Fungibility(Fungibility) Beginner's Guide
Fungibility refers to the fact that individual units of the same type of asset are identical in value, quality, and function, and can be substituted for one another without affecting a transaction. It is a foundational concept for understanding money, cryptocurrencies, and NFT differences.
Fungibility The core meaning of
When an asset possesses Fungibility, each of its units has no material difference in quality, value, or use and can be directly exchanged for another. For example, a five-USD-denomination banknote can be exchanged for five one-USD-denomination banknotes, and one pound of pure gold can likewise be exchanged for another pound of pure gold of equivalent value.
Fungibility in cryptocurrencies
Most cryptocurrencies are considered fungible assets. Take Bitcoin for example: every BTC is identical in code, network validity, and function. Even if a public ledger can trace transaction history, traceability and fungibility remain two distinct properties.
Fungible assets and NFT
NFT are contrasted with fungible assets: each NFT can be unique because of differences in metadata, origin, and characteristics, and therefore cannot be assumed to be exchanged on a one-to-one basis at equal value.Ethereum's fungible tokens typically use ERC-20, while NFT can use ERC-721 or ERC-1155。
Why this concept matters
Fungibility makes assets more suitable as a medium of exchange because the parties to a transaction generally do not need to distinguish which specific unit they received. Understanding this helps beginners identify the differences in the design and use of ordinary cryptocurrencies,Stablecoins and NFT.
Original Tutorial
https://www.binance.com/en/academy/glossary/fungibility
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