UPSC CSE Prelims
Question 42
With reference to Non-Fungible Tokens (NFTs), consider the following statements :
- 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 ?
View correct answer and explanation
Correct answer: A
Correct Option: A (1 and 2 only)
Explanation: NFTs are unique blockchain-recorded tokens that can represent digital claims to physical objects; unlike fungible money, they are not exchangeable one-for-one at equivalence.
Statement / Pair / Item-wise Analysis:
1. True / qualifies - NFT records can represent ownership or authenticity claims concerning physical assets.
2. True / qualifies - Each NFT has a distinct on-chain token identity.
3. False / does not qualify - NFTs are non-fungible: unlike currency tokens, different NFTs generally are not interchangeable at equal value.
Option-wise Analysis:
A. Correct-selects exactly the correct statements/items identified above.
B. Incorrect-includes 3 even though NFTs are non-fungible: unlike currency tokens, different NFTs generally are not interchangeable at equal value.; omits 1 even though NFT records can represent ownership or authenticity claims concerning physical assets.
C. Incorrect-includes 3 even though NFTs are non-fungible: unlike currency tokens, different NFTs generally are not interchangeable at equal value.; omits 2 even though Each NFT has a distinct on-chain token identity.
D. Incorrect-includes 3 even though NFTs are non-fungible: unlike currency tokens, different NFTs generally are not interchangeable at equal value.