Q69.
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?
Answer
A
Explanation
Statement 1 is correct: Anything that can be converted into a digital form can be an NFT — drawings, photos, videos, GIF, music, selfies, even a tweet. Statement 2 is correct: NFTs are unique cryptographic tokens that exist on a blockchain and cannot be replicated, having a unique identification code and metadata. Statement 3 is incorrect: NFTs are NON-fungible, meaning the value of one NFT is not equal to another. Unlike cryptocurrencies, they cannot be traded or exchanged at equivalency and therefore CANNOT be used as a medium of commercial transactions.