What is fungible meaning? An asset is considered fungible when its units are interchangeable with one another, meaning they are indistinguishable. An asset class is fungible when each unit of the asset has the same validity and market value. Examples of fungible asset classes are commodities, fiat currencies (money), precious metals, and cryptocurrencies.
Note that an equal exchange of a fungible asset does not necessarily mean exchanging of two identical units. As long as the transaction happens between instruments of the same kind and that share the same functionality, it can be considered as an equal exchange. For example, a five-dollar bill can be exchanged with five one-dollar bills, but they have the same validity. In this case, the US dollar is the fungible asset, while the bills merely represent their underlying value.
Most cryptocurrencies are considered fungible assets. Bitcoin is fungible because one unit of BTC is equivalent to another unit of BTC, regardless of in which block the coin was mined. On the contrary, non-fungible tokens (NFTs) are inherently unique and you cannot trade one NFT for another equally, even though they may look the same.
In conclusion, fungible meaning refers to assets that are interchangeable with one another, making them indistinguishable. You can trade fungible assets with one another.
