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?
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A hard Economy multiple-choice question from UPSC Prelims 2022. Attempt it above, then check the correct answer and detailed explanation below.
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Correct answer: A. 1 and 2 only
Statements 1 and 2 are correct — NFTs digitally represent assets and are unique cryptographic tokens on a blockchain. Statement 3 is wrong — being non-fungible, NFTs cannot be exchanged at equivalency and are not a medium of exchange. So 1 and 2 only — option (a).
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