What is the meaning of fungibility?

Fungibility refers only to the equivalence and indistinguishability of each unit of a commodity with other units of the same commodity, and not to the exchange of one commodity for another. The word fungibility comes from the Latin fungibilis, from the verb fungī, meaning "to perform", via phrases such as fungi vice, meaning "serve in place of".

What are the key takeaways of fungibility?

Key Takeaways. Fungibility is the ability of a good or asset to be interchanged for another good or asset of like kind. Like goods and assets that are not interchangeable, such as owned cars and houses, are non-fungible.

What is the difference between fungibility and liquidity?

Fungilibity vs. liquidity. Fungibility is not the same as liquidity. If something can be easily exchanged for money or another good it is liquid. Something is fungible if one unit of that product is substantially equivalent to another unit of the same product that has the same quality at a specific time and place.

What is a fungible asset?

Although fungibility is commonly associated with finance, it is also found in other disciplines, such as quantum physics. Although cryptocurrencies are generally considered fungible assets, some are unique and not interchangeable (e.g., non-fungible tokens [NFT]). Another example of a fungible asset is money.