Fungibility

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Basics

  • "Able to replace or be replaced by another identical item; mutually interchangeable."
  • In economics, fungibility is the property of a good or a commodity whose individual units are essentially interchangeable.
  • If a good, asset or token in this case, is fungible, then it can be interchanged or replaced by another identical token. Being non-fungible therefore means that a token is absolutely unique and is distinguishable from any other token.
  • The $USD is fungible in nature. $1 is exchangeable for $1. These individual dollars are essentially indistinguishable from one another. Fungibility is a core characteristic of all fiat currencies.