The challenges with building a reputation in Web3 — and how to solve them

Amazing things are being built in Web3 — often by pseudonymous individuals who prefer to keep their real-world identity private.

In some ways, this is liberating. It means that anyone can have a chance to get involved in a project and deliver value to the community — irrespective of their background.

But as decentralized identities proliferate, there’s one issue that cannot be ignored: Ensuring that there’s an easy way for us to verify the reputation of others.

This matters… for many reasons. If you’re about to start using a DeFi project created by someone pseudonymous, you’d like a way to know that they’re trustworthy and dependable.

If you’re reading an article that someone has written online, there should be a way of checking that their past works have been truthful and well-received.

And if you’re buying an item from a fellow user on a peer-to-peer marketplace, it’s crucial to check that they’ll deliver what you’ve asked for — and on time.

All of this has made reputation in Web3 a hot-button topic. Now, multiple crypto enthusiasts are exploring this concept in great detail — giving us the evidence we need to trust other people without knowing their name and background.

This could be a refreshing antidote to the status quo, where not everything we see online can be believed. Fake testimonials for products are a long-running problem, while bots on Twitter can distort reality and our perceptions of people and companies. We’ve even seen experiments where fake restaurants have shot to the top of TripAdvisor rankings.

Understanding decentralized identities

As a concept, DIDs remain at an early stage. But one day, your crypto wallet could store far more than altcoins and NFTs. Instead, they could be a rich background of what you’ve accomplished — open for all to see. And whereas the profiles that some of us carefully cultivate on Facebook and LinkedIn are centralized, we would see in full control of all of our data.

Ethereum co-founder Vitalik Buterin recently explained how this could work in practice when he unveiled proposals for “soulbound” NFTs. Known as SBTs, he paints a picture of how these digital assets could be used to represent everything from a college degree to a drivers’ license — and even provide a modern alternative to credit scores.

Buterin pointed to a proof-of-attendance protocol as an example of technology that could also show promise. POAP NFTs can be used to show that someone was present at a particular event — such as a…