What makes a token “Non-Fungible”?
The major difference between an NFT and traditional token is a concept known as “fungibility”. While it sounds like a scary word – “non-fungible” is really a fancy way of saying “unique”. For example:
Fungible assets are not unique, and you can easily swap them for another asset. Currency (both traditional and crypto) is a great example of a fungible asset as you can always swap one dollar bill for another dollar bill or one Bitcoin for another Bitcoin
Non-fungible assets, on the other hand, are unique, and therefore cannot be directly swapped for other assets. Most assets in life – art, real estate, shoes, couches, watches, etc… – are non-fungible (i.e., you can’t freely trade a shoe for a house)
Semi-fungible assets, like concert tickets, lie somewhere in between. While any ticket could theoretically be swapped for any other ticket to the same concert, you couldn’t swap it for a ticket to another concert
Fungible vs. Non-Fungible. Vs. Semi-Fungible Tokens
From a technical standpoint, fungible and non-fungible tokens are actually quite similar. They both contain functions to check the supply and balance, transfer tokens and approve transactions. The main difference is that non-fungible tokens each carry a unique ID, whereas fungible tokens do not (for Ethereum’s ERC-721 standard, this is known as a “uint256” ID)
Last updated
