Fungible Tokens Vs. Non-Fungible Tokens

The Difference Between ERC-20 and ERC-721 and Other Types of Fungible and Non-Fungible Cryptocurrency Tokens

Fungible tokens, like ERC-20 tokens, are interchangeable, divisible, and identical tokens that are useful as monies. Meanwhile, non-fungible tokens, like ERC-721 tokens, are not interchangeable, unique, and not divisible that are useful as collectables.^[1]

So, for example, a virtual US dollar would be fungible and a virtual Mona Lisa would be non-fungible.

There are many US dollars which are all equivalent and can be broken down into pieces (4 quarters is the same as $1, and $1 is the same as 10 dimes, and their value doesn’t depend on if they were printed in 1997 or 1987, etc), they are fungible.

There is only one Mona Lisa, it is a unique work of art, it can’t be broken down or reprinted and retain value, it is not interchangeable for another Mona Lisa, it is unique, it is not divisible… it is non-fungible.

In the Ethereum network ERC-20 tokens are a popular standard for fungible tokens (ex. ETH and ZRX) and ERC-721 tokens are a popular standard for non-fungible tokens (ex. kitties in CryptoKitties and cards in Gods Unchained).

Each token type can be kept in an Ethereum-based wallet suited for that token type, and each token type can have value affected by demand for it in a market, but fundamentally each token type is different in terms of qualities like interchangeability, uniqueness, and divisibility.

1. Fungible vs non-fungible tokens on the blockchain. Medium.com.