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?
Correct Answer A. 1 and 2 only
Explanation
Correct answer: (a) 1 and 2 only
An NFT is a unique cryptographic token on a blockchain (2) that can represent ownership of a real-world or digital asset (1). Statement 3 is incorrect precisely because NFTs are non-fungible — each is unique and cannot be swapped 1-for-1 like currency, so they can’t serve as a standard medium of exchange.