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 ?
A
1 and 2 only
Correct Answer
B
2 and 3 only
C
1 and 3 only
D
1, 2 and 3
Explanation
Statements 1 and 2 are correct because NFTs are unique, non-interchangeable cryptographic assets on a blockchain that can represent ownership of both digital and physical items. Statement 3 is incorrect because NFTs are "non-fungible," meaning they cannot be exchanged at equivalency (one NFT is not equal to another), unlike fungible assets like Bitcoin or cash which serve as a standard medium of exchange. The core concept tested is the distinction between fungibility and non-fungibility in the context of blockchain technology.
Blockchain TechnologyCryptocurrencies and Digital AssetsNon-Fungible Tokens (NFTs)blockchaindigital representationphysical assetsunique cryptographic tokensequivalencycommercial transactionsdigital art