CSC School: Fungibles and non-Fungibles Tokens #8
as we mentioned in previous lectures , CSC is a EVM-Based Blockchain that means it’s a multi-purpose platfrom. smart contracts will be executed on Ethereum virtual machine.there are some kind of smart contracts and now we want to talk about Fungibles and non-Fungibles Tokens.
Fungible Token
Due to decentralization, security, immutability, Blockchain is considered to be the perfect technology for managing all types of digital assets. But with such interchangeable tokens, this would not be possible. Such tokens work fine for cryptocurrencies, and in fact, fungibility is the fundamental feature of any currency.
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Such tokens are built in such a way that each fraction of a token is equivalent to the next. For instance, Bitcoin, the most popular cryptocurrency, is fungible, which means one Bitcoin is equal to one Bitcoin, and it’s equal to all other Bitcoins. Such tokens are assumed to be interchangeable and divisible too.
In simpler words, these are types of cryptographic tokens that are basically identical or uniform and can be interchanged with other fungible tokens of the same type without any issues. Such tokens relate to the things we use every day, and it applies to real-world well as digital assets.
Non-Fungible Tokens
Non-fungible tokens are special tokens that represent unique, collectible items. They are unique in the sense that they cannot be split or exactly changed for other non-fungible tokens of the same type. You can consider NFTs as tokens with no fungibility that offer a variety of unique opportunities for using blockchain technology. Crypto Kitties is the most popular example of non-fungible, collectible tokens.
Every CryptoKitty is unique, and no two CryptoKitties are the same; these are impracticable to break a CryptoKitty into smaller pieces, trade them, and reassemble them to create an equally valuable CryptoKitty, unlike fungible assets like CET.
The concepts of fungible vs nonfungible tokens are rather old in economics. Coin-like objects were traded as far back as the Roman Empire, apparently as tokens for brothels or gaming. In Medieval times, tokens called “Abbot’s money” were used by English monasteries to pay for services provided by foreigners.
Between the 17th and 19th centuries, merchants trading in the British Isles and North America regularly used fungible tokens — they represented a pledge redeemable for goods in times when state coins were scarce.
Fast-forwarding to more recent times, arcade games and casino slot machines started using fungible tokens interchangeable with money. Other such tokens get used in services like car washes, parking garages or public telephone booths.
In the crypto era, the concept of tokens remains the same: the representation of something tangible (physical) or intangible (non-physical, i.e., a service) within its ecosystem.
What is the difference between Fungible and non-Fungible
Now, as we have understood what the two types of tokens are, let’s understand the fundamental differences between the two.
Fungible are Interchangeable
As we already mentioned, such tokens are interchangeable and can be exchanged with any other token of the equivalent kind. For example, fiat currencies are fungible. For example, $50 notes are interchangeable with other $50 notes. Similarly, one Bitcoin value can be exchanged with other Bitcoin, which makes no difference for holders.
Non-Fungible are Non-Interchangeable
Unlike Fungible tokens, such tokens are non-interchangeable as they cannot be replaced with the non-fungible token of the same type.
Fungible Tokens are Divisible
These tokens can be divisible into smaller units, and one can get any number of units, and it does not matter to holders as long as the value remains the same.
Non-Fungible Tokens are Non-Divisible
These tokens cannot be divided in any sense.
Fungible Tokens are Uniform
Each token is different from all other tokens of the same type.
Non-Fungible Ones are Unique
All tokens of each type are identical in specification, and each token is identical to each other.
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