SBTs vs NFT vs SSI
Being an identity solution, SBTs function much like a non-fungible token (NFT). The main element difference is their insufficient transferability. SBTs are increasingly being built now, yet fall at one key hurdle: privacy.
SBTs certainly are a method of expressing oneself in Web3, like the ownership of crypto and NFTs. However, they might replicate most of the current identity issues faced in the present day day onto a fresh public and immutable platform, that is the primary drawback of SBTs.
There’s tension round the creation of SBTs, with some parties concerned that it could develop a public system of social merit, like the China social credit system. You can find fears that when widely adopted, the achievements and mistakes we make in real life could mean an SBT linked to that action. This might develop a ledger of each achievement and mistake made, without trade function, forever.
SBTs, in this sense, aren’t immune to human error; there’s the prospect of issuers to send SBTs to the wrong holder, that may open the perfect solution is up to amount of privacy issues. There’s already been an incident whereby a person created an Asshole SBT, a token that uses exactly the same technology being an NFT but could be sent to a person who may then only own it removed by paying a fee. This facet of SBTs gets the potential to cause great harm and may work to devalue Web3s soul.
SSI exists to handle the main element identity issues currently faced in a digital-centric society. By developing a system where in fact the user controls their data and contains the right to send it to whomever they wish, we begin facilitating true data ownership as a societal norm. Data transactions between companies and people could become as simple as messaging. By not making an inherently public-facing identity system, SSI can address data theft and centralised data silos without the ambiguity between your issuer and the holder.
SBTs are designed upon pre-existing Web3 concepts such as for example NFTs, gives them a solid path for adoption by the city, especially since developers are more comfortable with the tooling. However, as communities commence to grasp the general public nature of SBTs and the privacy issues this creates (e.g. traceability of online behaviour), they’ll start to look for privacy-preserving alternatives.
However, SSI has seen an enthusiastic adoption from universities recently and has a solid market for adoption amongst governing bodies, especially given recent events such as for example COVID-19. This fascination with SSI has already been starting to grow in momentum, with the EU commission proposing that Europeans must have a secure type of digital identity. This degree of government adoption will benefit SSI in its further expansion into key global sectors such as for example education and healthcare.
SBTs and SSI are both gaining publicity for solving Web3s current identity disorder. SBTs seek to leverage the community’s knowledge of NFTs to secure quick and seamless adoption. However, SSI looks to handle these problems with privacy-focused technology, which includes been developed over years of research. Still, both systems have the potential to include value to your digital lives. Nonetheless, SSI may be the only 1 that digs deep enough to resolve issues surrounding identity and privacy to permit Web3 to be truly adopted by the masses and put us at the centre of our very own ecosystems.