S4B Crypto Contest - Season 12

What is an NFT?

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In the combination of these terms, NFT represents the abbreviation for non-fungible token. It is a record on an electronic ledger of transactions, called a blockchain, that vouchsafes a digital object to be an entity of its kind and thus distinguishable from all others similar to it. This is why NFTs are uniquely suited to the representation of ownership of digital or physical assets or anything creative like art, music, videos, collectibles, etc. Unfortunately, only NFTs have become widespread in the art and the market of digital collectibles based on the battle-tested idea of ownership and uniqueness.

How are NFTs created and minted?

NFTs are created and minted on blockchain platforms that support the creation and sale of digital assets and this is how NFTs are created and minted, Choose a Blockchain Platform: These tokens in most times are built using blockchains specifically meant for the creation of non-fungible tokens, some of these blockchains are Ethereum, Binance Smart Chain, and flow.

Again Create Your Digital Asset: The next process is to develop the digital asset that you wish to tokenize and they can be Artwork, music, videos, collectibles, etc so minting the NFT, Minting an NFT is a process that involves creating a token on the blockchain that represents the ownership of the specified digital asset can be done through the help of smart contracts defining the property of the token such as metadata, details and ownership among other specifications.

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So dear friend’s , let me point out before you proceed with the steps in creating and minting of NFTs, know that these procedures may bear slight differences based on the blockchain platform that you will make use of alongside the tools or services you will employ in the process, do understand my point well.

What are some advantages of using NFTs?

Some of the advantages of using NFTs which is Non-Fungible Tokens some of the key advantages are ownership and Authenticity: The tokens being ‘blueprints’ ensure that the NFTs are identifiable and non-fungible and thus they can prove ownership and originality of the assets as the tokens cannot be duplicated or swapped.

And Interoperability: Some of the advantages include that the NFTs can be used in buying and selling other commodities or other NFTs in other markets so they can easily be traded in different markets without restrictions due to interoperability.

Royalties and Resale: Royalties can be built into NFT so that the artists who own it will get a cut of it each time the respective NFT is sold or resold again in the market.

Also Decentralization: They are created mainly on blockchain technology that helps in decentralization, increase in security for the digital assets and transparency while doing the actual transactions and lastly is the diversification of use Cases, NFTs can be employed to represent virtually anything such as virtual arts, music, videos, virtual land, virtual collectibles, in game items among others for the artists, musicians, video makers, players, game developers among others.

What are some potential risks or downsides of NFTs?

Some of the potential risks or downsides associated with NFTs some of these are Lack of Regulation: The creation and distribution of NFTs are still unpoliced at the moment, which means that investors can easily encounter fraudsters and scams, and their rights are not protected.

Another one is environmental Impact yeah The minting and trading of NFTs can be considered as environmental saddling because it requires the utilization of a great deal of energy for the working of blockchains.

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Again is Copyright and Ownership Issues: Sure some NFT collections went through cases of plagiarisms in their artwork or there were issues with ownership rights The same goes for Intellectual Property Rights as enforcing them especially in the virtual world is pretty much challenging also one major downside to investing in NFTs The prices are very fluid and are prone to fast changes According to trends popularity and of course speculation.

Lastly is Lack of Liquidity: In addition, NFTs can be illiqu idols – assets that one can sell quickly without losing cash or buying at the appropriate price, and if participants do not comprehend the weaknesses and liabilities of NFTs, they may undergo extreme adversities Consequently, whilst NFTs present tremendous potentialities for creators and collectors, participants also aptly need to be cognizant of these risks in the NFT market.

Thanks for reading my post I'm inviting @kuzyboy, @josepha and @eluustanley to participate in this contest.

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@waqarahmadshah