Token is a digital asset that can be easily transferred between peers in a blockchain network. Though the primary use of tokens is to serve as the currency for the network, it can also be used to give access to certain services on the platform.
According to the Merriam-Webster dictionary, a token is “a small piece of metal, plastic, or paper that is used for showing that something has been paid or given to someone.” Using this definition one can say, tokens are a payment method for services rendered. They are used to pay for goods or services, not just in the cryptocurrency world but also in the real one.
Tokens are basically coins that have the same functionalities as Ether. They are a representation of value and can be sent on the Ethereum Blockchain. They are not stored in wallets, but are kept in what is known as a “Contract”, which is basically just a list of addresses with their balances.
Tokens are created and distributed by companies, organizations, and individuals to incentivize certain behaviors. For example, crowdfunding platforms issue tokens that can be redeemed for products or services on the platform. Other applications include loyalty programs and vouchers, event tickets, licenses, memberships, in-game items and points, coupons and more.
In this article, we’ll discuss fungible and non-fungible tokens, the difference between fungible and non-fungible tokens, and how you can create non-fungible tokens. What are Fungible Tokens?
Fungible tokens represent a way to exchange one good for another of the same category. For example, if you have a dollar bill, you can exchange that dollar for another dollar bill of the same value. Fungibility is based on the idea that any item can be substituted for another of the same type without any loss in value.
The most common example of fungible cryptocurrencies is bitcoin. Bitcoins can be easily exchanged for each other without any loss in value. Bitcoin’s anonymity also makes it highly fungible as it is hard to track transactions and prove ownership of specific bitcoins. Listed here are the benefits of fungible tokens.
· Allows for a decentralized currency system, as there is no central authority that issues the coins
· Transactions are easy to process because they can be done through a centralized platform or blockchain system with minimal involvement from third parties
· The system is resistant to fraud because one token cannot be distinguished from others What are Non-Fungible Tokens?
Non-fungible tokens are tokens that are unique. They can be sold, traded, or transferred independently from other NFTs, meaning that they have a different value from one another.
Similar to fungible tokens, non-fungible currencies can also be exchanged for services offered by third parties or used as a payment method in certain stores. However, they are not interchangeable with other coins of the same value. Listed here are the benefits of non-fungible tokens.
· Enables the creation of digital assets for use in games or other virtual worlds. These assets cannot be counterfeited because they are unique to each user, making them highly valuable to their owners and reducing fraud risks within the system
· Allows for the creation of decentralized organizations as users can own shares in a company but cannot transfer their ownership rights to other people. This ensures that shares cannot be sold multiple times or transferred between individuals without approval from a centralized authority, such as an organization’s management team or board members Difference between Fungible Tokens and Non-Fungible Tokens
Fungible and non-fungible tokens are two different token types that are used for different functionalities in the blockchain. The main variance between fungible and non-fungible tokens is the nature of each. Both are distinct and cannot be swapped with another of the same kind.
However, fungible is a quality of a commodity or product that allows it to replace others of the same value or kind. For example, a dollar bill is fungible because it can be replaced by another dollar bill of the same value or kind. On the other hand, non-fungible is the opposite of fungible because it cannot be replaced by another of its own kind. For example, your identity is non-fungible because you cannot replace it with another person’s identity. How to create Non-Fungible Tokens (NFTs)?
With Appy Pie NFT Generator, you can create NFTs without any coding or designing skills. Follow the steps below to make your NFT collection easily and efficiently.
1. Select an NFT design
Choose your desired NFT template from the wide library
2. Customize your NFT
Change the look and feel of your NFT to make it unique
3. Export and sell your NFT
Download the NFT in your preferred format and sell it online Conclusion
Although both fungible and non-fungible tokens make use of blockchain technology, they have different uses and applications in the real world. Understanding these differences will help you decide whether you want to use fungible or non-fungible tokens in your project, as well as whether you want to use blockchain technology at all.