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Highlights
- CryptoPunks are NFTs, but Leonardo da Vinci's Mona Lisa is just non-fungible
- All cryptocurrencies are fungible, which means they are a part of some homogeneous group
- Facebook’s metaverse may give a boost to blockchain gaming and NFTs
The debate around fungible and non-fungible started after non-fungible tokens (NFTs) gained traction this year.
It may be a mistake to look at this debate through the lens of cryptocurrencies vs. NFTs alone.
First, the latter are 'non-fungible', and second, each such token claims to have some unique attribute/s and is not interchangeable with any other token. For example, CryptoPunk is an NFT project with 10,000 unique characters and no single character is said to be exactly identical to any other. Similarly, every Axie character within the Axie Infinity blockchain-based game is unique.
Also read: Is Bitcoin better than gold as hedge against high inflation?
Crypto tokens are indeed fungible because any crypto token's unit is essentially a part of a homogeneous group, and one such unit is exactly identical to the other. All BTCs or DOGEs, for example, are identical.
Is everything non-fungible an NFT?
Anything that is 'non-fungible' is not necessarily an NFT.
NFTs are underpinned by blockchain, and this is their biggest appeal in the world of collectibles. Leonardo da Vinci's Mona Lisa is non-fungible as it is not identical to anything and is not a part of any homogeneous group. But Mona Lisa is not NFT, at least for now. If its ownership is someday registered on blockchain, it would then become an NFT.
The blockchain-based ownership of artwork as NFT is evolving. Every NFT is non-fungible, but not all non-fungible things are NFTs.
Also read: Top 5 most expensive NFTs ever sold including CryptoPunks
Are NFTs good investments?
As of now, NFTs are one of the most popular things with blockchain underpinning. How can you know if someone claiming to be the real owner of Mona Lisa is truly genuine? It could have been possible had the ownership been registered on blockchain, which can make it peer-to-peer reviewed and immutable.
That’s the idea on which NFTs are thriving. In March 2021, an artwork, Everydays; the First 5000 Days, by Beeple sold for over US$69 million in a Christie’s auction. A number of characters by Larva Labs, known as CryptoPunks, have also sold for millions of dollars each as NFTs.
Even Jack Dorsey’s first tweet has now sold as an NFT for nearly US$2.9.
Also read: What are DeFi games & which are the most popular DeFi games?
NFTs aren’t just restricted to digital artworks. The popular blockchain-based game, Axie Infinity, has its characters as NFTs, and the native altcoin AXS has returned jaw-dropping profits to its backers in 2021. It is being speculated that the entry of Facebook into metaverse will create more competition and can boost the blockchain gaming and associated NFT world.
Bottom line
Fungible is something that is not one-of-its-kind. Non-fungible is always one-of-its-kind, and it cannot be interchanged with anything that is even closely linked to it. NFTs are mandatorily non-fungible. But not all non-fungibles like paintings by Leonardo da Vinci or an original letter written by some king is NFT. It has so far been a year of NFTs as many of these have sold for millions of dollars.
