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Fungible Token

A fungible token is a type of cryptographic token that is interchangeable with others of its kind.

Fungible tokens serve as an integral element in the blockchain ecosystem, functioning with the seamless equivalency of indistinguishable units. Each of these cryptographic tokens maintains perfect parity with its fellow units within the digital environment.

Imagine walking into an apple orchard. The apples hanging from the trees are all identical to each other. Now, imagine each apple is a fungible token, and the orchard is a blockchain. You could pluck any apple, or token, and exchange it for another one without any discernible difference, just like swapping one red apple for another in the orchard.

This homogeneity, this inherent indistinguishability, is what makes these tokens ideal for commercial transactions. The most common examples that immediately spring to mind are the heavyweights of the cryptocurrency world: Bitcoin and Ethereum. Each Bitcoin or Ethereum token is an exact replica of another, making them directly interchangeable. It's like trading dollar bills; you don't mind getting another bill as change because you know its worth will remain the same. The fungible nature of these tokens is the cornerstone of their reliability and the bedrock of their popularity in the world of digital transactions.

The opposite of a fungible token is a "non-fungible" token, these are called NFT's.


Example 1: Bitcoin is an example of a fungible token. If Person A lends 1 Bitcoin to Person B, and Person B later repays Person A with a different Bitcoin, the loan is still considered repaid. This is because all Bitcoins are equivalent and fungible.


Blockchain and Technology
Crypto Accounting
Crypto Basics
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