S4B Crypto Contest - Season 12

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My dear steemian fellows! I am @newsblog24 from Bangladesh 🇧🇩. Today I participate in the contest that is organized by "@waqarahmadshah".The topic of contest that is "Contest!!||S4B Crypto Contest - Season 12" . It's amazing contest.so, without wastage of time let's start

(What is an NFT?)

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The full meaning of NFT or NFT is Non-Fungible Token. It is a digital asset.

Let's try to understand about Fungible now. For example, you have 1000 taka, now your friend also has 10 100 taka notes. What is the value of your money and the money that a friend has? Certainly not. And it is fungible that can be exchanged.

Many may be wondering why it is non-fungible. There is a reason for saying non-fungible. NFT token is a token where unique information can be stored within each token using its smart contract. And this is why one NFT token differs from another NFT token. That is why it is called a non-fungible token.

(How are NFTs created and minted?)

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The uniqueness of NFTs determines their value. Users may want to make several identical copies of their creations under certain circumstances. For example, if you sell collectibles, you can offer different editions, some of which are more limited than others. Here, the number of identical copies of a particular NFT that you want to include in the blockchain must be determined by you, as your NFTs cannot be changed after they are created.

Minting is the process of creating a nonfungible token. The term refers to the process of converting a digital object into an asset on the blockchain. After creation, NFTs are minted, much like metal coins, and then used. By following the procedure, digital things become more secure, harder to tamper with and tamper-proof. It can then be bought, traded and digitally monitored when it is later resold or collected again because it is represented as a nonfungible token.

Creators can include a royalty clause in their token when it is minted, which will allow them to receive passive income from sales of their digital products in the future. In case their work gains popularity and appreciation, they may get financial benefits.

The minting process starts once you sign your NFT and pay the gas fee. Once the transaction is verified, you can see your newly created NFT in your profile.

(What are some advantages of using NFTs?)

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(NFTs increase the efficiency of the marketplace)

NFTs work by converting physical assets into digital assets through a blockchain network. Buying and selling NFTs is easier and more efficient as physical transactions don't require a lot of processes and waste of time.

Merchants can easily connect directly with buyers, eliminating the need for third-party agents that are both costly and time-consuming. The authentication process for sales is more accessible and efficient to reduce costs and save time.

(Diversifies users' portfolios)

NFTs are different from physical assets because they have additional features and benefits. Due to market volatility, investing in NFTs adds diversification to users' portfolios.

A diversified portfolio reduces portfolio risk. Investing in different assets and industries reduces general investment risk.

(NFTs help share ownership of assets)

Sharing ownership of digital assets between different parties is easier and more efficient than sharing ownership of physical assets. This applies to a variety of assets including art, real estate and jewelry.

This facilitates resource sharing, resulting in greater liquidity and higher costs. The ability to effectively share asset ownership helps owners build professional portfolios.

(High security)

NFTs are generated and stored using blockchain technology, a secure way of storing data. Blockchain networks contain a secure transaction record accessible to members in a peer-to-peer network.

All assets have unique records on the blockchain network with a chain of ownership that protects them from theft or misuse. A single account can only own assets at a time, which only change when sold.

(What are some potential risks or downsides of NFTs?)

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(Risks of smart contracts)

The security of smart contracts in the DeFi network is extremely important, as vulnerabilities can cause significant losses of cryptocurrency. The Poly Network incident, where hackers stole $600 million worth of NFTs, highlights the dangers of weak security in smart contracts. Such vulnerabilities open up large-scale attack opportunities, demonstrating that errors in smart contract code can put entire networks at risk.

(Assessment Challenges)

Valuation of NFTs is extremely complex due to the absence of established standards and the subjective nature of issues such as exclusivity and creativity. Price volatility is a constant challenge, due to the difficulty of predicting what will affect the market price of NFTs, making their valuation a difficult and uncertain task.

(Legal challenge)

There is still no unified legal definition or specific global regulation for NFTs. As interest and application in NFTs grows, the need for a strong and defined regulatory framework to guide both the creation and trading of these digital assets becomes more pressing.

(Cyber ​​threats)

The NFT market is not immune to cyber attacks, with a significant increase in scams such as fake shops and imitation artists. These scams often involve selling non-existent items or stealing the identities of famous manufacturers, putting consumers at risk of buying counterfeits or becoming victims of identity theft.

Cc
@waqarahmadshah