There are plenty of terms confusing for newcomers when it comes to cryptocurrencies. One word, for instance, often misunderstood is "fungible." Many people think that all cryptocurrencies are fungible, but this is not the case. This blog post will define the term "semi-fungible" and explain how it applies to cryptocurrencies. We will also discuss why semi-fungible tokens are becoming more popular and why they can change the way we use blockchain technology.
A cryptocurrency is fungible if every unit of the currency is interchangeable. For example, if you have one bitcoin and someone else has another bitcoin, both are worth the same amount. Therefore, they can be exchanged for each other without any penalty. Conversely, a cryptocurrency is non-fungible if every unit of the currency is not interchangeable. An example of a non-fungible cryptocurrency would be Bitcoin Cash (BCH). If you have one BCH and someone else has another BCH, they are not worth the same amount. They may even be worth different amounts on different exchanges.
A semi-fungible crypto token is a digital asset that is fungible in some ways and non-fungible in others. For example, let's say you have a semi-fungible token called CryptoKitty. Each CryptoKitty has an ID number, making it unique. This means that if you have one CryptoKitty with the ID number "12345" and another CryptoKitty with the same ID number belonging to someone else, they are not interchangeable, as they both share the same attributes (e.g., color). However, these two tokens may still be worth different amounts due to market demand or scarcity of supply at any given time, making them fungible in terms of value but non-fungible in terms of attributes.
Two top reasons to use a semi-fungible crypto token:
Semi-fungible tokens are still relatively new, but they have the potential to change the way we use blockchain technology. For example, these tokens get famous. A time comes when all cryptocurrencies are semi-fungible because each unit of currency will have its unique digital asset on a distributed ledger like Ethereum or EOSio.
This makes it easier to exchange cryptocurrencies for goods and services, leading to new decentralized applications that use blockchain technology.