Exchange Binance plans to offer an incentive for customers to complete their identity verification (KYC) process. In exchange for the data, the exchange will offer a “Soulbound” token, which will allow access to BNB Chain resources. This token is called Binance Account Bound (BAB) and the supply is quite limited. According to Binance’s announcement, only those who complete the KYC process this Thursday (8th) will have access to the token. Soulbound tokens in this case act as an identity passport throughout the BNB chain. Like NFTs, they are unique to each person. However, they are also non-transferable, that is, no one will be able to sell the BAB on the market. Binance created the campaign as a way to encourage users to KYC. But those who prefer to keep their data safe don’t need to KYC.
Token gives access to BNB projects
Binance’s soul-bound token – called a binance account bound (BAB) – will allow users to participate in “building projects” within BNB. At the same time, Binance stated that its holders will be able to earn rewards if they have the tokens. This soulbound token concept is new, having hit the market in January of this year. The name soulbound means “bound to the soul”, which highlights the non-transferable character of these tokens. The one who started the discussion of these tokens was Vitalik Buterin, co-founder of the Ethereum blockchain, in January. On his blog, Buterin wrote a text where he described the new asset class as non-transferable digital tokens that represent social identity in a decentralized society. That is, the tokens would act as a kind of decentralized identity document, forever linked to its holder. In the future, this type of token could even replace the traditional KYC processes performed by exchanges.
The KYC Controversies
The use of KYC in crypto came under intense scrutiny this week as decentralized exchange dYdX prompted its users to complete a “pep check” using webcam technology, with several users commenting on the antithetical relationship between decentralization and KYC. In general, exchanges use KYC as a way to prove the identity of the owner of an account, to prevent fraud. This verification is normally required by governments and anti-money laundering authorities. However, if KYC on the one hand is supposed to guarantee the protection of these crimes, on the other hand it requires users to put various personal data on exchange platforms. But many people criticize the measure as a violation of customers’ privacy. In addition, another party fears that hackers and criminals can steal your data by attacking these platforms, using it to commit crimes and fraud. Therefore, KYC in this sense can represent a serious security flaw. Also read: Whale sells 5,000 Bitcoins and analysts bet on high Read also: Coinbase talks with MakerDAO to avoid DAI ‘depeg’ Also read: Ethereum block validation failures occur after Bellatrix activation
