How to Conceal the Major NFT Loopholes Using Blockchain?

Non-Fungible Tokens (NFTs) are popular and have over 3.6 million users globally. Nobody could have imagined such a massive growth over a short period of time. The concept of ownership using a token has caught the attention of investors as well as collectors. 

Even though NFTs have a huge fanbase, there are some potential investors who are not willing to buy NFTs. Having some loopholes makes these tokens lose their value from some investors’ points of view. 

Do these loopholes really make a big deal? Is there any way to cover them up? Let us find out together!

NFT and Its Sudden Boom

NFT is abbreviated as Non-Fungible Token. They are the digital tokens representing the ownership of any physical or digital asset. The applications of NFTs are wide in the domains like art, gaming, real estate, music, entertainment, sports, and more. By acquiring help from a leading nft art marketplace development company, you can develop a custom NFT marketplace easily.

The main reason for the boom of NFT is due to its power to overcome the real-time struggles of an asset owner. Usually, the owner has to maintain the necessary ownership documents which involve too much paperwork and formalities. Whilst, NFT can avoid time-consuming procedures and can transfer ownership in a few minutes. 

5-Major Loopholes in NFTs

We have described a few major loopholes in NFTs that could possibly fear investors to take a step back from NFTs.

• Improper Contractual Rights

• Counterfeit Tokens

• Mutable Metadata

• Unfair Market Prices

• Centralization of Minting Platforms

Improper Contractual Rights

Contractual rights refer to the assured set of rights provided to all the distributed users (more than two) when they agree with a valid agreement.

The lack of proper contractual rights is one of the significant loopholes found in NFTs. The investor might not have a complete understanding of NFT's legal restrictions for copyrighted content. There are chances that the buyer is not clear about the permissions he owns for an asset. Because the original content may still have its own in the hands of the creator who can edit or copy the content. 

The solution to this problem is to understand the agreement and the rights it offers with the ownership of the asset. 

Counterfeit Tokens

At times, a single asset can be sold on two different platforms as two different NFTs. It leads to the duplication of the original content. This makes the user uncertain about the cost of the asset. 

Having a constant hash technique and leveraging several index platforms will help to avoid investment in an unauthorized asset.

Mutable Metadata

Every block of the blockchain has unique metadata that stores information like a time-stamp, transaction ID, transaction details, etc. These records get stored in hosted servers or a distributed file system. If the server goes down, the links may get broken leading to tampered metadata. 

NFT platforms should let content owners partly keep a local storage device to store the metadata.

Unfair Market Prices

NFT marketplaces have certain limitations when it comes to minting. Some of them have restrictions for minting such as allowing only invited users to trade an NFT. Due to the contrasts between different marketplaces, they don't reflect a fluid market. So, the users will remain unsure whether they are getting the best deal for an NFT. 

Centralization of Minting Platforms

The existing NFT minting platforms have centralized nature. So, one has to keep an eye on these applications regularly to see their NFT. If there is any update in the application, the content like videos or audio may stop functioning. 

A distributed open-source environment will help the user to keep a backup of the content. Thus, it assures the same structure even after an update.

Latching Up the NFT Loopholes 

NFTs are created using ERC1155 or ERC721 token standards. Both of them have a set of pre-defined functionalities. However, the smart contracts have to be regularly audited with the help of a professional team with technical knowledge.

Since NFT is still evolving, many changes are occurring regularly in its marketplaces, storage, legal challenges, and so on. Despite this, NFTs are booming along with the competition for NFT platforms. 

If you are thinking of either buying or selling an NFT, you need to ensure security and other factors before stepping into an NFT ecosystem. There is also an alternative way to seal these loopholes by approaching a professional blockchain service-providing firm. 

Blockchain Firm is an nft marketplace project development company that delivers the best blockchain solutions for various industries. Reach out to our experts to obtain customized blockchain services for your enterprise!

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