Bybit Cloud Wallet offers a seamless way to manage cryptocurrencies without having to handle private keys. Learn more about how it works in this article.

Bybit Cloud Wallet makes crypto management seamless for everyone by offering a user-friendly platform for storing and managing cryptocurrencies without the hassle of handling 

 not only enhances security but also simplifies interactions with Bybit Web3 services. In this article, we'll explore how Bybit Cloud Wallet works and its benefits and risks, and provide a step-by-step guide to using the wallet. 

Bybit Cloud Wallet is a custodial digital wallet integrated with the Bybit platform, allowing users to store and manage cryptocurrencies without handling private keys directly. It offers enhanced security and accessibility for web3 interactions.

Bybit Cloud Wallet is a custodial wallet, meaning that Bybit manages the private keys on behalf of its users. This design simplifies the experience by removing the burden of securely storing seed phrases or private keys. It integrates with Bybit accounts to streamline cryptocurrency management and provide secure handling for private keys.

Users can access their wallet by logging into their account and completing the Cloud Wallet setup. A unique wallet address is generated, and the associated private keys are securely stored on Bybit's cloud servers. Once the wallet is configured, users can safely store, manage and transact a variety of digital assets. 

When initiating transactions — such as sending or receiving cryptocurrency — a request is created and securely transmitted to Bybit’s servers. The provider verifies the request using the stored private keys, ensuring it’s been authorized by the rightful owner.

Depositing funds into the Bybit Cloud Wallet is straightforward, and users can transfer cryptocurrencies from other wallets within the Bybit Web3 platform with ease. Withdrawals follow a similarly simple process, whereby users specify the amount and destination address while selecting their preferred gas fees.

The wallet uses standard security protocols to protect user accounts and funds from unauthorized access. While the custodial nature of the wallet makes it user-friendly, it also necessitates trust in Bybit's security practices.

Bybit Cloud Wallet integrates with various Bybit Web3 services, enabling users to trade, 

 (DApps) directly through the wallet’s interface.

Bybit Cloud Wallet offers a range of benefits for users seeking an efficient and secure way to manage their cryptocurrency assets.

While Bybit Cloud Wallet offers numerous advantages, users should also be aware of several inherent risks associated with its use.

: Navigate to the Bybit homepage and log in to your Bybit account. Then, click on the 

tab on the top left corner of the page. 

. This will generate a unique wallet address associated with your account.

Now that you’ve created your Bybit Cloud Wallet, here’s how you can deposit tokens and start interacting with DApps. There are two ways in which you can deposit tokens into your Bybit Cloud Wallet — by transferring from your Bybit Funding Account, and by transferring from your external wallet.

: Please ensure that you already have funds in your Bybit Funding Account before you proceed with the steps below. 

: Hover your cursor over your profile icon in the upper right corner of the Bybit homepage, and click on 

 (Web3) and your Bybit Wallet (Web3) address will automatically be filled. Select your preferred 

and enter the amount you wish to withdraw to your Bybit Wallet (Web3).

: After you’ve checked and verified all details, click on 

Congratulations! You’ve successfully transferred assets from your Bybit account to your Bybit Cloud Wallet!

Let’s use MetaMask and the BNB chain as an example. 

: Navigate to your MetaMask wallet. Then, click on the 

. Click on the copy icon to copy your Bybit Wallet address.

and paste your Bybit Cloud Wallet address into the input box. 

: Please make sure you choose BSC. Otherwise, your USDT and BNB may not be transferred successfully.

Congratulations! You’ve successfully transferred assets from your external wallet to your Bybit Cloud Wallet.

 next to the token you would like to withdraw, and transfer your funds to your Bybit Funding Account.

, enter the amount you would like to withdraw, choose your gas fees and click on 

: Confirm the details, request the verification code and submit your withdrawal request.

 next to the token you would like to withdraw, and transfer your funds to your external wallet.

: Enter the receiving wallet address and the amount, and choose your gas fees. Click on 

: Review the details, submit the verification code and confirm your withdrawal.

: To view your transfer history, hover your cursor over the 

tab in the top-right corner of the Bybit Web3 page, and click on 

: You can check your deposit and withdrawal history under either the 

Who Is Best Suited to Use the Bybit Cloud Wallet?

