# Club5050 - What is Fungible Token and its difference from non-fungible token with advantages and disadvantages as well...
Greetings to all and sundry once again on this great platform, I am very delighted to write and share with you all my article which is going to be about fungible tokens and we last discussed what non-fungible tokens are and the difference between the two.
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Fungible tokens are a type of cryptocurrency that can be exchanged for any other token of the same type. Fungible tokens are a type of cryptocurrency that can be used as a currency or a form of payment. They are not unique in any way and can be used interchangeably with other fungible tokens.
Fungible tokens are a type of crypto that can be exchanged for other tokens on the blockchain.
The way it works is that, if you receive a fungible token from someone else, you can always trade it for another token with someone else. This means that all tokens in circulation are interchangeable and have equal value.
If you want to use a fungible token to purchase goods or services from someone, you don't need to worry about changing it back into fiat currency, you can just pay with the same token as long as you're willing to accept its value at face value.
They are identical, which means that one unit of a fungible token is interchangeable with another unit of the same token.
Advantages of fungible tokens
Fungible tokens are easy to use. The way they work is basically the same as how any other cryptocurrency works, so if you know how to use one, you can use another.
They're great for creating a decentralized system. Because they're based on blockchain technology, they can be used to create a network without having any central authority controlling it.
They can be used for transactions between two parties who do not trust each other
They can be used as collateral for loans or as payment for goods and services
They can be traded on exchanges
Disadvantages of Fungible tokens
Their value fluctuates too much. Because their value is determined by supply and demand instead of being fixed at a certain amount, there's no guarantee that you'll get back what you put in—and sometimes the price can drop significantly very quickly!
They are not as secure as nonfungible tokens because their value is based on supply and demand rather than intrinsic value
Difference between Fungible tokens and non-fungible tokens
| Fungible Tokens | Non-Fungible Tokens |
|---|---|
| They are easily interchangeable | They are not interchangeable because of them specifies a unique asset |
| They depend on the ERC-20 standard | They depend on the ERC-721 standard |
| They can be shared into smaller units which can be used to make larger payments | They cannot be divide because their value is a whole entity |
We can now see the difference between NFTs and Fungible tokens. Per my research, I would say that both are good assets to buy and hold them. It is research I did, and if any mistake is found somewhere please kindly draw my attention in the comment section. I would be glad to hear your views as well. I would end here and see you all in my next article.
Thank you, friend!
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