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Fungible

Fungible refers to an asset or item that can be easily exchanged or replaced with another of the same kind and value. In the context of cryptocurrencies, fungible tokens like Bitcoin are identical, interchangeable units, each having the same value.

What is Fungible?


Fungibility is a characteristic of an asset that allows it to be exchanged on a one-to-one basis with other identical units, making each unit indistinguishable from another. A fungible asset has uniform value, meaning that one unit can be substituted for another without any loss or gain in value.


For example, fiat currencies like dollars or euros are fungible. A $10 bill can be exchanged for another $10 bill or two $5 bills, and the value remains the same. Similarly, cryptocurrencies like Bitcoin (BTC) and Ether (ETH) are fungible tokens, meaning that each unit of BTC or ETH is identical in value to another unit, making them easily interchangeable.

Fungibility is an important property for assets used as money, as it allows them to serve effectively as a medium of exchange. In a fungible system, every unit is treated equally, which simplifies transactions and ensures consistent value across the market.


In contrast, non-fungible items are unique and cannot be exchanged on a one-to-one basis. For example, non-fungible tokens (NFTs) are digital assets on the blockchain that represent ownership of unique items, like digital art or collectibles. Each NFT has distinct characteristics and value, which makes them non-interchangeable.


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