Bybit Cloud Wallet combines ease of use with robust security measures, making it a suitable option for users who prefer not to manage their own private keys, while still being able to conduct cryptocurrency transactions.

Individuals who are new to cryptocurrencies will find Bybit Cloud Wallet appealing due to its user-friendly interface and custodial nature, which eliminates the need for managing private keys. This accessibility allows users to engage with digital assets without needing extensive technical knowledge.

 services will also appreciate the wallet's integration with various DApps and platforms, allowing for easy interaction within the blockchain ecosystem.

Deciding whether to use the Bybit Cloud Wallet depends upon your specific needs and preferences. If you value security, convenience and the ability to manage multiple cryptocurrencies within a single platform, Bybit Cloud Wallet is a strong choice. However, if you prefer having full control over your private keys and assets, a 

 might be a better option. Consider your priorities and the level of control you desire over your digital assets when making your decision.

Bybit Cloud Wallet offers a secure and convenient way to manage cryptocurrency assets without the complexity of handling private keys. Its seamless integration with Bybit Web3 services makes it ideal for beginners and experienced users alike, enabling easy interactions with DApps and DeFi platforms. While Bybit Cloud Wallet offers strong security and user-friendliness, the risks of using a custodial wallet remain a consideration for those seeking full control over their assets.

Beginner

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Bybit Cloud Wallet: Seamless Crypto Management for Everyone

USUAL introduces USD0, a stablecoin backed by U.S. Treasury Bills, offering transparency, security, and revenue sharing through its governance token, USUAL.

More than a decade ago, in mid-2014, the first 

 arrived on the stage of the crypto market. These cryptocurrencies were designed to provide stability in the typically volatile world of crypto, and to serve as a bridge between the traditional finance (TradFi) and 

 (DeFi) ecosystems. At the core of their functionality is a mechanism that maintains a close peg to some traditionally valued asset, be it the U.S. dollar, euro or 

Stablecoins have proved to be tremendously popular, with the leading asset in this niche, 

 (USDT), routinely attracting higher trading volumes than any other cryptocurrency — including the mighty Bitcoin. The second most popular stablecoin in the market, 

 (USDC), also enjoys multibillion-dollar daily trading volumes, and ranks among the top 10 cryptocurrencies by market cap.

Despite their popularity, many leading stablecoins — including the dominant USDT and USDC pair — have opaque collateral management mechanisms, are lacking in transparency, don't distribute revenues to the wider user community and are highly centralized in terms of control.

Usual (USUAL) is a DeFi solution launched on the 

 (ETH) blockchain that aims to tackle these deficiencies of traditional stablecoins by offering a 

 (RWA)–backed stablecoin and redistributing protocol revenues among its users. The platform's primary stablecoin — USD0 — is backed by collateral invested mainly in short-term U.S. Treasury Bills; maintains a tight peg to the greenback via these secure investments; has a fully transparent reserve verification system; and opens up additional yield opportunities across a variety of external DeFi protocols via a 

 (USUAL) is an Ethereum-based DeFi platform that offers an RWA-backed, USD-pegged transparent stablecoin, USD0, and distributes protocol revenues among its user community. 

USD0 is backed by collateral invested in RWAs, primarily in short-term U.S. Treasury Bills. The short-term, highly liquid and secure nature of these government-issued assets ensures that USD0's peg to the U.S. dollar isn't likely to be compromised.

Usual has partnered with Hashnote, a Florida-based regulated provider of digital and tokenized fund products, to facilitate secure investment in U.S. Treasury Bills and associated products.

Usual's USD0 is a unique stablecoin product, distinct from the dominant assets in this niche, 

 and USDC. While these cryptocurrencies also maintain fiat reserves to back their value, they’re controlled by centralized corporate entities, and their USD reserves are exposed to the traditional banking system, with poorly known levels of risk associated with them.

