What is it?

Actually, fungibility is an economics term that describes the interchangeability of certain goods. For example, a dollar bill is equal to any other dollar bill while a non-fungible token is something 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 nonfungible 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 tokensNonfungible tokens
Main featuresDivisibleIndivisible
Real-world purposesPayment systemIntellectual property
Store of valueAcademic title
Music composition
Assets like stocks, shares
Access to a service i.e, a subscription
Techology usedOwn blockchainBuilt on another blockchain
Example of tokensLitecoin, Quartz, ERC-20ERC-721