Neobank Cogni is using Soulbound NFTs to revolutionize banking. The NYC-based financial institution announced it would integrate Web3 technology into its digital banking platform. How is Cogni using soulbound NFTs to better serve its customers?
Image Credit: Cogni
How is Cogni using Soulbound NFTs?
Cogni will transfer customer KYC information into NFTs on the Polygon network. These NFTs are “soulbound” — they cannot be transferred from one wallet to another. This feature ensures that users cannot lose and hackers can never steal these tokens.
Minting the NFTs is optional for account holders. With their consent, the NFTs can be used to interact with Web3 applications and websites. The goal, according to Cogni, is to enhance the banking experience for users and transcend the Web2 world of logging into websites with usernames and passwords.
Cogni started offering a crypto wallet in January. Users can transmit, receive, and retain Bitcoin, Ethereum, and NFTs with the wallet. Unlike most crypto-focused financial institutions, Cogni even offers FDIC insurance to its customers.
Archie Ravishankar, the founder and CEO of Cogni, explained, “The reason why the crypto-curious have not really been able to jump on the decentralization bandwagon is, one, obviously, the user experience. The second is trust in the ecosystem. Everybody knows how to use digital banking, however.” Ravishankar also added that the crypto wallet is available “in the course of the normal banking experience.”
Image Credit: YouTube
Cogni’s KYC data is “bank-level”. As a result, the NFT satisfies US KYC regulations and allows users to interact with different dApps without having to fill out personal info for each one. This ability will greatly simplify the user experience for Cogni customers.
What are Soulbound NFTs?
Vitalik Buterin, the creator of Ethereum, describes soulbound NFTs as “non-transferable NFTs that can help represent a person’s identity and achievements in Web3.” Many industry experts expect soulbound tokens to be a foundational layer of the mainstream’s adoption of NFT technology.
Some common use cases include:
- Preserving medical records
- Holding membership or ID cards
- Digital diplomas and work achievements
- Property deeds
- Mortgage documents
- Birth certificates
Soulbound tokens can essentially be used to add layers of trust and provenance to Web3. Because they cannot be transferred, these tokens help keep bad actors from buying status and misrepresenting their accomplishments.
Additionally, soulbound tokens also help avoid scenarios in which important digital assets could end up in the wrong hands. Imagine, for example, someone steals an NFT representing the deed to your house. This type of situation is a major hurdle for using NFT technology to simplify some existing frameworks. Soulbound tokens will help to resolve some of these issues.
Cogni Bank is helping lead the charge into the digital future by integrating soulbound tokens into its digital banking platform. Customers will be able to use a multitude of dApps and protocols without having to create unique usernames and passwords with each one. Also, these users won’t need to worry about having their KYC data compromised– the technology behind soulbound NFTs will keep sensitive information where it belongs.
As time goes on, more people will become comfortable with Web3 technology and soulbound NFTs will surely be a huge part of this transition.
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This article is educational material.
As always, make your own research prior to making any kind of investment.