, whose values aren’t backed by fiat assets, and which are highly dependent upon underlying protocols’ activity to maintain their pegs. In many cases, these algorithmic coins lose their pegs and stability when the underlying lending or borrowing activities on their protocols are manipulated by 

 or become subject to panic-driven runs. The most notorious example was the 2022 

Usual’s platform also offers a liquid staking version of USD0, USD0++, which can be used throughout the DeFi ecosystem for additional yields. It has partnered with several Ethereum DeFi protocols to expand the universe of platforms where USD0++ can be utilized, including 

Usual also has another distinct feature: the protocol aims to distribute future revenue among its users, specifically among holders of its upcoming USUAL 

The platform was developed by the France-based Usual Labs, a blockchain development outfit co-founded by Adli Takkal Bataille, Hugo Sallé de Chou and former French parliament member Pierre Person. Usual launched the USD0 stablecoin in mid-2024. In late November 2024, the platform introduced the USUAL governance token, set to be launched sometime in mid-December 2024.

The introduction of the USD0 stablecoin is a potentially paradigm-changing event for the crypto market. This innovative asset adopts many of the advantages of fiat-backed stablecoins, but also resolves many associated issues. Usual Labs has targeted several goals with the advent of USD0 and its unique working mechanism.

One key aim is to change the way that profits from decentralized stablecoin operations are shared. Usual's revenue is to be shared with the user community — namely, the holders of the USUAL token. All the revenue generated from the platform's operations flows to its treasury. USUAL holders are in charge of this revenue, making them eligible to decide on the actual distribution. In essence, owning USUAL entitles you to a share of potentially 100% of revenue generated by the platform.

This starkly contrasts with the way that other fiat-backed stablecoins, notably USDT and USDC, operate. All the revenues generated from these stablecoins are appropriated by their respective founding companies — Tether Limited for USDT, and Circle Internet Financial Limited for USDC. While the risks from the operations of these assets are externalized and shared with holders of the stablecoins, the revenues are internalized and scooped up by Tether and Circle.

Another aim of the Usual project is to bring transparency to the management of collateral that backs the USD0 stablecoin. As a decentralized protocol, Usual provides the transparency of collateral funds' allocation. Again, this contrasts with the opaque nature of the way that USD collateral for some stablecoins is managed. Tether's USDT has particularly 

 in the crypto investor community, as the company has never conducted a full-scale audit for its vast claimed dollar reserves.

Another aim of Usual is to provide a stablecoin that’s completely secure from exposure to the traditional, fractional reserve-based banking system. Some crypto investors have derided the fractional reserve system, whereby only a small proportion of client liabilities are actually held at any given time by banks. Projects like USDT and USDC rely heavily on the traditional banking system, which backs their U.S. dollar reserves. These banks naturally rely on fractional reserves that, at least in the opinion of the most risk-averse investors, exposes them to 

In contrast, USD0 is backed by short-term U.S. Treasury Bills, an asset class that’s fully backed by the U.S. government's pledge. These are considered among the safest assets in the world of finance, as the U.S. government has never yet defaulted on its payment obligations. Unlike USD deposits in banks, USD0's Treasury Bill–based collateral isn't exposed to the risks of the fractional reserve system. As such, the coin's collateral is based on a government-backed asset, providing a level of security that most fiat-based stablecoins in the market are unlikely to match.

Usual uses a three-token model to power its operations and services. There's the fiat-backed USD0 stablecoin, which is protected by Treasury Bill collateral. The second asset is the USD0++ LST, a derivative of USD0 issued upon staking the latter. And there’s the USUAL governance token that grants holders the right to participate in decision-making on the protocol's rules and future direction.

The Usual protocol provides two ways to mint the USD0 stablecoin:

:This is normally done by investing in the USYC fund and using it as collateral, then depositing it into the mint engine to mint USD0. USYC is an on-chain representation of the Short Duration Yield Fund (SDYF) provided by Hashnote, a regulated provider of tokenized fund products. USYC/SDYF is based mainly on U.S. Treasury Bills with short-term maturity.

:You can also mint USD0 indirectly on a 1:1 basis by supplying the USDC stablecoin as collateral.

Redeeming the stablecoin is also possible in two ways — directly through the protocol, or via the secondary market. When using direct redeeming, you simply withdraw your RWA collateral using the protocol's interface. Alternatively, you can sell USD0 for USDC or USDT via a secondary market platform, such as 

 (CRV), a popular DeFi protocol that specializes in stablecoin assets.

