Q. With reference to fungible and non-fungible assets, consider the following statements:
1. A fungible asset can be readily interchanged.
2. A non-fungible asset can also contain smart contracts.
Which of the statements given above is/are correct?
Both statements are correct.
What are Fungible and Non-Fungible assets?
- A fungible asset is something that can be readily interchanged like money. With money, you can swap a £10 note for two £5 notes, and it will have the same value.
- On the other hand, a non-fungible asset means it has unique properties which cannot be interchanged with something else. Example: It could be a painting that is one of a kind. You can take a photo of the painting or buy a print, but there will only ever be one original painting.
What are Non-Fungible Tokens(NFTs)?
- Non-Fungible Tokens(NFTs) are unique cryptographic tokens that exist on a blockchain and cannot be replicated.
- They are one-of-a-kind assets in the digital world that can be bought and sold like any other piece of property, but they have no tangible form of their own.
- The digital tokens can be thought of as certificates of ownership for virtual or physical assets.
- NFTs can also contain smart contracts that can solve the problems of provenance and duplication of the art.