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What concerns or risks should the agricultural industry address when implementing NFTs?
Despite their benefits and potential, farmers and consumers should be aware of certain limitations of NFTs and blockchain technology in general.
To begin with, blockchains are closed systems without access to real-world data. Therefore, connecting an on-chain NFT with a physical or digital off-chain asset requires additional effort. This can be achieved with the help of so-called oracles or other conditions embedded into the smart contract itself.
Eventually, stakeholders must ensure that the tokens accurately represent the underlying products, be it crops, livestock or bonds. For example, Dimitra has developed its Land Suitability Oracle that evaluates each farm based on its potential to grow a particular crop. Moreover, Dimitra already has an application that assesses farmer performance. The combination of these tools provides a significant capability for agricultural lenders compared to the available tools.
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