USD0++ is an LST representation of USD0. When you stake USD0 on the platform, you’re issued USD0++, which is fully composable and can be used on various Ethereum-linked protocols to earn additional yield. You can lock USD0 to get issued USD0++ for four years. However, you’re also free to unstake at any time.

Staking rewards from locking USD0 to get USD0++ are paid in USUAL tokens. Usual's model rewards long-term staking commitments, as users are encouraged to stake for at least six months — this is the minimum period of staking required to qualify for what the protocol calls the 

 (BIG). BIG essentially refers to a guaranteed yield from native staking of the underlying RWAs on the Usual protocol. When the period concludes, the staker can choose to collect the yield in either USUAL or USD0.

Yields start accumulating from day one of staking. Although users are free to unstake at any time, those who do so before the six-month minimum period will forfeit accumulated rewards.

USUAL is the Usual protocol's governance crypto token. It was unveiled on Nov 19, 2024, and is currently in pre-market mode only. It's expected that USUAL's public launch will occur in the near future. As USUAL is a community-first token, 90% of the tokens are distributed to the community with only 10% allocated to insiders (team and investors).

Usual feeds its revenues into its protocol's treasury, which is controlled by the USUAL holder community. As such, USUAL holders own 100% of the platform, a significant departure from the system used by many other stablecoin issuers, whereby a corporate entity earns all or the majority of the profits. 

Additionally, Usual is designed such that its protocol will incentivize early adopters and long-term holders. As the TVL of USD0 increases, Usual will generate more revenue. The emission rate of USUAL is also disinflationary, gradually reducing as the TVL of USD0 rises and enhancing the scarcity of the token, which will subsequently lead to a boost in its value.

At the initial stages of the platform's market presence, Usual Labs is largely responsible for governance decision-making. However, this function will be taken over by USUAL holders, likely in the form of a 

Although called a governance token, USUAL has additional functionalities beyond supporting the protocol's governance processes. It’s also used to distribute yields from staking ( as discussed in the section above on USD0++). Rewards from the protocol's loyalty point campaigns are also airdropped in USUAL. 

In addition, USUAL can be staked for additional governance rights and rewards. USUAL stakers will receive 

, from which they can earn a portion of USUAL emissions and 50% of the fees generated from people unstaking their Usual assets (USUAL or USD0++).

USUAL's maximum and total token supply are specified at 4 billion. The initial circulating supply during the early days of the token's pre-market trading is close to 500 million as of Dec 2, 2024.

The Usual protocol ran a points-based reward program from July through the last week of November 2024. Called the 

, it let early users accumulate points by acting as liquidity providers before the protocol's full public launch phase. The accumulated Pills points will determine users' eligibility for a USUAL airdrop, slated for mid-December.

The airdrop will allocate 8.5% of the token's supply to eligible users — the more Pills points you've earned, the more USUAL tokens you’ll receive.

During the token's pre-market trading stage, Bybit is one of the rare platforms that’s allowing you to access it. As of Dec 2, 2024, 

 on Bybit's Pre-Market Perpetuals Trading platform as a 

 lets you invest in a variety of upcoming cryptocurrencies via USDT-based perpetual futures contracts before these assets are listed on the main spot or derivatives markets. Using this platform, you can access a range of promising new crypto assets before they become publicly available. There are two main limits enforced by Perpetual Pre-Market — the position size cannot exceed $250,000, and leverage is permitted up to 5x.

Stablecoins are one of the oldest asset types in the crypto industry, while RWAs are a much newer trend that’s growing increasingly popular among investors. The Usual project has decided to marry these two areas, providing an RWA-backed, USD-pegged stablecoin — USD0. The concept of using an RWA for stablecoin collateral may not be totally unique. However, using a highly secure asset such as U.S. Treasury Bills with short-term maturity is something that truly distinguishes the Usual protocol.

Distributing revenue among the governance token holder community is also a refreshing innovation in a niche dominated by providers who largely internalize protocol incomes. Currently, the stablecoin market is heavily dominated by USDT and USDC, with 

 (FDUSD) also recently posting impressive, multibillion-dollar daily trading volumes. All three of these stablecoin issuers lack a mechanism to share revenue with their users. A major stablecoin provider that utilizes a democratized way of sharing protocol revenues with the user community is a deserted area, one that the Usual platform is keen to claim.

