What are Fungible and Non-fungible tokens in the world of Cryptocurrencies?
A lot of clients have approached me for the Blockchain development services and they all are aware of What Cryptocurrencies are, what are the Smart Contracts and how they work?
But one of my clients, CEO of Canada based Blockchain platform, www. artproven.io, which helps artists to get the authenticity & protection of their arts using Ethereum Smart Contracts, has asked me regarding the Non-fungibility tokens. He asked me to go for non-fungibility and eliminating the current Smart contract which was based on the Ethereum,ERC-20 protocol which is using fungible tokens.
Then, I realized the importance of how non-fungibility can help these artists in getting the advantage of timestamping their unique piece of work. As a solution provider, I would have to suggest to him what suits best for him but this is the beauty of our profession, sometimes, you learn by your mistakes and negligence. Let me help you in understanding What is Fungible & Non-fungible tokens and How they can be the revolutionary technology in the coming time?
What are Fungible tokens?
Fungible tokens are divisible and are not unique. They are interchangeable with the same value. Let me explain you with the help of an example, if you are sending one Bitcoin to your friend then he sends you back 1 bitcoin after 20 days. This means the bitcoin you send and the bitcoin you received are not the same but you still have the value of 1 Bitcoin. You can’t say that the Bitcoin which I sent was different from the bitcoin I received. Our whole economy works on the fungible tokens. Their value matters to us irrespective of their identity.
Another example, In Fiat Currency, though every currency note has a unique number on it, still they are Fungible. It means you can exchange INR 100 with any other INR 100 and in the end, you still have a value of INR 100 irrespective of the notes you exchanged.
What are Non-Fungibility Tokens?
Non-fungible tokens are not divisible and they are unique in themselves. When I say a non-fungible token, it means you can’t exchange two fungible tokens together as here value is not relevant. Instead, the identity of the token is important. Let me explain to you with a great example, Suppose you are traveling from London to New Delhi via Flight. You can’t exchange your ticket with someone because your ticket is unique. It has a unique ticket number and your identity. I hope this can clear your thoughts about non-fungible tokens
Ethereum, has made the non-fungibility possible with the help of ERC-721 protocol. There are a lot of real-world applications that can be solved with the help of the non-fungibility tokens. For more information or business inquiries, you can write to us at contact@benchwork.in
