Civil Services Prep

Prelims 2022 · Science and Technology · Question 69

With reference to Non-Fungible Tokens (NFTs), consider the following statements: 1. They enable the digital representation of physical assets. 2. They are unique cryptographic tokens that exist on a blockchain. 3. They can be traded or exchanged at equivalency and therefore can be used as a medium of commercial transactions. Which of the statements given above are correct?

  1. 1 and 2 only
  2. 2 and 3 only
  3. 1 and 3 only
  4. 1, 2 and 3

Answer

1 and 2 only

1. Correct. NFTs can represent ownership or proof linked to digital or even physical assets such as art, real estate, or collectibles. So they do enable digital representation of physical assets.

2. Correct. NFTs are unique cryptographic tokens recorded on a blockchain; unlike cryptocurrencies such as Bitcoin, each NFT is distinct.

3. Incorrect. NFTs are non-fungible, so they are not interchangeable at equivalency like currency tokens. Hence, they are not suitable as a general medium of commercial transactions.

Therefore, the correct answer is (a) 1 and 2 only.

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