Digital Assets – Revolution or Bubble? Business RC

Can digital ownership truly revolutionize creative markets, or are we witnessing another speculative bubble destined to burst? These moderate difficulty GMAT and GRE passages explore the contentious world of non-fungible tokens from distinctly different angles, encouraging readers to navigate complex technical concepts and heated philosophical debates.

Read these medium difficulty RC passage(s) in Business, Economy, and Governance and answer the question(s) that follows. You can choose the GMAT style Reading Passage and the question or the GRE RC variant and answer the GRE-style question. Even better, you could solve both.

GMAT RC Practice | Medium Difficulty | ~200 words

Non-fungible tokens (NFTs) represent a revolutionary form of digital asset that establishes verifiable ownership and authenticity for unique digital items through blockchain technology. Unlike traditional cryptocurrencies such as Bitcoin, which are fungible and interchangeable, NFTs are distinguished by their non-fungible nature, meaning each token possesses distinct characteristics that cannot be replicated or substituted. These digital certificates are encoded with identifying information that creates digital scarcity, transforming previously copyable digital content into ownable assets with provable uniqueness.

The practical applications of NFTs have expanded rapidly across multiple sectors since their mainstream emergence. In the art world, digital artists utilize NFT platforms to monetize their creations, enabling direct sales to collectors without traditional gallery intermediaries. Gaming companies integrate NFTs to represent in-game items, characters, or virtual real estate that players can genuinely own and transfer between different gaming ecosystems. Entertainment industries employ NFTs for exclusive content access, allowing creators to offer limited-edition experiences or behind-the-scenes materials to token holders. Smart contract functionality automates royalty distributions, ensuring creators receive predetermined percentages from secondary sales without manual intervention. Additionally, NFTs facilitate ownership verification for digital collectibles, intellectual property rights, virtual event tickets, and even academic credentials, creating tamper-proof records of authenticity across diverse applications.

Question Type: Primary Purpose | Question Difficulty: Medium

The primary purpose of the passage is to:

1. evaluate the effectiveness of NFTs in replacing traditional ownership verification systems across multiple industries
2. argue that NFTs represent a superior alternative to conventional methods of establishing digital authenticity
3. analyze the technical mechanisms that enable NFTs to create verifiable digital scarcity
4. compare the advantages and limitations of NFTs versus traditional cryptocurrencies in commercial applications
5. define a digital technology and demonstrate its practical implementation across various sectors

GRE Reading Passage | Medium Difficulty | ~190 words

The proliferation of non-fungible tokens has precipitated a contentious debate between digital ownership advocates and technology skeptics. Proponents argue that NFTs represent an unprecedented democratization of creative markets, enabling artists to circumvent traditional gatekeepers and establish direct relationships with collectors. They contend that blockchain-based provenance creates immutable records of authenticity, solving the perennial problem of digital reproduction and forgery. Furthermore, supporters emphasize that smart contracts embedded within NFTs can perpetually compensate creators through automated royalty mechanisms, establishing sustainable income streams that transcend initial sales.

Conversely, critics dismiss NFTs as a speculative phenomenon devoid of intrinsic value, arguing that purchasers acquire merely a digital receipt rather than exclusive ownership of the underlying content. They assert that the environmental ramifications of blockchain technology, particularly energy-intensive consensus mechanisms, are unconscionable given the dubious utility of digital collectibles. Skeptics further contend that NFT markets exhibit classic bubble characteristics: artificial scarcity, celebrity endorsements, and irrational price appreciation driven by fear of missing out rather than fundamental value.

Despite these criticisms, the transformative potential of NFTs appears undeniable, as their applications extend beyond art into intellectual property, credentials verification, and decentralized identity systems, fundamentally reshaping digital ownership paradigms.

Question Type: Stated Idea | Select One or More Answers | Question Difficulty: Medium

According to the passage, which of the following are mentioned as arguments made those who consider NFTs as a speculative phenomenon? Select ALL that apply.

1. The NFT marketplace exhibits speculative characteristics including manufactured scarcity and influence from famous personalities
2. NFT buyers receive digital documentation of a transaction without actually gaining control over the asset
3. The energy requirements of the underlying technology are unjustifiable, considering the questionable benefits of these digital items