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Non-Fungible Tokens (NFTs) are unique digital tokens that exist on a blockchain. They use cryptographic algorithms to verify their authenticity and ownership, making them ideal for representing digital assets such as art, music, videos, and other types of content.
Statement 1 is incorrect because NFTs enable the digital representation of unique digital assets rather than physical assets.
Statement 2 is correct as NFTs are unique cryptographic tokens that exist on a blockchain, such as Ethereum.
Statement 3 is incorrect because while NFTs can be traded or exchanged, they are not equivalent to each other and therefore cannot be used as a medium of commercial transactions. NFTs derive their value from their uniqueness and scarcity, and their value is determined by the market demand for them.
Preparing for Future Exams: Learning from the Analysis of Past Questions
Topics:
- Non-Fungible Tokens (NFTs)
- Blockchain technology
- Cryptocurrencies
- Digital assets
- Digital ownership
Sources:
- "What are NFTs and why are some worth millions?" by BBC News
- "What Are NFTs? And What Do They Mean for the Future of Art?" by Artwork Archive
- "The Complete Guide to NFTs: How to Create, Buy, and Sell Non-Fungible Tokens" by CoinCentral
- "Blockchain Basics: A Non-Technical Introduction in 25 Steps" by Daniel Drescher
- "Cryptocurrency Investing Bible: The Ultimate Guide About Blockchain, Mining, Trading, ICO, Ethereum Platform, Exchanges, Top Cryptocurrencies for Investing and Perfect Strategies to Make Money" by Alan T. Norman
Related Concepts:
- Fungibility vs. Non-fungibility
- Smart contracts
- Decentralized finance (DeFi)
- Tokenization
- Proof of ownership