Vitalik Buterin explains the advantages of non-transferrable NFT

Ethereum co-founder Vitalik Buterin has published an opinion piece on non-transferrable NFTs, arguing that there are a number of use cases where token transferability backfires.

Vitalik Buterin – Co-founder of Ethereum

Truly irreplaceable

Vitalik Buterin believes that users can benefit from non-transferable tokens.

Vitalik Buterin published a post Blog today where he reflects on the possibility of “bound” NFTs – truly irreplaceable NFTs literally cannot be sold or separated from their owners.

Borrowing a World of Warcraft term (where the “soulbound” item refers to an item that cannot be sold or separated from the player who owns it), Buterin has explored the concept in the NFT space , which makes up the bulk of it. post content. Currently, most NFTs can be bought, sold or transferred from one owner to another.

“While transferrable NFTs have established their place in the space and are really valuable for supporting artists or charities, there is also a large and unexplored space for non-transferrable NFTs.”

To illustrate his point, Buterin provided a number of real and hypothetical examples of cases where transferability is not a preferred property of NFT. For example, POAP, the “Proof-of-Attendance” protocol, distributes NFTs to users who prove they attended an event. While POAP tokens are technically available for trading on OpenSea, their core use case (i.e. to signal that someone actually attended the event) suggests that they will make sense as non-transferrable tokens.

Buterin also suggested that governance makes more sense when associated with “bound” tokens that are non-transferrable. Enabling governance token trading can easily lead to the wealthiest or most power-hungry people amassing huge stakes. Instead, Buterin said governance tokens should be tied to key stakeholders in the network or organization. For example, the citizenship or residency NFT has voting rights, similar to the CityDAO “citizen” NFT. However, CityDAO NFTs are still transferrable. On the other hand, the administrative NFT that Buterin envisions will be “contiguous” and available only to real-world residents.

Buterin has been careful to raise privacy concerns, noting that some technological innovation will be required to ensure that an individual’s entire on-chain data is not made public, whether it’s name or face. However, he notes that “some fairly simple technical options are possible,” including using zk-SNARK.

The Ethereum co-founder concluded his post by noting that while most blockchain research and innovation is done with the goal of maximum portability, there are effective NFT use cases as if they were truly irreplaceable. Concluding the post, he urged the crypto community to pay attention to the points he discussed.

“If we can, this will open a wider door for blockchain to be at the heart of exciting and collaborative ecosystems, not just money.”

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