Nonfungibility refers to the unique nature of an asset, where it cannot be exchanged for an equivalent asset in a one-to-one manner.
It means that the asset cannot be divided into smaller parts or interchanged with other similar assets, as each unit is distinct and holds its inherent value. Examples of nonfungible assets include art, collectibles, and digital tokens such as cryptocurrencies or virtual real estate.
Unlike fungible assets, like money or commodities, nonfungible assets hold a special meaning or significance that cannot be replicated or duplicated.
This characteristic is important in determining the value and scarcity of the asset, and thus the asset’s ability to hold its value over time.