Tokenization & Digital Assets Flashcards
6 cards from real CBSA practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 6 Tokenization & Digital Assets flashcards as text
Which ERC token standard is used for non-fungible tokens (NFTs) on Ethereum?
Answer: ERC-721
ERC-721 defines a standard for non-fungible tokens where each token has a unique identifier and cannot be exchanged on a 1:1 basis with another token.
What is the primary difference between a utility token and a security token?
Answer: Utility tokens provide access to a product or service; security tokens represent an investment contract
Utility tokens grant holders access to a platform or service, while security tokens represent ownership or profit rights and are subject to securities regulations.
Which token standard supports both fungible and non-fungible tokens in a single contract?
Answer: ERC-1155
ERC-1155 is the multi-token standard that allows a single smart contract to manage multiple token types, including both fungible and non-fungible tokens.
In the context of asset tokenization, what does fractional ownership mean?
Answer: Dividing a real-world asset into multiple digital tokens so multiple parties can own a share
Fractional ownership through tokenization allows high-value assets like real estate or art to be divided into tokens, enabling multiple investors to own a portion.
What regulatory framework in the US classifies a digital asset as a security using the 'Howey Test'?
Answer: SEC Securities Act
The SEC applies the Howey Test under the Securities Act to determine if a digital asset qualifies as an investment contract and thus a security.
Which mechanism allows token holders to redeem tokens for an underlying asset in a tokenized asset system?
Answer: Burning
Burning tokens removes them from circulation and typically triggers redemption of the underlying asset, maintaining the peg between token supply and real-world asset reserves.