Declaring variables inside or outside of a loop

Question

Why does the following work fine?

String str;
while (condition) {
    str = calculateStr();
    .....
}

But this one is said to be dangerou

Answer 1

One solution to this problem could be to provide a variable scope encapsulating the while loop:

{
  // all tmp loop variables here ....
  // ....
  String str;
  while(condition){
      str = calculateStr();
      .....
  }
}

They would be automatically de-reference when the outer scope ends.