Cryptocurrency NFTs and Digital Assets 2 — Questions and Answers
Question 1: What is the 'floor price' of an NFT collection?
- The highest price any NFT in the collection has ever sold for
- The lowest listed price for any NFT currently available in that collection (Correct answer)
- The average price of all NFTs sold in the past 24 hours
- The price set by the creator at the time of minting
Correct answer: The lowest listed price for any NFT currently available in that collection
Floor price represents the cheapest NFT available in a collection on a marketplace, serving as the baseline entry point for buyers and a key market health indicator.
Question 2: What role does IPFS (InterPlanetary File System) play in NFT infrastructure?
- It processes NFT smart contract transactions on-chain
- It provides decentralized storage for NFT media files referenced by on-chain metadata (Correct answer)
- It validates ownership signatures for NFT transfers
- It calculates gas fees for minting operations
Correct answer: It provides decentralized storage for NFT media files referenced by on-chain metadata
Because storing large media files directly on-chain is cost-prohibitive, NFT metadata typically points to IPFS — a decentralized content-addressed storage network — to host the actual images or files.
Question 3: What is 'wash trading' in NFT markets?
- Cleaning metadata of an NFT before resale
- A seller buying their own NFTs repeatedly to artificially inflate volume and price (Correct answer)
- Exchanging NFTs across multiple blockchains simultaneously
- Burning old NFTs to mint fresh versions
Correct answer: A seller buying their own NFTs repeatedly to artificially inflate volume and price
Wash trading involves transacting with oneself or colluding parties to simulate trading activity, misleading buyers about an NFT's demand and price history.
Question 4: What is a 'generative NFT' collection?
- NFTs created manually by artists one at a time
- NFTs programmatically assembled from trait layers using algorithms, producing thousands of unique combinations (Correct answer)
- NFTs that change appearance based on real-world data
- NFTs that can generate passive income through staking
Correct answer: NFTs programmatically assembled from trait layers using algorithms, producing thousands of unique combinations
Generative NFT collections — like CryptoPunks and Bored Apes — use code to randomly combine visual traits (background, eyes, clothing) to produce thousands of distinct but thematically related tokens.
Question 5: What is 'token gating'?
- Locking a token in a smart contract to prevent transfers
- Restricting access to content, events, or communities based on NFT or token ownership (Correct answer)
- A security process to verify a token's smart contract code
- A mechanism to set a minimum resale price for an NFT
Correct answer: Restricting access to content, events, or communities based on NFT or token ownership
Token gating uses ownership of a specific NFT or token as an access key, granting holders exclusive entry to communities, content, events, or features.
Question 6: Which blockchain hosts the majority of NFT trading volume by historical standards?
- Bitcoin
- Solana
- Ethereum (Correct answer)
- Cardano
Correct answer: Ethereum
Ethereum pioneered NFT standards (ERC-721, ERC-1155) and has historically dominated NFT trading volume, hosting major marketplaces and blue-chip collections.
Question 7: What is a 'soul-bound token' (SBT)?
- An NFT that gains value as its owner holds it longer
- A non-transferable token permanently tied to a wallet representing credentials or identity (Correct answer)
- An NFT that can only be sold back to its original creator
- A token locked in a staking contract for a fixed period
Correct answer: A non-transferable token permanently tied to a wallet representing credentials or identity
Proposed by Vitalik Buterin, SBTs are non-transferable tokens representing achievements, credentials, or affiliations — they cannot be sold or moved, making them suitable for identity and reputation systems.
Cryptocurrency NFTs and Digital Assets 2
What is the 'floor price' of an NFT collection?