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

There are many visionary scenarios for how Web3 could unfold. However, one of the most recent, “Decentralized Society – Finding Web3’s Heart” — a paper published mid-May by E. Glen Weyl and Puja Ohlhaver — is on track to become one of the 50 most downloaded papers from the SSRN scholarly research platform.

One might think that the attention is due to Buterin’s participation, the blockchain’s wunderkind, and the legendary co-founder of Ethereum. It could also be due to the paper’s ambitions and scope. This includes asking questions such as: What kind of society would you like to live in? Is it trust-based or finance-based?

The authors show how “nontransferable soulbound tokens (SBTs), representing the commitments and credentials of ‘Souls’, can encode trust networks of real economy to establish provenance, reputation.” “Souls” are essentially people, or, strictly speaking, individual crypto wallets. But Souls can also include institutions like Columbia University and the Ethereum Foundation. These were the authors’ words:

Imagine a world in which all participants have Souls that keep SBTs representing a variety of memberships, affiliations, and credentials. A Soul might store SBTs that represent a person’s educational credentials, employment history, hashes of writings, and art.

These SBTs can be “self-certified” in their simplest form,” the authors say. This is similar to the way we share information about our self in our CVs. But that’s just the beginning.

The true power of this mechanism is when SBTs owned by one Soul can be issued or attested by other Souls who are counterparts to these relationships. These Souls can be individuals, businesses, or institutions. The Ethereum Foundation, for example, could issue SBTs to Souls who attend a developer conference. A university could be a Soul that issues sBTs to students. Stadiums could be Souls that issue SBTs to Dodgers long-time fans.

The 36-page paper is a wealth of information. It sometimes feels like a jumble of different ideas and solutions, ranging from anarcho-capitalism to recovering private keys. It has been praised by critics for not focusing on hyperfinancialization but instead “encoding social relations of trust.”

Fraser Edwards, cofounder and CEO at Cheqd (a network that supports self -sovereign identities (SSI)), criticized the paper via Twitter. He told Cointelegraph that he was not surprised by the criticism.

“Vitalik standing up to say that NFTs [nonfungible symbols] are a bad idea is a great thing. The publicity for university degrees and certificates is great, since SSI has been horrible at marketing itself.

He also said that the paper’s attention on issues such as loans being too collateralized due to a lack of usable credit ratings was “excellent”.

Co-author Weyl said that the overall reaction from the crypto community has been very positive. RadicalxChange economist Weyl provided the main ideas and Ohlhaver wrote most of the writing. Buterin edited the text, as well as the cryptography section.

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Weyl claims that the only sustained opposition to the paper was from the DID/VC community (decentralized identifiers, verifiable credentials), a subset within the self-sovereign movement for identity. This community has been working for years on decentralized, blockchain-based credentials, including peer-to-peer credentials.

What is “lack understanding”?

Still, the visionary work garnered some criticism from media outlets such as the Financial Timeswhichcalled it a “whimsical paper.” Some also worried that SBTs, given their potentially public, non-transferable qualities, could give rise to a Chinese-government-style “social credit system.” Others took shots at co-author Buterin personally, criticizing his “lack of understanding of the real world.”

David Gerard, crypto skeptic, and author, went further. He declared, “Even though any of this could work, it would be the worst idea ever.” Buterin is proposing a permanent, binding record for all users of the blockchain.

Others pointed out that many of the SBT-related use cases, such as establishing provenance and unlocking lending markets via reputation, measuring decentralization, or enabling decentralized key administration, are already being performed in different areas. Edwards said that SBTs could be “potentially beneficial”, but he has yet to see an application where they can outperform existing technologies.

Cointelegraph interviewed Kim Hamilton Duffy two years ago about a story about decentralized digital credentials. What is the relationship between their work and hers in digital credentials?

Cointelegraph was told by Duffy, director of identity standards and identity at the Centre Consortium that his thinking and approach is similar to mine when I first explored blockchain-anchored identity claims using Blockcerts. “The risks and, consequently, the initial use cases that I carved out — limiting to identity claims that you are comfortable being publicly accessible forever — were thus similar.”

The Soul paper discusses potential solutions to risk and challenges, such as how to handle sensitive information, key recovery and other issues. These solutions can be more difficult than they seem at first glance. These problems needed better primitives, VCs and DIDs.

Weyl said that there was no intention to claim priority in regard to the use cases proposed. It was simply to demonstrate the power of these technologies. The paper is therefore less a document and more a research agenda. He and his coworkers are happy to give credit where credit is due. He told Cointelegraph that the VC community plays an important role, as do other technologies.

