Practice Test Geeks(CCE) Certified Cryptocurrency Expert Practice Test
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NFTs, Tokenization, and Digital Assets Flashcards

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  1. What makes a Non-Fungible Token (NFT) different from a fungible cryptocurrency like Bitcoin?

    Answer: NFTs are unique and non-interchangeable, each with distinct metadata and ownership records

    Unlike fungible tokens where each unit is identical and interchangeable, NFTs have unique identifiers and metadata, making each one distinct and verifiable on-chain.

  2. Which Ethereum token standard is specifically designed for Non-Fungible Tokens (NFTs)?

    Answer: ERC-721

    ERC-721 defines the standard interface for NFTs on Ethereum, specifying ownership tracking, transfer functions, and unique token ID management.

  3. What is the role of metadata in an NFT?

    Answer: Metadata contains the descriptive attributes and media (image, video) associated with the NFT

    NFT metadata includes the token's name, description, and media URI, typically stored on IPFS or Arweave to provide the content that makes each NFT unique.

  4. What does 'tokenization of real-world assets' (RWA) mean in cryptocurrency?

    Answer: Representing ownership of tangible assets (real estate, commodities, equities) as blockchain tokens

    RWA tokenization converts the ownership rights of physical or traditional financial assets into digital tokens on a blockchain, enabling fractional ownership and 24/7 trading.

  5. What is a royalty mechanism in an NFT smart contract?

    Answer: A percentage of secondary sale proceeds automatically sent to the original creator via the smart contract

    NFT royalty mechanisms (e.g., EIP-2981) encode creator royalty percentages in the smart contract, enabling automatic royalty payments on secondary market resales.

  6. What is IPFS and why is it commonly used for NFT storage?

    Answer: A decentralized peer-to-peer file storage protocol that provides content-addressed, censorship-resistant media hosting

    IPFS (InterPlanetary File System) stores NFT media off-chain using content hashes, ensuring the media referenced by an NFT's metadata remains tamper-proof and decentralized.