What Does Fungible Mean? Definition, Explanation & Examples

The condition of each card, the centering of the print, and whether the printed art remains sharp or looks muddy affect the value of each card. Fungibility is a property that makes something interchangeable. If an item is fungible, you can exchange it for a different unit of that same item with little noticeable difference. Where it came from or who made it doesn’t make a real difference for the item’s quality or utility. Bear in mind, NFTs may also be subject to tax as will the cryptocurrencies used to purchase the NFT be. The Indian Budget 2022 proposed imposing withholding tax on transfer of virtual digital assets — which should include NFTs and cryptocurrencies — effective July 1.

fungible meaning

It went live in 2020, and it’s currently run by the nonprofit Decentraland Foundation. Everything in-game is a sellable item including avatar wearables, estates, and the land on which these estates sit. Notably, it also stands as the first virtual world owned by users, and is considered an early model for the metaverse.

Word History

Fungible investments can be bought and sold on different exchanges. Amilcar Chavarria is a fintech and blockchain entrepreneur with expertise in cryptocurrency, blockchain, fintech, investing, and personal finance. Experts suggest that NFTs can be a good investment because you can resell them for profit.

  • Belgium has adopted fungibility for its domestic central securities depository, CIK , which was set up in 1967–1968.
  • Typically, businesses that cross-list their shares sell their shares on a domestic stock exchange and one or more foreign exchanges.
  • These include white papers, government data, original reporting, and interviews with industry experts.
  • Hans Jasperson has over a decade of experience in public policy research, with an emphasis on workforce development, education, and economic justice.

Exchange – NFT exchanges take place with cryptocurrencies such as Bitcoin on specialist sites. The fungibility of money refers to the fact that all money is the same. It doesn’t matter whether you have one $100 bill or one hundred $1 bills. In the same way, the source of your money doesn’t impact how you can use it. Robyn Conti is a freelance financial writer based in Los Angeles, CA. She has been writing about workplace retirement plans, investing, and personal finance for the past 20+ years. When she isn’t feverishly working to meet a deadline, Robyn enjoys hanging out with her kids, drinking coffee, reading, and hiking.

In 2021 alone, the virtual platform had more than 1.1 million registered users who traded some $800 million in NFTs, bringing new levels of mainstream awareness. Notably, NBA Top Shot is one of the most affordable NFTs for starting collectors, with most selling for well under $100 upon release and purchasable through standard fiat currencies. Decentraland is a browser-based game where users can buy and sell virtual plots of land and in-game items. It was created by Argentinians Ari Meilich and Esteban Ordano, who began working on the project in 2015.

Common investment vehicles include stocks, bonds, commodities, and mutual funds. The Federal Reserve Bank of New York offers gold custody services to central banks and governments around the world by storing gold bars in its underground vault. Assets like diamonds, land, or baseball cards are not fungible because each unit has unique qualities that add or subtract value. Depending on whether the interests of the aggrieved party are fungible, a determination made by the trier of fact, the appropriate remedy may change. For example, a court may require specific performance as a remedy for breach of contract, instead of the more favored remedy of monetary damages. Like currency, that other newly important way of thinking about value, time as fungible unit of commerce, provided the necessary abstraction to make sense of market exchange.

What are the best ways to make money from NFTs?

When many transactions like this are executed, the trade volume rises. As a result, it looks like the underlying asset is highly sought after. This has the effect of increasing https://cryptolisting.org/ the value of the NFT in question. In fact, some NFT wash traders have executed hundreds of transactions through self-controlled wallets to try and increase demand.

NFTs are perfect for hobbyist collectors who want to support a content creator, be part of a community, or own a little piece of something they’re passionate about. In all likelihood, we’ll continue to see more quirky and innovative NFT uses, as brands and independent creators push the boundaries of the collectibles market even what is falcon nine further in the years to come. Classic internet memes like Nyan Cat and Bad Luck Brian sold as NFTs, and many other memes have followed suit. This enabled the artists behind the creations to finally be properly compensated and recognized for their work. As mainstream adoption increased, so did the sales volumes and price points.

Of course, the U.S. dollar does change in value over time relative to other currencies, but it is still fungible because—at any one point in time—all U.S. dollars are worth the same amount. That is to say that all U.S. dollars change in value in ensemble as a currency—not individually as single dollars. If Person A lends Person B a $50 bill, it does not matter to Person A if he is repaid with a different $50 bill, as it is mutually substitutable. In the same sense, Person A can be repaid with two $20 bills and one $10 bill and still be satisfied, since the total equals $50.

