Fungible Vs. Non-fungible Tokens: Which is best?

Fungible Vs. Non-fungible tokens

In the blockchain space, a token is something that is used to represent the digital format of a physical asset like gold or real estate. Tokens have lately become famous as a means for easily tokenizing and monetizing physical assets. They add liquidity to otherwise illiquid assets, expanding their range and tradeability.

All tokens in the world can be broadly divided into two types:

  1. Fungible tokens
  2. Non-fungible tokens

Fungible tokens are cryptocurrencies that can be exchanged with each other. Bitcoin, ETH, DOGE and all other popular cryptocurrencies are fungible tokens. You can trade bitcoin for an equal value of ETH, and vice-versa.

Fungible tokens are widely famous for their use as a digital mode of payment. Since each cryptocurrency has a value attached to it, it can be virtually used to pay for things and as a medium of exchange.

Read Also : How To Become a HUMSTER

Fiat currencies are also fungible tokens, as they can be used to exchange things and items of value.

A fungible token will continue to have the same value and can be used for payments even when it is divided into or exchange with another fungible token. For instance, a $100 note even when exchanged with two $50 bills will continue to have the same value.

These are exchangeable and tradeable tokens.

Non-fungible tokens, on the other hand, cannot be exchanged for each other. A non-fungible token or NFT is a blockchain-based token that is created to represent a particular item or digital entity. No two non-fungible tokens are ever the same, as they represent different, unique items, and cannot be, therefore, exchanged for each other. However, an NFT can be traded, purchased or sold on the dedicated marketplace.

NFT’s are generally used to represent unique, rare items such as art, music, ownership of a house/property, a rare diamond, etc.

Non-fungible tokens in the blockchain space are essentially used to represent the unique ownership of a rare item. For example, the original Mona Lisa painting is a unique item and can be represented by an NFT that can be traded as a way to buy or sell the original painting. But, yes, there can be digital copies of an NFT, as there can be copies of a rare item. But, the authenticity of NFTs can be verified, as the entire ownership data is safely stored on the immutable blockchain.

An NFT marketplace is the platform used to buy and sell non-fungible tokens through a bidding system. HUMU is a good example of an NFT marketplace for creators in the fashion industry. The platform allows creators to turn their unique work into NFTs and sell them to fans globally to earn fast and assured income online.

Fungible Vs. Non-fungible tokens

The primary difference between fungible tokens and NFTs is that NFTs cannot be exchanged with each other, unlike fungible tokens that can be swapped for other tokens of the same type.

Fungible tokens are exchangeable, divisible and can be split without changing their value. NFTs cannot be divided or split. Each NFT is a single unit of token that represents a unique digital item.

Since all fungible tokens are practically the same, they can be traded for each other. NFTs are unique and not similar to each other. They cannot be traded for each other but can be bought and sold on the marketplace.

To conclude, both NFTs and fungible tokens have their different roles, purposes and uses. Both are important for the blockchain space and are growing in popularity. Find out more about how to create your NFT token at https://humutoken.com/

Published by humutoken

Anda is the founder of HUMU. Entrepreneur – Crypto and NFT enthusiast. Anda believes in creating more job opportunities and changing the world through blockchain technology. A critical part of our future is fair work opportunities that are how the idea of HUMU was born.