With all these merits of the Usual protocol, the upcoming USUAL token is a promising and potentially rewarding asset. Investors interested in stablecoins grounded in highly secure TradFi collateral might want to take a closer look at these new arrivals on the block — the USD0 stablecoin and the USUAL governance token.

Intermediate

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Usual (USUAL): A New Model of Collateralized Stablecoin Ownership

AI agents in crypto are autonomous entities designed to operate within blockchain ecosystems. A popular AI agent is AIXBT, which specializes in providing crypto market intelligence.

The cryptocurrency ecosystem runs on narratives, and the current cycle is being driven by two major ones: meme coins and artificial intelligence (AI). 

The recent AI agent craze has captured both of these narratives to a large extent. November 2024 saw several AI agents gain significant traction, boasting tokens with market caps in hundreds of millions of dollars. 

As of now, most of these agents are used as key opinion leader (KOL) influencers to post on X (formerly Twitter), interact with X users and promote their particular tokens. However, they have the potential to evolve to handle complex tasks and reshape how users interact with 

AI agents are autonomous entities designed to operate within 

 ecosystems. They can utilize machine learning algorithms and data analytics to perform a variety of tasks, such as trading, posting tweets, building a community and even creating art or music. 

At first glance, an AI agent might just look like a fancy rebranding of traditional bots that have existed in the ecosystem for a long time. But unlike traditional bots that follow rigid rules, AI agents can analyze data in real time and adapt their strategies accordingly. This flexibility and learning capability make them significantly more sophisticated than conventional bots. 

AI agents have a variety of applications within the cryptocurrency space:

, an AI agent deployment platform that operates on the 

 blockchain. It enables any user to create and launch an AI-powered agent that can perform a variety of tasks and accrue value for its token holders. 

The recent popularity in the AI narrative has driven the price of Virtuals Protocol’s token, VIRTUAL, from $0.05 to $1.89 in just a few months. 

Virtuals Protocol operates similarly to the popular Solana-based meme coin launchpad 

. By purchasing VIRTUAL tokens, any user can build an AI agent to seamlessly interact with different networks. Each agent requires 10 VIRTUAL tokens for deployment. Once deployed, the agent token enters a bonding curve, whereby users can buy or sell it depending upon their interest.

If the bonding curve market cap reaches $420,000, the token’s liquidity pool is deployed on 

 and the agent is transferred to a new contract that handles the on-chain creation process. The agent also becomes visible on the platform, where users can trade it freely. 

There have been several notable launches from Virtuals Protocol, none more so than 

, which has reached a market cap of approximately $200 million in less than a month. AIXBT specializes in providing crypto market intelligence and automates the process of tracking market trends and interpreting data. It tracks over 400 KOLs to understand trending narratives in real time, and can perform technical analysis on the price movements of different cryptocurrencies. 

AIXBT has had a remarkable run-up in price during November 2024, as its market cap has increased from around $42 million to over $230 million. Its price has since retraced slightly, with its current market cap hovering around $174 million. The number of token holders has also seen a sharp increase over the past month. 

While AI agents present numerous advantages, they also bring some challenges. The biggest concern with any AI agent is 

, as their responses aren’t always accurate. Therefore, solely relying on them for research can be counter-productive. The second major concern is security: adding an AI agent to execute a transaction also adds an additional layer of security risk and vulnerability that could be exploited by malicious actors. 

Conclusion: The Future of AIXBT and AI Agents

Despite the risks outlined above, AI agents such as AIXBT have become the hottest sector of the current crypto cycle. The 2017 cycle was led by the advent of 

 platforms, and the 2021 cycle was largely driven by DeFi. Now, as we head into 2025, we could possibly see AI agents becoming the breakthrough technology that provides a new case for cryptocurrency.

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AIXBT by Virtuals: The AI Analyst Shaking up Crypto Twitter

Sonic Labs is set to publicly launch its new layer-1 blockchain, Sonic, after achieving its Genesis block.

Daily Top Performer — Hedera Hashgraph (HBAR)

The S&P 500 rose 0.24% to a record high, led by tech stocks, as investors eye labor data and Fed speeches. Coindesk Indices, an index measuring broader cryptocurrency market performance was down by 0.78%, with Bitcoin and Ether dropping by 1.51% and 2.48%, respectively in the past 24 hours.

