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Fungible tokens are digital assets that are interchangeable and identical to one another. They are mutually interchangeable on a one-to-one basis, meaning that each token is indistinguishable from another token of the same type. Fungible tokens are divisible, meaning they can be broken down into smaller units without affecting their value. Examples of fungible tokens include cryptocurrencies like Bitcoin (BTC) and Ethereum (ETH), where each unit holds the same value as any other unit of the same token.

Key characteristics of fungible tokens:

1. Interchangeability: Each token is equal in value and can be exchanged with another token of the same type.

2. Divisibility: Fungible tokens can be divided into smaller units, and each unit is still worth the same.

3. Indistinguishability: There are no unique properties or attributes that differentiate one token from another.

Non-Fungible Tokens (NFTs):

Non-Fungible Tokens (NFTs) are digital assets that are unique and cannot be exchanged on a one-to-one basis. Each NFT has distinct properties, attributes, or characteristics that set it apart from other tokens. NFTs represent ownership or access to a specific item, artwork, collectible, or digital asset. These assets can be anything from digital art and music to virtual real estate and in-game items. NFTs utilize blockchain technology to establish provenance, ownership, and authenticity of these digital assets.

Key characteristics of non-fungible tokens:

1. Uniqueness: Each NFT is distinct and has its own set of properties or attributes that differentiate it from other tokens.

2. Indivisibility: NFTs are not divisible like fungible tokens. They cannot be broken down into smaller units without affecting their value.

3. Ownership and provenance: NFTs enable the establishment of ownership and the tracking of ownership history through the blockchain.

The fundamental difference between fungible and non-fungible tokens lies in their interchangeability and uniqueness. Fungible tokens are interchangeable and identical, while non-fungible tokens are unique and represent specific digital assets with distinct properties. The rise of NFTs has revolutionized the digital economy by allowing ownership and transferability of unique digital items, opening up new possibilities for creators, collectors, and investors.