UPSC Prelims 2022 · GS Paper I
Question 69: Science and Technology
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 ?
AnswerUPSC’s answer is (a).
A non-fungible token is a unique cryptographic token recorded on a blockchain, so statement 2 is true, and it can digitally represent a physical asset such as art or property, so statement 1 is true. 'Non-fungible' means each token is distinct and cannot be swapped like for like at equivalency the way a currency unit can, which makes statement 3, about trading at equivalency as a medium of transactions, wrong.
- 1. NFTs can digitally represent physical assets.
- 2. They are unique tokens recorded on a blockchain.
- 3. Being non-fungible, they cannot be exchanged at equivalency like currency.
How you could have got this
- If you were sure statement 3 is not correct, (b), (c) and (d) go: each of them includes 3.
What you needed to know: Being non-fungible, they cannot be exchanged at equivalency like currency.
Only (a) is left. You didn’t need statements 1 or 2.
Which options go is worked out from UPSC’s key and the options, not by a model.
Why each option is right or wrong
- (a) Correct. Digital representation and uniqueness on a blockchain.
- (b) Wrong. Statement 3 is false.
- (c) Wrong. Statement 3 is false.
- (d) Wrong. Statement 3 is false.
Answer: UPSC’s key. Explanation: written by UPSC Grade, not by UPSC.
Source: UPSC, Civil Services (Preliminary) Examination 2022, General Studies Paper I, Series A. The paper on upsc.gov.in.