Today's top performer is HBAR, which surged 59.0% following the announcement of Hedera and SEALSQ's collaboration to revolutionize decentralized physical infrastructure.

Hedera Hashgraph (HBAR), launched on September 2019, is a cryptocurrency network that supports fast transactions and application deployment, overseen by a select group of business-approved nodes. This design ensures quick finality and reliability, attracting major corporations like LG, IBM, and Boeing as participants. SEALSQ and the Hedera Hashgraph Association are collaborating to develop 

 using Hedera's DLT. The partnership integrates SEALSQ's platform to securely manage trillions of object transactions, aiming to revolutionize physical infrastructure with scalable, decentralized solutions.

Check Out the Latest Prices, Charts, and Data of 

, Sonic, after achieving its Genesis block. Positioned as a faster, EVM-compatible successor to the Fantom Opera network, Sonic aims to reduce latency and transaction fees while incentivizing developers with 90% of generated fees. Supported by the Fantom Foundation, Sonic allows users to swap FTM tokens for S tokens at a 1:1 ratio, with 200 million S tokens being airdropped. Sonic achieved 720-millisecond transaction finality during testing, positioning it as a competitor to fast EVM chains like Solana.

Yesterday, the BTC Spot ETF data shows a total flow of $15.3 million, with $28.1 million flowing out of GBTC and $43.4 million in non-GBTC products.

, offering free points (shards) to participants. To earn 3000 shards, users need to sign up, verify their email, and connect their X and Discord accounts. Additional points can be earned by creating content about Talus on X. Talus is a high-throughput layer 1 blockchain designed for decentralized AI agents, and its token is confirmed.

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Sonic Labs Prepares for Launch as the Fastest Fantom Successor Blockchain

Bybit Learn

web3

From non-transferability to exciting use cases, here's how soulbound tokens (SBTs) will contribute to a decentralized society and a brighter Web 3.0 future.

There are growing concerns in many online spaces relating to altered or fake identities, false or incomplete information and other issues with factual data. These concerns tie into many aspects of society. In fact, they impact everything from gaming and social media to the medical industry, employment, finances and more. Soulbound tokens are an exciting advancement in Web 3.0 tech directly tackling this issue. They offer the promise of bringing verifiable digital records into a variety of real-world environments. These soulbound NFTs are exclusively tied to the holder, which yields tremendous benefits. Let’s take a closer look at SBTs.

Soulbound tokens (SBTs) are non-fungible tokens (NFTs) that are permanently linked to the user. Because they’re unique and non-transferrable, SBTs offer beneficial applications in both digital and real-world environments.

Vitalik Buterin is well-known in the cryptocurrency world as the creator of Ethereum, which is the largest programmable blockchain and has the second-largest market cap behind Bitcoin (BTC). While playing the 

 game, Buterin came up with the idea of non-transferable tokens. Although tokens and NFTs are transferable as assets, Buterin was interested in using them as a type of proof, rather than assets 

. Not long after, Buterin published a paper detailing a decentralized society which he described as an augmented space based on soulbound tokens. The concept of Web 3.0 is established on the idea of a decentralized society.

What are soulbound tokens? SBT are best described as digital tokens that can be publicly verified. These non-transferable tokens hold critical information about a Soul, or individual entity. This information could include real-life employment history, skills, credentials, education, memberships and more. On a more significant level, SBTs enable a variety of other applications to come together in a decentralized society which draws on merging the properties of both “Souls” and communities. This confluence results in the co-creation of a pluralized network of intelligence and goods. In this decentralized society, a combination of advanced governance features and decomposable property rights collectively reward cooperation and trust. At the same time, they protect the network of goods and intelligence from penetration and damage.

Now that we’ve established a conceptualization for soulbound tokens, what are their applications? In society, soulbound NFTs support decentralization mechanisms, 

 governance, community wallet recovery and more. The token holder is the Soul, which can be an individual, a company or a community. This means that full networks can be created using soulbound tokens. Just as NFTs can be owned and tracked on blockchains, the same holds true for SBTs. However, unlike NFTs, SBTs cannot be transferred.

