A fungible token can be divided and exchanged for another. In this explainer, we will dive deep into the world of non-fungible tokens, their applications and use cases, and how these tokens are helping shape digital ownership.įungibility roughly translates to the ability to be replaced by something identical - when something is fungible, there are typically many of them that are the same. Non-fungibility, on the other hand, is quite the opposite - it's unique and therefore cannot be substituted. Fungibility is the ability to exchange one with another of the same kind - is an essential feature of any currency. There are two ways of thinking about tokens: fungible and non-fungible. One way that value is represented on a distributed ledger is through the tokenization of nearly anything. The advancements in distributed ledger technologies led to the creation of concepts that could simplify and reduce the cost of exchanging value. Smart contracts enabled developers and businesses to build financial applications that make use of cryptocurrencies and other types of tokens, for things like borrowing and lending, decentralized exchanges, and more. The second generation of blockchain, Ethereum, was introduced in 2014, and allowed developers to execute programs ( smart contracts) on a distributed ledger. Those historical business models relied on slow and costly intermediaries to create trust between two parties who don't inherently trust each other - such as two businesses attempting to trade money for an asset.īlockchain was first introduced in 2008 with the inception of the Bitcoin cryptocurrency - the creation of digital money that anyone can own. Distributed ledger technologies (DLTs), including blockchain, is an emerging technology that challenges existing business models.
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