The ability to protect and define our identity has become a major discussion at Consensus 2023, the annual summit dedicated to blockchain technology. Vitalik Buterin, the co-founder of Ethereum, has proposed the concept of soulbound tokens (SBTs) as non-transferable NFTs which can represent a person’s digital identity. But according to experts, SBTs are largely a fraudulent meme.
Panelists debate SBT necessity and advise on key rotation for decentralized identities.
At a panel called “Not Your Keys, Not Your Identity: How to Protect our Most Precious Asset” on Thursday, Daniel Buchner, the head of Decentralized Identity at Block, said that SBTs aren’t necessary for decentralized identities. Evin McMullan, co-founder, and CEO of disco.xyz, agreed and said we need to focus on features that protect us from losing control of our identities, like rotating keys. The third panelist, Tyrone Lobban from JPMorgan’s Blockchain department, urged developers to experiment with verifiable credentials.
Cobo, MetaMask Institutional, and Gnosis DAO launch exclusive metaverse identity project
In the past year, the SBT protocol has been emerging as a way to create Web3 identities, but without the possibility of transferring them, they are increasingly used as another level of exclusivity unavailable to the general public. Cobo, MetaMask Institutional, and Gnosis DAO have partnered together to create “Evolution,” a project to help users define their digital identity in the metaverse. By participating, users get access to exclusive research, dissuading them from changing wallets or rotating keys for security purposes.
Masa Finance and Sumitomo Mitsui experiment with SBTs on Celo blockchain for a better financial system
Masa Finance, a project deployed on the carbon-negative Celo blockchain, is giving users the opportunity to create a “prosperity passport” by minting a variety of SBTs (Stablecoins-backed Tokens) related to their digital life, such as a credit score SBT or a community reputation SBT. Major financial firm Sumitomo Mitsui is also experimenting with SBTs to meet social needs. This is a great way to use blockchain technology to create a more secure and transparent financial system and to give users more control over their digital identity and financial data. With the help of SBTs, users can easily access financial services and products, and benefit from the advantages of a digital economy.
SBTs are becoming important in the Web3 space, but they are not designed to replace NFTs or solve the issue of digital identity altogether. Recently the EU proposed using zero-knowledge proofs for digital identity, while a spokesperson from Cobo said they are useful to bring more exclusivity to users and brands.
Experts recommend key rotation and verifiable credentials over SBTs to protect identities in Web3
Overall, it’s clear that soulbond tokens are not an ideal solution to protect our identities, although they offer valuable tools for defined digital personas. The experts at Consensus 2023 warned against falling for the fraudulent meme, and instead focus on opportunities to rotate keys and experiment with other verifiable credentials. Doing this will go a long way in protecting and defining our identities in the Web3 space.
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