Cryptocurrency NFTs and Digital Assets 3

Question 1

What is the ERC-1155 standard, and how does it differ from ERC-721?

Accepted Answer

ERC-1155 supports both fungible and non-fungible tokens in a single contract, while ERC-721 handles only unique NFTs

Answer

ERC-1155 is a multi-token standard that allows a single smart contract to manage multiple token types — both fungible and non-fungible — improving efficiency over deploying separate ERC-20 and ERC-721 contracts.

Question 2

What does 'fractionalization' of an NFT mean?

Accepted Answer

Dividing ownership of an NFT into multiple fungible tokens so several parties can share ownership

Answer

NFT fractionalization locks an NFT in a smart contract and issues fungible tokens representing fractional ownership, lowering the cost barrier for expensive blue-chip NFTs.

Question 3

What is a 'dynamic NFT' (dNFT)?

Accepted Answer

An NFT whose metadata and appearance can change based on external data or on-chain conditions

Answer

Dynamic NFTs use oracles or on-chain logic to update their metadata — for example, a sports card NFT that reflects a player's real-time stats — making them responsive to real-world events.

Question 4

What is 'provenance' in the context of NFTs?

Accepted Answer

The verifiable ownership and transaction history of an NFT recorded on the blockchain

Answer

Blockchain provenance provides an immutable record of every wallet that has owned an NFT, enabling buyers to verify authenticity and trace the asset back to its original minting.

Question 5

What is typically meant by a 'blue-chip NFT'?

Accepted Answer

An NFT from an established, highly valued collection with strong market liquidity and brand recognition

Answer

Borrowed from traditional finance, 'blue-chip NFT' refers to collections like CryptoPunks or Bored Ape Yacht Club — established projects with proven demand, high liquidity, and cultural cachet.

Cryptocurrency Practice Test

Cryptocurrency Practice Test

Cryptocurrency NFTs and Digital Assets 3