Vitalik, the creator of Ethereum, introduced the idea of soulbound NFTs in this blog post. He took the idea from the famous online game, World of Warcraft. In World of Warcraft, soulbound items are items that cannot be exchanged or sold to another player. They are unique to you. If you think about it, soulbound items exist in real life too.
Here are some examples of IRL soulbound items:
Vitalik is a big fan of the idea of creating soulbound NFTs. These are NFTs that cannot be flipped or exchanged, and NFTs that you have to earn.
If the technology behind soulbound NFTs is created, there is the potential to put a huge number of things, like driver’s licenses on the blockchain. Vitalik talked about a few use cases he’s excited to see, which include a new system for credit scores. Your current credit score is almost like a random number generated through a black box. Non-transferable NFTs could be used to create a new credit score system, which could be based on your work history, certifications and things like that.
Right now, owning a blue-chip NFT like a bored ape is a symbol of status or wealth. If you own a bored ape, it means you were either rich enough to spend hundreds of thousands of dollars on one, or you were early enough to the NFT game to get one before all the hype. Vitalik’s hope is that soulbound NFTs can be used to signal that you achieved a certain goal or did a certain thing.
"Making more items in the crypto space "soulbound" can be one path toward an alternative, where NFTs can represent much more of who you are and not just what you can afford".
Nearly all blockchains and protocols designed so far have centred around the idea of maximum transferability. Building a blockchain where transfers can be limited or even prevented poses its own technical challenges, but Vitalik and many others believe that if this can be figured out, "this opens a much wider door to blockchains being at the center of ecosystems that are collaborative and fun, and not just about money".
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