Struggle for Web3’s soul: The future of blockchain-based identity

The attention, one might suspect, has much to do with the participation of Buterin, blockchain’s wunderkind and the legendary co-founder of the Ethereum network. But it could also be a function of the paper’s ambition and scope, which includes asking questions like: What sort of society do we really want to live in? One that is finance-based or trust-based?

The authors illustrate how “non-transferable ‘soulbound’ tokens (SBTs) representing the commitments, credentials and affiliations of ‘Souls’ can encode the trust networks of the real economy to establish provenance and reputation.” These SBTs appear to be something like blockchain-based curricula vitae, or CVs, while “Souls” are basically people — or strictly speaking, individuals’ crypto wallets. However, Souls can also be institutions, like Columbia University or the Ethereum Foundation. The authors wrote:

There is no shortage of visionary scenarios about how Web3 might unfold, but one of the latest, “Decentralized Society: Finding Web3’s Soul” — a paper published in mid-May by E. Glen Weyl, Puja Ohlhaver and Vitalik Buterin — is close to becoming one of the top 50 most downloaded papers on the SSRN scholarly research platform.

“Imagine a world where most participants have Souls that store SBTs corresponding to a series of affiliations, memberships, and credentials. For example, a person might have a Soul that stores SBTs representing educational credentials, employment history, or hashes of their writings or works of art.”

“In their simplest form, these SBTs can be ‘self-certified,’” continue the authors, “similar to how we share information about ourselves in our CVs.” But this is just scratching the surface of possibilities:

“The true power of this mechanism emerges when SBTs held by one Soul can be issued — or attested — by other Souls, who are counterparties to these relationships. These counterparty Souls could be individuals, companies, or institutions. For example, the Ethereum Foundation could be a Soul that issues SBTs to Souls who attended a developer conference. A university could be a Soul that issues SBTs to graduates. A stadium could be a Soul that issues SBTs to longtime Dodgers fans.”

There’s a lot to digest in the 36-page paper, which sometimes seems a hodgepodge of disparate ideas and solutions ranging from recovering private keys to anarcho-capitalism. But it has received praise, even from critics, for describing a decentralized society that isn’t mainly focused on hyperfinancializaton but rather “encoding social relationships of trust.”

Fraser Edwards, co-founder and CEO of Cheqd — a network that supports self-sovereign identity (SSI) projects — criticized the paper on Twitter. Nonetheless, he told Cointelegraph:

“Vitalik standing up and saying NFTs [nonfungible tokens] are a bad idea for identity is a great thing. Also, the publicity for use cases like university degrees and certifications is fantastic, as SSI has been terrible at marketing itself.”

Similarly, the paper’s attention to issues like loans being overcollateralized due to lack of usable credit ratings “is excellent,” he added.

Overall, the reaction from the crypto community, in particular, has been quite positive, co-author Weyl told Cointelegraph. Weyl, an economist with RadicalxChange, provided the core ideas for the paper, Ohlhaver did most of the writing, and Buterin edited the text and also wrote the cryptography section, he explained.

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According to Weyl, the only real sustained pushback against the paper came from the DID/VC (decentralized identifiers and verifiable credentials) community, a subset of the self-sovereign identity movement that has been working on blockchain-based, decentralized credentials for some years now, including ideas like peer-to-peer credentials.