NFTs, or non-fungible tokens, are unique digital assets that can be purchased and sold. Although soulbound NFTs can be described as an evolution of NFTs, they cannot be traded in a “like” fashion. Instead, SBTs are a type of non-transferable NFT. They hold credentials that are specifically bound to the Soul, or token holder. In this way, they serve as the foundation of a decentralized society. However, because they’re bound to the Soul, SBTs cannot be bought or sold. Notably, because they’re non-transferrable, soulbound tokens 

However, an individual or entity may hold numerous SBTs. These tokens offer a different type of value to the Soul. They’re a type of identity marker, and they may individually hold attributes related to employment history, skills and more. An identification Soul may provide the same information as a person’s driver’s license, passport or other government-issued ID. A medical Soul may have a person’s full medical history.

Be aware that soulbound tokens are a relatively new concept. While there are some preliminary uses in action, soulbound NFTs aren’t expected to be in full use until 2024. As a developing innovation, however, the time frame for bringing soulbound tokens fully online is rough.

Thus far, the focus of cryptocurrencies has been centered on finances. Soulbound tokens make an important shift away from finances and toward the evolution of society. SBTs enable a person to focus on themself by building their digital identity, which takes the emphasis off of building financial assets. This can fundamentally shift both digital and real-life societies.

Another critical advantage of SBTs is the ability to verify the token holder's identity and reputation. The unique nature of SBTs increases the difficulty of artificially manipulating “clout” and skills on résumés. As a result, soulbound NFTs promote trust in a decentralized society because token holders can more easily verify their identity and other personalized factors. This has direct and beneficial ramifications for job searches, healthcare and more. Through improved verification capabilities, SBTs may also decrease the incidence of crypto scams.

One of the most pressing concerns related to what Soulbound tokens are capable of is their potential impact on privacy. Consider, for example, that an individual may collect SBTs describing specific group affiliations, political participation, religion or attendance at special events. Some individuals or groups may identify affiliations and interests that oppose their own ideologies, which could conceivably feed into trolling, harassment or even harm. Illegal redlining could also occur when individuals apply for a new job, loan or something else because of misuse of the data tied to their SBTs. In other instances, policies and companies could use SBTs to target a specific group, such as for predatory lending.

The possibility of loss related to hacking should also be considered. Unfortunately, NFTs are frequently stolen, so it’s reasonable to suspect that soulbound tokens stored in a wallet could also be swiped. The creator of soulbound tokens, Buterin, has an answer for this concern. Specifically, he has suggested a social recovery model in which appointed SBT guardians can collectively aid in SBT recovery.

NFTs and soulbound NFTs have notable similarities as well as strong differences. They’re both non-fungible tokens that function on blockchain networks. They both offer true value for the holder, and each one is unique. More than that, they can be collected. However, they’re collected for different purposes.

An NFT stands out because it’s a digital asset that has financial value. Because of this unique quality, NFTs can be bought, sold and traded. Many tokens have associated NFTs.

Soulbound NFTs, on the other hand, provide value through their identity and data storage functionalities. They contain unique identifiers for the holder, such as driver’s license number, educational background, religious affiliation and more. Because SBTs have details that are specific to the individual, they’re unique. Their verification and identification features provide non-financial value to the token holder. Soulbound tokens also provide functionality for corporations, organizations, governments and other entities. Unlike NFTs, SBTs cannot be traded.

Soulbound NFTs evolved from NFTs. However, SBTs are not replacing NFTs. They serve different and important purposes in their own right, and you can therefore expect both to continue to play a key role in the crypto world going forward.

In a decentralized society, each member has access to the same information about an individual or entity. There’s no need to rely on trust, or to personally know the individual or entity, because all information is available to each member. Soulbound tokens directly support a decentralized society. They cannot be transferred, so they’re directly linked to the person or entity for whom they were created. This creates socially verifiable reputations, available to all society members.

It’s useful to explore how the SBTs may be used in a real-life situation. Soulbound NFTs have numerous applications to consider.

