UPSC Prelims 2022 – Question 69

by Edukemy Team February 22, 2024

Here is Question No. 69 a part of our series on UPSC Prelims 2022.

Table of Contents

They enable the digital representation of physical assets.
They are unique cryptographic tokens that exist on a blockchain.
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?
a) 1 and 2 only
b) 2 and 3 only
c) 1 and 3 only
d) 1, 2 and 3

Answer – A

Non–fungible tokens (NFTs) are cryptographic assets on a blockchain with a unique identification code and metadata that distinguish them from each other.
Statement 1 is correct. NFTs typically contain references to digital files such as photos, videos, and audio. Because NFTs are uniquely identifiable, they differ from cryptocurrencies, which are fungible. The market value of an NFT is associated with the digital file it references. Anything that can be converted into a digital form can be an NFT. Everything from your drawings, photos, videos, GIF, music, in-game items, selfies, and even a tweet can be turned into an NFT, which can then be traded online using cryptocurrency.
Statement 2 is correct. Non-fungible tokens (NFTs) are cryptographic assets on a blockchain with unique identification codes and metadata that distinguish them from each other. NFTs can also function to represent individuals’ identities, property rights, and more.
Statement 3 is incorrect. Unlike cryptocurrencies, they cannot be traded or exchanged at equivalency. This differs from fungible tokens like cryptocurrencies, which are identical to each other and, therefore, can serve as a medium for commercial transactions

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