When Vitalik Buterin introduced the idea of soulbound tokens, its opposers compared SBTs with social credits in China. To be honest, it does resemble the system of the authoritarian state highly obsessed with surveillance. And it can be potentially used to discriminate against individuals or specific groups. But it’s not that simple.
OneArt takes a deep dive into the topic to find out what the next-generation web built on the blockchain has to do with social credits and whether it can flip the system (at least, in a technical sense).
Big data is watching you!
The Social Credit System (SoCS) has been developed for years, with regional trials starting in 2009. As of the end of 2020, over 80% of provinces, autonomous regions, and municipal cities in the country had implemented or were going to enact local regulations. However, it hasn’t yet been introduced at the national level. And some experts argue it’s low-tech, fragmented, and won’t be implemented soon. Moreover, last year, China backed a United Nations pledge to ban the system.
It may be a great example of the road to hell paved with good intentions (if there were any at all).
“By using the most data possible, the so-called big data, the system will play an important role in rebuilding a moral society.”
Lin Junye, founder of the social credit theory in China
SoCS aggregates data from the state, banks, and companies. To track everything you do in China, the government uses over 415 million cameras. It’s more than ½ of all the surveillance cameras in the world. The information helps create detailed profiles to rate citizens and enterprises as good or bad, i.e., untrustworthy. What is it if not a digital dictatorship depriving people of freedoms?
Young, well-educated, tech-savvy locals say that it “makes you become a better citizen,” “works as a warning,” “keeps you safe,” “we don’t have a choice,” or “you’re not going to be punished if you haven’t done anything wrong.” Perhaps, it’s because they can access more perks. Well, Lacie from Nosedive, a Black Mirror episode, was thinking the same thing.
Second-class citizens. How it works
There’s no single unified system, and local governments have their own versions. Private companies also create ranking systems, e.g., Sesame Credit by Ant Group, an affiliate of Alibaba Group. And commercial versions gain even more popularity than governmental ones.
In general, the score from 350 to 950 is based on “a thousand variables across five data sets” — financial situation, spending habits, behavior (including on social media), career, and more. A score in the 700s is considered good, around the 500s marks a cause for concern.
A higher score means you get perks like cheaper loans, travel deals, discounts, deposit-free sharing services, etc. To improve the score, you can give money to charity or donate blood, for example. You lose points for debts, jaywalking, littering, spreading rumors, swearing, buying alcohol or too many video games, and even not visiting your parents frequently enough.
A bad score results in public shaming, more scrutiny, and (OMG!) slower internet. Blacklisted people are banned from traveling and can’t buy plane and train tickets, start a business, send kids to private schools, start their own business, or buy an apartment. It’s harder to find a job for those at the bottom of the social hierarchy. And there’s no chance to get a mortgage (which may be better in the current economic climate as people across China refuse to pay loans amid the property crisis).
In fact, the idea resembles credit scoring systems in different countries and even a 2-way rating system on the Uber app, though they’re different. But we got used to that, right?
So, what do social credit score and SBT have in common?
❌ Soulbound tokens can be issued without your consent, e.g., your university can issue your diploma, or a bank provides a credit score. SBTs could potentially include some sensitive data you’d prefer not to disclose. It, in turn, may lead to discrimination.
But the devil is in the details, and they’re significant.
✅The concept of SBTs provides for the possibility to “burn” the token or hide it.
✅The blockchain-built community is owned and ruled by users, while social credit scoring is government-driven.
✅ Users can have multiple accounts (“souls”).
Trust score vs SoCS. How blockchain can change things
Currently, the internet is one of the main engines of economic development yet controlled by governments and private companies. Users don’t have control over their data and digital identity. A crypto profile connected to an identity wallet truly owned and managed by a user could help solve the issue. Based on your crypto space activity, sort of a trust score may be developed.
It would grant (or restrict) access to various financial instruments, such as unsecured crypto loans. For example, currently, you need some digital asset as collateral to get a DeFi loan. For crypto holders with a high enough trust score, there will be no need for collateral. The trust score could also become a pass to a group or community, e.g., for those having some proof-of-attendance badges or specific NFTs.