There are many scenarios in real life when you may need to provide proof of identification. For example, when a person applies for a mortgage, the lender needs to make sure that the applicant is who they say they are. This may be corroborated by reviewing the individual’s government-issued ID. Then, the specific individual’s credit rating and job history must be analyzed. These factors all play into the lender’s risk for extending a loan to that person, and it can drive the loan’s interest rate and other factors.

The tedious process of applying for a mortgage inevitably involves submitting stacks of paperwork to the lender. The lender, in turn, must take time to review and verify all of the documentation. When soulbound NFTs are used, however, identity can more easily be verified. Other factors, such as employment, credit scores and more, may also be reviewed through SBTs. In this way, SBTs can dramatically speed up and simplify the process.

SBTs could be issued at special events in the future. For example, you may attend a seminar and receive a soulbound token confirming your attendance. Organizations, companies, universities and other entities may support individuals as they build their digital clout by obtaining these proof-of-attendance tokens. SBTs may also be used to verify other meaningful life experiences, not related to employment or education. For example, an SBT may be issued when an individual attends a church retreat or a political rally. Proof of attendance may be used when applying for a job, joining an organization, applying for college and more.

A person’s medical history follows them throughout life, but keeping track of medical records is a tedious process. Each doctor visit, lab test, hospital stay and more create additional records to track. When an individual switches doctors, visits an emergency room or takes any number of other steps to obtain care, they must complete lengthy forms outlining their medical history. For special diagnoses, a complete copy of medical records may be needed by the physician. Soulbound tokens could eliminate the need for hassle by storing a complete set of medical records. In addition to saving time, energy and paper, SBTs used in this way could ensure that the individual receives proper care based on their full medical history.

Form of Verifiable Membership or Affiliation

In some situations, an individual or entity may be asked to verify their membership or affiliation with a specific group or organization. For example, a business may need to prove that it’s properly registered with an industry-specific trade organization, or licensed to do business in a particular geographic area. An individual may want to join an online community for their profession, political affiliation or some other distinction. Currently, such verification is often done through centralized, Web 2.0 affiliations. This may be through a social media connection, for example. SBTs may be issued by an organization or group with which the business or individual is affiliated. An SBT can then be used as a form of verification to simplify the process. In addition, SBTs could be used by organizations to confirm that all of their members and their connections are legitimate.

, often have a solid governance structure in place to steer the direction of the organization and to make other critical decisions. Unfortunately, DAOs can be negatively affected by Sybil attacks. In such a scenario, one or more parties would collect many of the governance tokens with the intention of manipulating voting and governance in their interests, rather than in favor of the organization.

It’s important to note that decentralized governance is a hallmark of this emerging realm, and is widely used on some of the most notable platforms. SBTs could support decentralized governance by ensuring that voting power is weighted according to participation, rather than to the number of tokens held. Even those who don’t intentionally try to manipulate governance may still do so. For example, a 

, who by definition has invested in a large number of tokens, could have a greater influence through voting power than others, even without malicious intentions. Through the use of SBTs, platforms can ensure that each token holder’s voting power is equal.

How SBTs Can Become the Foundations of a Decentralized Society

Soulbound tokens are still being developed and aren’t expected to be fully utilized until 2024. However, the possibilities for their use in a decentralized society are significant, with potential use cases not yet imagined. Practical uses described above, related to the hiring process, applying for a mortgage, joining organizations and simplifying medical records management, are already anticipated and in the works. However, there may be many other functionalities for SBTs once they’re adopted in the mainstream.

Soulbound tokens support a decentralized society, facilitating easier data management and the conveyance of accurate data. In addition, they theoretically promote social scoring to minimize the risk of discrimination and other similar abuses. In the future, soulbound tokens may be used to help an individual apply for college, select a contractor, find a qualified candidate for a job opening, choose the most impactful charity organization for donations and more.

A Web 3.0 society puts users in direct control over their data and facilitates its quick and accurate transfer. As the technology surrounding soulbound tokens continues to evolve and moves into common use, privacy, speed, equality and other factors will be improved.

Soulbound tokens represent the next stage of evolution in the crypto space. Though their technology is still being developed, they have the potential to fundamentally change many aspects of both the digital and physical realms. The promises offered by SBTs are almost certain to be expanded upon going forward.

How Soulbound Tokens (SBTs) Can Improve Society With Web 3.0

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