Definition
Fungible describes units that can substitute for one another without changing their nominal value or function. One unit of a standard fungible token generally represents the same type of claim or balance as another unit of that token. Fungibility is different from divisibility: an asset can be interchangeable even if it cannot be split into arbitrarily small pieces.
Blockchain Context
Fungible token systems commonly track account balances rather than treating each unit as a separately identified collectible. Token standards such as ERC-20 provide interfaces suited to this model. However, two tokens sharing a symbol are not necessarily the same asset; their contracts, issuers and networks may differ.
Key Considerations
Technical interchangeability does not guarantee equal treatment in every market or legal context. Transfer restrictions, issuer controls or transaction history may affect whether a party accepts particular assets. A fungible token also need not have a stable price, strong liquidity or reserve backing. The term describes the relationship between equivalent units, not the quality or investment merits of the asset.