Fungibility

Fungible: When individual units of a good or commodity are essentially interchangeable and each of whose parts is indistinguishable from another part.

Cryptocurrencies are fungible. They can be thought of as a digital coin.

If you toss a physical coin in a bag with 25 others of the same value, you probably won't be able to pick out the original. It shouldn't matter, though - each coin has the same value. These coins are also limited in quantity and issued by a central organization.

Cryptocurrencies are similar in a few ways. Any one token (digital coin) can be exchanged for any other, as they all hold the same value. Cryptocurrencies are also usually limited in quantity and are issued on a blockchain network.

Despite the name, Non-Fungible Tokens (NFTs) can be either Non-Fungible or Semi-Fungible.

Any two unique NFTs from the same smart contract are not directly interchangeable, but in some cases multiple copies of an NFT can be interchangeable.

On Ethereum, there are a number of popular token standards to allow maximum composability:

• ERC-20 | Fungible Tokens | Cryptocurrency

• ERC-721 | Non-Fungible Tokens | NFTs

• ERC-777 | Fungible Tokens | Improves on ERC-20 | Cryptocurrency

• ERC-1155 | Non-Fungible OR Semi-Fungible Tokens | NFTs

Using trading cards as an analogy:

You open a physical trading card game booster pack that contains 5 cards in the following rarities:

• Master Planner | 1 of 1 | Ultra rare, only copy ever printed

• Decider | 1 of 5,000 | Common

• Undecided | 1 of 50,000 | Ultra common

• Undecided | 1 of 50,000 | Ultra common

• Magus | 1 of 100 | Rare

In this scenario, the Master Planner is Non-Fungible. There are no other cards like it - any trade involving that card would by necessity involve some other asset.

The Magus, Undecided, and Decider are Semi-Fungible. They are interchangeable with other copies of the same card, but are not directly interchangeable with each other. If a copy of Decider is mixed in a bag full of other copies of Decider, the original will be nearly impossible to pick out. But if a copy of Magus is mixed into a bag full of copies of Decider, it would be easy to find the original Magus.

Important: The behavior of each NFT and Cryptocurrency is dependent on the smart contract that created it. Be vigilant when interacting with assets from unknown smart contracts.