Nonfungible

Nonfungible, often written as non-fungible, describes assets that are not interchangeable on a one-to-one basis because each unit has distinct properties or values. By contrast, fungible assets such as money or bulk commodities are interchangeable, with each unit considered equivalent to every other. The concept is used in economics to distinguish holdings where identity, attributes, or provenance matter for value.

In digital and token-based contexts, nonfungible assets are frequently discussed as nonfungible tokens (NFTs). An NFT is a cryptographic token on a blockchain that represents a unique item or asset. The token’s metadata and the blockchain record provide evidence of ownership and provenance, while the underlying asset can be digital (such as art, music, or in-game items) or a representation of a real-world asset.

Properties and implications of nonfungible assets include uniqueness, scarcity, and traceable provenance. Valuation tends to be idiosyncratic, influenced by factors such as rarity, utility, creator reputation, cultural significance, and market demand. Ownership transfer and rights are typically secured by the token and associated legal or contractual arrangements.

Limitations and considerations include the potential for mislabeling or counterfeit claims, regulatory variability across jurisdictions, and market volatility. Some nonfungible markets raise environmental concerns when they rely on energy-intensive blockchain technologies. Despite these issues, nonfungible assets enable distinct ownership and traceability in both digital and real-world contexts.