Fungible
What is it?
Actually, fungibility is an economic term that describes the interchangeability of certain goods. For example, a dollar bill equals any other dollar bill, while a non-fungible token is unique and inimitable. For example, if you have a dollar bill signed by a famous artist, it becomes unique.
Familiarity with the concept of fungibility in economics might help one better understand fungible and non-fungible tokens. The only difference is that crypto tokens express their fungibility property through a code script.
Fungible tokens or assets are divisible and non-unique. For instance, fiat currencies like the dollar are fungible: A $1 bill in New York City has the same value as a $1 bill in Miami. A fungible token can also be a cryptocurrency like Bitcoin: 1 BTC is worth 1 BTC, no matter where it is issued.
NFTs differ from fungible tokens like cryptocurrencies, which are identical to each other and, therefore, can serve as a medium for commercial transactions (e.g., for buying goods).
Fungible vs. Non-fungible tokens
| Fungible tokens | Nonfungible tokens | |
|---|---|---|
| Main features | Divisible | Indivisible |
| Non-unique | Unique | |
| Real-world purposes | Payment system | Intellectual property |
| Store of value | Academic title | |
| Artwork | ||
| Music composition | ||
| Gaming | ||
| Utility | ||
| Assets like stocks, shares | ||
| Access to a service i.e., a subscription | ||
| Technology used | Own blockchain | Built on another blockchain |
| Example of tokens | Litecoin, Quartz, ERC-20 | ERC-721 |