Cryptocurrency NFTs and Digital Assets 1 — Questions and Answers
Question 1: What does NFT stand for?
- Non-Fungible Token (Correct answer)
- Network Finality Token
- New Financial Technology
- Null-Function Transfer
Correct answer: Non-Fungible Token
NFT stands for Non-Fungible Token, meaning each token is unique and cannot be exchanged on a one-to-one basis with another token of the same type.
Question 2: Which Ethereum token standard is most commonly used for NFTs?
- ERC-20
- ERC-721 (Correct answer)
- ERC-1400
- ERC-777
Correct answer: ERC-721
ERC-721 is the standard that introduced non-fungible tokens on Ethereum, giving each token a unique identifier that distinguishes it from all other tokens.
Question 3: What makes a token 'non-fungible' as opposed to fungible?
- It cannot be transferred between wallets
- Each unit is unique and not interchangeable with another of the same type (Correct answer)
- It has no monetary value
- It can only be held by one person at a time globally
Correct answer: Each unit is unique and not interchangeable with another of the same type
Non-fungible means each token has unique properties and cannot be replaced by an identical unit, unlike fungible assets like Bitcoin where every coin is identical.
Question 4: What does 'minting' an NFT mean?
- Burning an NFT to create cryptocurrency
- Publishing a digital asset on the blockchain as a new token (Correct answer)
- Transferring an NFT to another wallet
- Listing an NFT for sale on a marketplace
Correct answer: Publishing a digital asset on the blockchain as a new token
Minting is the process of recording a digital asset on a blockchain, creating a new token with a unique ID that certifies ownership and provenance.
Question 5: What is the primary purpose of metadata in an NFT?
- To store the private key of the owner
- To describe the properties and attributes of the NFT such as image URL and traits (Correct answer)
- To record every transaction history permanently on-chain
- To set the gas fee for future transfers
Correct answer: To describe the properties and attributes of the NFT such as image URL and traits
NFT metadata contains descriptive information about the token — including the name, description, image URL, and traits — that defines what the NFT represents.
Question 6: What is a creator royalty in the context of NFTs?
- A fee paid to the blockchain validator each time an NFT is viewed
- A percentage of secondary sale proceeds automatically sent to the original creator (Correct answer)
- A tax charged by governments on NFT profits
- A fee charged by marketplaces for hosting NFT listings
Correct answer: A percentage of secondary sale proceeds automatically sent to the original creator
NFT royalties allow creators to receive a percentage — typically 5–10% — of the proceeds each time their NFT is resold on a secondary market, enforced via smart contracts.
Question 7: Which of the following best describes a 'digital asset' in the cryptocurrency context?
- Any file stored on a personal computer
- A value-bearing item that exists in digital form and can be owned or transferred on a blockchain (Correct answer)
- A social media account with monetary value
- A software license purchased online
Correct answer: A value-bearing item that exists in digital form and can be owned or transferred on a blockchain
In crypto, a digital asset is a blockchain-recorded item — such as a token, NFT, or coin — that has verifiable ownership and can be transferred peer-to-peer without intermediaries.
Cryptocurrency NFTs and Digital Assets 1
What does NFT stand for?