Tokens are all around us. You may not have realized this because we do not call them that. We have been taking them for granted because of how common they are. People are renewing their interests in understanding token economics because of blockchain technology. Tokens play an important role in human to human socio-economic exchange.

What are Non-Fungible Tokens?

In simple words, non-fungible tokens are unique, not interchangeable and non-divisible. They are the same as real world objects like cars. The main difference is that they live on the blockchain.

The blockchain stores the address of each non-fungible token. Its value lies in the eye of the beholder. For example, your smartphone is a form of non-fungible token. However, the blockchain does not store its certificate of ownership yet. Still you can prove your ownership because you’ve a receipt from the store where you purchased it.

Although, you can bet that many consumer electronics devices in the future will store ownership certificates and related tokens on the blockchain.

Only the owner can replicate a non-fungible token. Almost all real world utilities are a form of non-fungible tokens. Devices, machines, artworks, intellectual property etc. are all non-fungible tokens. Most if it is not on the blockchain yet. In fact, this is what the ‘tokenization’ of everything looks like.

The vision is to put everything real on the blockchain and trade them 24/7. As and when owners need to buy and sell different items. There are ways to realize this vision.

Non-fungible tokens will revolutionize trading and commerce as we know it.

What are Fungible Tokens?

Tokens that are the same as one another are fungible. For example, let’s come back to our currencies. Each dollar or pound or rupee or any other currency is exactly the same in value as the other. A unit of currency does not change its value. There is a reason why we need them. Most of our thoughts are about money. Money is one of the main reasons why we get up in the morning. All of us know that.

One bitcoin’s value is the same as another bitcoin’s value irrespective of the circumstances of its usage. This property of money and tokens help us to understand money as a form of social technology. All cryptocurrencies are fungible tokens.

Although their market value fluctuates every second depending on how people are buying and selling them as investment or securities, each one of them is worth the same as the other. Thought like that, all generated electricity is a form of fungible token because your electricity is the same as others’, although costs vary depending on source and place.

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