Soulbound Tokens (SBTs) balance non-transferability and privacy through innovative design. Non-transferability ensures SBTs, representing credentials or affiliations, remain tied to an individual’s wallet, preventing trading or delegation. This is achieved via smart contracts that lock tokens to a specific address. For privacy, SBTs leverage zero-knowledge proofs, allowing verification of attributes without revealing sensitive data. Users can prove eligibility or membership while keeping personal details hidden. Decentralized identity systems further enhance privacy by enabling selective disclosure, where only necessary information is shared. However, challenges arise in maintaining anonymity without compromising accountability, as fully private systems risk misuse. SBTs address this by integrating reputation mechanisms or revocable credentials, ensuring trust without sacrificing user control.