(Kitco News) - Japan’s Sumitomo Mitsui Financial Group (SMBC) has become one of the first major financial institutions to announce its plans to explore the practical uses of soulbound tokens (SBTs) for identity verification. SMBC is the second largest bank in Japan and part of Mitsui Group, one of the largest corporate groups in the world.
SBTs were first proposed by Ethereum co-founder Vitalik Buterin as a form of digital identity token that can track an individual or entity’s history, generate a reputation score, and be used for identity verification purposes in Web3. SBTs are tied to a specific wallet address, hold no value and are non-transferable.
According to the announcement from SMBC, the company has partnered with the digital asset firm HashPort to explore the “practical” use of SBTs for its clients. The first phase of the exploration will involve the SMBC Group issuing SBTs on a trial basis with technical support from the HashPoert Group. This phase will last until the end of March 2023.
The SMBC Group and the HashPort Group have been in talks about the new venture since July 2022, with the pair focused on “developing a safe and secure Web3 economic zone.”
The second phase of the trial will involve exploring different scenarios where SBTs can be used as proof of behavior and employment history. It will also include testing designed to produce case studies demonstrating SBT utility in conjunction with companies wanting to develop and market fan tokens.
The overall purpose of the collaboration is to conduct research on SBTs to find out their practical uses for communities, jobs, knowledge-sharing services and decentralized autonomous organizations (DAOs).
“With more and more people taking on side jobs, personal technology and knowledge sharing services gaining traction, decentralized autonomous organizations (DAOs) emerging, and other changes taking place in society, it has become common practice for individuals to assume diverse roles and personalities within society,” SMBC said. “It is expected in this new society that each individual will be able to control which 2 [personas] he/she displays in each community in which he/she participates. SBTs satisfy these new social needs through the use of multiple ‘souls’.”
The firm provided the example of a user having an SBT that represents their work life and an SBT that represents their activity as a music fan.
“If this user wants to prove his/her skills and work history when changing jobs, he/she can simultaneously prove his/her identity and his/her career information associated with them by allowing his/her employer to reference the SBTs,” SMBC said.
In the music community, the user could “share his/her fan activity history within an artist's fan community to prove his/her loyalty as a fan,” while also limiting what information the community has access to based on the “SBTs held within the user’s soul as a music fan.”
This approach allows a person to share personal information in a secure manner while also remaining anonymous.
|
| Japan to experiment with the issuance of a digital yen in 2023 |
The introduction of SBTs into their business model puts SMBC ahead of the curve in terms of the adoption of blockchain technology and digital identity. Some of the top use cases for SBTs include proof of education, proof of work history, government-issued identification, credit history/score, medical history, and banking information, to name a few.
According to SMBC, its partnership with HashPort can help facilitate the widespread adoption of blockchain technology and nonfungible tokens in Japan and around the world.
“Partnering with the HashPort Group to conduct research on SBTs that can be put to practical use in [the] future is a meaningful initiative by the SMBC Group to help the Web3 economy catch on more widely in Japan,” the company said. “In addition, the two parties will also consider undertaking content business associated with NFTs and developing infrastructure for the Web3 economic zone to encourage the spread of the token business both in Japan and overseas.”