Question of trustworthiness

However, implementation might not be as simple. Joshua Ellul, Associate Professor and Director of the Centre for Distributed Ledger Technologies, University of Malta, said to Cointelegraph that the main issue is not technological, but trust.

Any input from the outside world, such as an academic degree, affiliation, or attestation, raises questions about the trustworthiness. Ellul stated that although we can increase the trustworthiness and reliability of data using decentralized oracles it is important to recognize that the data’s trustworthiness depends on the collective trustworthiness among those oracles.

Let’s say a university is a “Soul” and issues students certificates based on blockchain technology. Ellul stated that people may trust the attestation as they trust the central university that makes its key public. Others might then wonder, “What’s the point of storing SBTs in a DLT if the university has such control?”

Peer-to-peer credentials can be viewed as “In the real world”: “Would a company honor a peer to peer credential issued by an individual/institution unknown to the company?” Or would they prefer to rely on their traditional credentials?

Ellul explained to Cointelegraph that it’s about “shifting the mentality trust” away from central institutional trust and towards trusting networks. This could be a lengthy process.

Any input from the outside world, such as an academic degree, affiliation, or attestation, raises questions about the trustworthiness. Ellul stated that although we can increase the trustworthiness and reliability of data using decentralized oracles it is important to recognize that the data’s trustworthiness depends on the collective trustworthiness among those oracles.

Let’s say a university is a “Soul” and issues students certificates based on blockchain technology. Ellul stated that people may trust the attestation as they trust the central university that makes its key public. Others might then wonder, “What’s the point of storing SBTs in a DLT if the university has such control?”

Peer-to-peer credentials can be viewed as “In the real world”: “Would a company honor a peer to peer credential issued by an individual/institution unknown to the company?” Or would they prefer to rely on their traditional credentials?

Ellul explained to Cointelegraph that it’s about “shifting the mentality trust” away from central institutional trust and towards trusting networks. This could be a lengthy process.

What happens if your private key is lost?

Weyl explained to Cointelegraph that the paper presents several use cases for areas in which very little has been done. One is community recovery private keys. The paper asks what happens to a person’s Soul if their private key is lost. A community recovery model is presented by the authors as a recovery strategy that relies on people’s trusted relationships.

According to the paper, to recover a Soul’s private key, a member of a qualified majority (e.g. universities) would need to consent to it. They could also be the issuers of certificates (e.g. universities), the last 20 people with whom you took a photograph, and DAOs in which you participated.

Model for Soul recovery through community recovery. Source: “Decentralized society: Finding Web3’s soul”

This paper discusses innovative ways of thinking about property. The authors state that “the future of property innovation will not build on wholly transferable personal property.” Instead, the paper discusses decomposing property rights like permissioning access for privately or publicly controlled resources, such as homes, cars or museums.

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Access rights could be granted by SBTs to a park, or even a private backyard. These rights are nontransferable and conditional. The paper notes that although I might trust you with access to my backyard for recreational purposes, that does not mean that I am able to trust you to grant permission to others. This condition can easily be coded into an SBT, but not an NFT. It is transferable by its very nature.

NFTs facing backlash

It is becoming increasingly difficult to determine the motivation behind Buterin attaching his name, prestige and signature to such a paper. Edwards noted that some media outlets believed the Ethereum founder was looking for the next big thing or overreaching. However, “This doesn’t fit Vitalik’s typical approach.”

Buterin may simply be looking for a way to build Ethereum’s platform dominance. Edwards said that the motivation could be a reaction to the fraud and speculation with NFTs, and a desire to repurpose them in a technology that can make a difference in the world.

Edwards and others see the Soul paper, which sheds light on decentralized societies, as a positive contribution, even though SBTs eventually turn out to be non-starters. The real world is not a perfect place. Sometimes, you just need an improvement on what is already there. Or, as the paper’s editors put it:

“DeSoc doesn’t have to be perfect in order to pass the acceptance test of being non-dystopian. To be a paradigm that is worth exploring, it only needs to be better than all the alternatives.

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Eileen Wilson

Eileen Wilson –Technology and Energy My Name is Eileen Wilson with more than 5 years of experience in the Stock market industry, I am energetic about Technology news, started my career as an author then, later climbing my way up towards success into senior positions. I can consider myself as the backbone behind the success and growth of topmagazinewire.com with a dream to expand the reach out of the industry on a global scale. I am also a contributor and an editor of the Technology and Energy category. I experienced a critical analysis of companies and extracted the most noteworthy information for our vibrant investor network.

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