Fungibility

Definition

Fungibility is the property that units of an asset can be treated as equivalent and interchangeable for a particular purpose. For a fungible token, one unit normally carries the same protocol-level rights as another unit of the same token. This does not mean that tokens issued by different contracts are interchangeable merely because they share a name or ticker. Fungibility is also separate from divisibility: an asset can be split into smaller units without every identifiable item being equivalent. Non-fungible tokens instead distinguish individual identifiers and their ownership. In public cryptocurrency systems, transaction histories remain observable, so service providers may treat otherwise equivalent units differently based on their own policies or analysis. The concept therefore has both a technical dimension, concerning how balances are represented, and a practical dimension, concerning how people and applications actually accept the asset.