Structure, Lifecycle, and Legal Considerations of NFTs BBLC Practice Questions (Page 5)

Questions 21–25

1. 21expert · hard

   An NFT project has minted 10,000 tokens with metadata stored on a centralized server. The project team wants to migrate to decentralized storage without changing the token IDs or breaking existing marketplaces. What is the most effective way to achieve this?

   • AAsk each marketplace to update the metadata manually.
   • BMint new tokens with the new metadata and burn the old ones.
   • CUpdate the base URI in the smart contract to point to the new IPFS gateway.
   • DUse a proxy contract to redirect metadata requests.
   Reveal Solution Discussion Select an answer first
2. 22application · medium

   A gaming company is planning to issue NFTs that represent in-game items. They want players to be able to trade these items freely, but they also want to retain the ability to modify or disable items that are found to be exploits. Which approach best balances player ownership and company control?

   • AIssue NFTs with a smart contract that includes a pause or freeze function controlled by the company.
   • BIssue NFTs with no administrative functions, giving players absolute control.
   • CIssue NFTs on a private blockchain controlled by the company.
   • DIssue NFTs as ERC-20 tokens to simplify trading.
   Reveal Solution Discussion Select an answer first
4. 23expert · hard

   A company is launching an NFT that also functions as a ticket to a live event. The company wants to prevent scalping and ensure that tickets are used by the original purchaser. Which approach best balances these goals with the benefits of NFTs?

   • AUse a centralized database to track ticket ownership.
   • BUse a standard ERC-721 token with a royalty on secondary sales.
   • CUse a standard ERC-721 token and rely on the event venue to check IDs.
   • DUse a soulbound token (non-transferable NFT) that is issued directly to the purchaser's wallet.
   Reveal Solution Discussion Select an answer first
5. 24foundation · easy

   Under U.S. securities law, when might an NFT be considered a security?

   • AWhen it is sold on a secondary marketplace
   • BWhen it passes the Howey test, meaning it involves an investment of money in a common enterprise with an expectation of profits from the efforts of others
   • CWhen it represents a unique digital collectible
   • DWhen it is created by a well-known artist
   Reveal Solution Discussion Select an answer first
6. 25application · medium

   A digital art marketplace is preparing to mint a new collection of 10,000 generative artworks. The team wants each token to display unique visual traits and a distinct title while keeping the on-chain storage cost low. Which approach best satisfies these requirements?

   • AUse a single shared metadata URI for all tokens and rely on the marketplace to display different images.
   • BMint tokens with a metadata URI pointing to a centralized server that hosts the images and JSON files.
   • CStore the image files on IPFS and include the IPFS URI in the token metadata, which is referenced by the smart contract.
   • DStore the full image and metadata for every token directly in the smart contract.
   Reveal Solution Discussion Select an answer first