Thinking from first principles.
Crypto/web3 runs heavily on narratives. But narratives are exclusive in nature. They often leave out information that doesn't fit in, even when this information has the potential to change the narrative itself. For example, the popular narrative that web3 is a marked improvement to web2 fails to properly acknowledge the "other side" of these technologies (i.e., the certainties and convenience of web2, and the dangerous implications of web3's immutability).
An objective view of the widespread disdain for web2 and fervor for web3 forces us to look beyond the surface and think for ourselves. In doing so, we stay true to ourselves and, more importantly, true to the spirit of crypto/web3.
In this article, we aim to do the same--rethink the concepts of society, identity, and reputation from first principles and briefly discuss the immediate applicability of Soulbound tokens. Let's begin!
Taking a Step Back
Society is essentially a system housing the interactions or connections among individuals. Without these, we have a collection of individuals, not a society. Thus, it logically follows that the atomic elements of society are the relationships among individuals (and not the individuals themselves).
This makes more sense when we realize how a person's identity and reputation are by-products of their interactions. Let's look at the most fundamental dimension of someone's identity: their name.
People derive their names from the communities they are parts of. That is why it is common to have a different name for your classmates and a different name for your family at home. In both instances, your name (or nickname) arises from regular interactions with members of the friend group or family.
In cases where this name changes, again, such a change is a by-product of interactions with others. (Interactions after which they all agree either explicitly or implicitly to call you something else.) Another example supporting the argument (of relationships as the atomic elements of society) is our reliance on these relationships as a means of verification.
Authorities that manage identity and reputation systems rely wholly on a person's interactions with others to issue or update identity credentials. This is seen every time employers perform background checks with ex-employers, when passport officials visit a neighborhood to learn more about a person, and so on.
Thus, looking at society as a system built around interactions is more accurate and opens up new perspectives to adjacent concepts such as privacy. Let's see how.
Looking at Privacy
The popular conception of privacy focuses disproportionately on the binary between disclosure and secrecy, between sharing and not sharing, and between public data and private data. But placing such emphasis on the act of sharing is misguided at best.
When talking about infringements of their privacy, most people refer to the inappropriate and improper sharing of information, not the act of sharing itself. This is because most data, by default, is shared with at least one other person or party. And this is fine by us as long as the data maintains its contextual integrity.
For example, while you may want to keep an affair hidden, the person(s) you are in an affair with still knows about it. Now, as long as this stays between you and the other person(s), it is alright.
Similarly, you may want to keep your financial transactions to yourself. But your bank, or the person(s) you have conducted these transactions with, still knows about them. Again, as long as this knowledge stays between you and the other party/parties, it is alright.
The problem only arises when data gets in the hands of those who are not contextually relevant (i.e., those who are not supposed to or are not expected to access the data). This is why big tech exploiting their users' data for profit feels like an infringement of privacy.
People that used their platform did so with the intention and expectation of sharing with their friends or followers, not to help a large corporation make money. Had they known this would happen, they would have perhaps behaved differently.
Thus, approaching privacy as upholding the contextual integrity of data is a more genuine and better approach than looking at it as a binary between disclosure and secrecy. This perspective is enabled when we look at society as a system of interactions among individuals.
But beyond fresh perspectives, this also enables us to address some of the most pressing problems of crypto/web3. Let's take a look.
Our frustration with the exploitative nature of traditional finance and the general unfairness of legacy systems became the foundation of crypto/web3. But over the past few years, we have seen the same problems creep into crypto/web3. For example, we witness centralization in DeFi and unjust decision making in DAOs.
Further, crypto/web3 faces other pressing challenges, like its inability to represent simple contracts like rental agreements. But it need not be like this.
A way to course-correct is by building the web3 primitives of society (that all current crypto applications rely upon) and doing so in a way that represents the interactions among individuals. Fortunately, Soulbound tokens are immediately applicable to address this and show great promise.
Soulbound tokens can aptly represent the connections or interactions among individuals. We already see this happen with POAPs (non-transferrable NFTs given to participants of an event) and with membership shares in Moloch-style DAOs (that use NFTs with limited transferability to denote DAO membership). Put another way, Soulbound tokens are ready to encode society into web3.
Surely, any long-term solution to these issues would have several tech and non-tech parts, and these would be a mix of several different options. However, arriving at such a solution will be an iterative process, and Soulbound tokens offer us a good starting point.
In addition to being a good starting point, they also unlock exciting applications in the near future. Of the several discussed in the DeSoc paper, let's take a minute to talk about how SBTs enable mixed bundling of property rights.
As defined in the Roman legal tradition, property rights are bundles of rights to use, consume/destroy and profit from a particular property. Contracts in society allow for several permutations and combinations of this. However, web3 cannot represent even the simplest bundling of property rights today.
Take the case of rental agreements (where one party owns and profits from an asset while another uses it). There is no way to effectively represent this in web3. Instead, web3 limits us to wholly transferrable property types (i.e. those types of property whose rights to use, consume/destroy and profit from are all bundled together). Soulbound tokens show the way out.
For example, they can denote partial property ownership and represent rental agreements with proof of payments on the token itself. The transferability of these tokens could be limited (only the owner can choose who this goes to and when). And we can build smart contracts atop these tokens that retrieve the asset in case of missed payments or misuse.
Another exciting application that Soulbound tokens enable is programmable privacy. They make it easier to maintain the contextual integrity of data by directly encoding the relationship among individuals (and their varied relationships with the data) on the token itself. This probably deserves a post of its own.
We started this article by rethinking society from first principles. In doing so, we saw how interactions among people form the atomic elements of society, and how all reputation and identity are by-products of these interactions.
This formed the basis of a new approach to privacy where we try to maintain the contextual integrity of data (instead of "sharing or hiding" it).
This also empowered us to explore potential solutions to some pressing problems of crypto/web3 (and see the immediate applicability of Soulbound tokens in this regard).
Finally, we discussed how Soulbound tokens are a good starting point to encode people's interactions (and their by-products of identity and reputation) in web3. We do want to reiterate that any possible long-term solution will possibly use a mix of technologies. However, we believe that using Soulbound tokens offer us an excellent starting point.
Encoding the essential elements of society is something we at rep3 are excited about. We imagine a future where we put the interactions among members at the center of communities rather than individuals or arbitrary authorities. To this end, we have built a protocol (and a tool) based on a modified type of Soulbound tokens.