The terms fungible and non-fungible are currently marking a before and after in the technological age, in addition to the fact that many users of digital currencies are considering moving to a new level of investment. Like where Android smartphone worthy to access Bitcoins.
The profits that many are obtaining through investments in cryptocurrencies are high, but for beginners in ​​financial investment, it is necessary to know and differentiate the basic terms that define the digital market.
What is a fungible asset?
They are all those movable assets that can replace because they have a useful life; in short, they run out, and it is now that another of the same replaces them.
A different interest cannot replace fungible goods; they must be replaced by one with the same characteristics or exact nature.
Depending on the use we give it, this type of goods wears out and deteriorates; consequently, they are consumables, which is why the pertinent use of them is recommended.
One of the most common examples of assets or consumable goods is money, a 10 dollar bill is used, and you can replace it with another billet of the same denomination, or in another case, clothing whose use deteriorates them can be replaced by the same and better quality.
In the case of the digital market, cryptocurrencies are considered fungible goods because they are exchanged for tokens identical or similar to their denomination. Such is the case of Bitcoin or Ether exchange operations; whether buying or selling, the digital currency chosen by the participants will always be exchanged.
Characteristics of a fungible good
Fungible goods have a set of characteristics that identify and distinguish them in the digital market from the wide variety of digital assets.
- The use of consumable goods leads to their deterioration and wear.
- This type of property is substitutable or replaceable by another with the same characteristics.
- If they are consumables, they are fungible
- They are considered personal property, which implies that they `can be moved from one place to another.
Â
Non-fungible good
Non-fungible goods or assets are all those that cannot be exchanged or replaced by another good; they are unique and authentic, which makes it impossible for there to be another identical one that can replace it.
If a term has become popular in the crypto-assets market, it is non-fungible goods, where the ones that shine with their light are the NFTs, which work under the Blockchain platform, bringing significant benefits to the artists.
The profits obtained by the creators of NFTs have no comparison; it all comes down to the design of digital works of art through the various applications created for the exhibition of these non-fungible items.
These applications allow the purchase, sale, and auction of digital assets in the form of virtual paintings that have a certificate of ownership and authenticity that contributes to the concept of non-fungible property.
Only the author has that ownership, and the exchange of the digital work of art for tokens or cryptocurrencies as a form of payment for the acquisition of a good of this type is on his account.
There are no two identical NFTs; this is impossible; the blockchain platform, in turn, allows identifying the authenticity of this type of digital assets, determining if there is any fraudulent copy of it.
The value of the NFTs is subject to the movements of the digital market, and its value is unalterable because they are registered in the Blockchain accounting book.
Differences between fungible and non-fungible
It is important to note that there are two types of market: traditional and digital, but, as is usual, once defined concepts have a similar basis, they are adapted to the various scenarios in which they are executed.
Such is the case of fungible and non-fungible goods, which in the traditional market enjoy a legal basis that supports them in commercial and commercial transactions carried out by people.
In the case of the digital market, although there are no laws or regulations that regulate it, it is its users who are responsible for maintaining the limits established in terms of their use, management, and marketing.
On the other hand, we find that fungible goods are substitutable; another of the same characteristics can replace them; in non-fungible goods, they cannot be returned; they are unique and authentic.
Fungible goods are consumables; non-fungible goods cannot be consumed.
Conclusion
When deciding which type of digital asset to choose, everything will depend on the user’s investment, where he must analyze whether he wishes to invest in fungible assets (cryptocurrencies) or not fungibles like NFTs; it’s all up to you.
In the same way, both have the same volatility because the market that controls them is the same, but everything comes down to the use that the investor wishes to give to his capital.
