Non Fungible Tokens: A Quick Guide
To qualify as a currency it has to possess three qualities:
- It must be fungible
- It must be a unit of account and
- It must be a medium of exchange
Here we will explore only the first quality. What does it mean a currency must be fungible?
If you give someone a $10 note, it doesn't really matter to the recipient which particular $10 note from your wallet you gave him. To the recipient all the $10 notes are the same and can be exchanged with one another. This is simply what it means to be fungible. Besides currency there are other things that are also fungible. For instance, all commodities are also fungible. A kilo of a particular type of rice or cooking oil or beans are equally exchangeable with another of its same type. Likewise you wouldn't mind which Bitcoin was given to you - all carry the same use value to you.
And so, tokens are also fungible but not all of them are. There are some tokens that are created specifically as non-fungible tokens. It simply means a particular non-fungible token cannot be of equivalent use value as another and therefore cannot be exchanged for each other like the other fungible tokens.
If you are new to non-fungible tokens (NFTs) then the shared article here is a good guide to start off your learning journey. Check it out.
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