Even celebrities like Snoop Dogg, Lindsay Lohan, Amitabh Bachchan and Salman Khan are jumping on the NFT bandwagon, releasing unique memories, artwork and moments as securitized NFTs. Nyan Cat, a 2011-era GIF of a cat with a pop-tart body, sold for nearly $600,000 in February. And NBA Top Shot generated more than $500 million in sales as of late March. A single LeBron James highlight NFT fetched more than $200,000. Some experts say they’re a bubble poised to pop, like the dotcom craze or Beanie Babies.

What Is Fungibility? What Makes an Asset Fungible?

Crypto’s fungibility makes it a trusted means of conducting transactions on the blockchain. Spells of Genesis was created in 2015 by EverdreamSoft on top of Bitcoin. As such, it helped usher in a new era of gaming — one in which players have true ownership of their digital assets. Each card contains a piece of art representing a historic moment in blockchain history. Players collect, trade, and combine cards to create a powerful deck.

fungible meaning

Money is a prime example of something fungible, where a $1 bill is easily convertible into four quarters or ten dimes, etc. Appliances are usually fungible—that is, they can be replaced with cash or a similar item of equal value. It is fungible, with a low spread between the prices to buy and sell.

Fungible trading works when you can buy/sell on one exchange, and sell/buy on another exchange, netting your share position to zero and earning a profit. Arbitrage trades are more likely to occur when a currencyexchange rate is involved, as traders can spot arbitrage opportunities in the same currency very quickly. This works with paper money when you swap your dollar for someone else’s. It doesn’t work if you try to trade a U.S. dollar for a Canadian dollar—they don’t share the same value. A voting token is fungible when a blockchain-based governance system allows members to have one vote per token. Such governance rules are defined in a decentralized autonomous organization .

Something fungible can be exchanged for something else of the same kind. For example, when we say “oil is a fungible commodity,” we mean that when a purchaser is expecting a delivery of oil, any oil of the stipulated quantity and quality will usually do. It doesn’t matter what twenty dollar bill you get—it’s still worth the same amount as any other twenty dollar bill. In contrast, something like a work of art isn’t fungible; a purchaser would expect a specific, identifiable item to be delivered. In broader use, fungible can mean “interchangeable,” or sometimes “readily changeable to adapt to new situations.” Like cryptocurrencies, non-fungible tokens also exist on a blockchain.

Put simply, when something is non-fungible, it is unique or one of a kind. There may be other similar products or assets, but each one has its own particular features and quirks, especially in terms of quality. Fungibility is the property of being exchangeable for other assets of the same kind without any change in value or usability.

Two shirts may look similar, but one made of high-quality cloth by a skilled seamstress is worth more than one made with low-quality cotton using a poorly made sewing machine. Though both shirts serve the same purpose, they aren’t interchangeable, and therefore not fungible. As an investment opportunity, NFTs are highly volatile and the market is speculative. As with art and other rare items, some NFTs have gained immense value over time while others have lost immense value.

What’s the difference between NFTs and cryptocurrency?

While fungible items are interchangeable with each other, non-fungible assets are unique. In economics, fungibility is the property of a good or a commodity whose individual units are essentially interchangeable, and each of whose parts is indistinguishable from any other part. Fungible tokens can be exchanged or replaced; for example, a $100 note can easily be exchanged for twenty $5 bills. In contrast, non-fungible tokens cannot be exchanged in the same manner.

What Is Fungibility?

For example, a foreign company may list American depositary shares on U.S. stock exchanges. Instead, it gives the owner the right to shares held in an overseas bank. Most countries have their own stock exchanges, and businesses can list their shares on the exchanges of their choice.

Hypothetically, cutting off the supply should raise the value of a given asset, assuming it’s in demand. NFTs are also generally one of a kind, or at least one of a very limited run, and have unique identifying codes. “Essentially, NFTs create digital scarcity,” says Arry Yu, chair of the Washington Technology Industry Association Cascadia Blockchain Council and managing director of Yellow Umbrella Ventures. Despite the explosive popularity we’ve seen in the past few years, NFTs are still in their early stages, and it’s never too late to get started.

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