Chances are you’ve come across the term non-fungible a few times over the past few days. From online chatter about non-fungible tokens to artists getting upset about non-fungible art, fungibility (and nonfungibility) have become words charged with revolution and energy. But what exactly does non-fungible mean? And why should the average Joe/Jane care? Here’s everything you need to know.
Fungible vs. Non-Fungible: Do You Know the Difference?
To understand what makes something non-fungible, it helps to understand what the root word "fungible" means. Fungibility refers to the interchangeability of an asset. Anything that is fungible is replaceable with something of equal value. For simplicity, you associate fungible with replaceable (or interchangeable). A simple example of something fungible is money. A $10 bill is fungible because it can easily be replaced with ten $1 coins (or other denominations of equal value).
Now, anything that is not easily replaceable is nonfungible. Real world objects that cannot be replaced by other items are nonfungible. Your old Telecaster guitar, an autographed book, baseball cards, or other such collectibles are called nonfungible. Even your collection of coins that are no longer in circulation are nonfungible. Basically, nonfungible is just a fancy word for something that is unique and therefore not easily interchangeable.
Related: Nerdschalk Explains: What is NFT Crypto?
