Fungibility occurs when goods can always be identified according to certain properties and are interchangeable
Cryptocurrency is not synonymous with crypto money
NFTs are digital assets that are not readily interchangeable or substitutable
The terms fungibility and tokens
In order to understand the difference between Bitcoin, other cryptocurrencies (fungible tokens) such as Mooncoin, Tether and NFT (non-fungible tokens), it is important to first clarify the terms fungibility and token. Blockchainwelt website refers to tokens as “a cryptocurrency built on top of an existing blockchain or protocol.” These usually represent an asset or utility. The most commonly used blockchain is Ethereum.
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In the Gabler business dictionary, Prof. Dr. Wolfgang Breuer and colleagues define the concept of fungibility as “a property of goods, currency and securities, e.g. to be determinable by size, number or weight and to be exchangeable or interchangeable without further ado.” According to btc-echo, fungibility is present when “one gram of pure gold […] is worth as much as another gram of pure gold”. In a guest article for the stock exchange portal Focus Money, the Bitcoin expert Jrg Hermsdorf emphasizes that currencies should be fungible in order to ensure an efficient exchange process and an efficient profitability calculation.
Cryptocurrencies and Crypto Money
According to CoinMarketCap, there are now over 15,000 different cryptocurrencies. However, many just copy the elements of Bitcoin. According to Jrg Hermsdorf, the goal is usually not to create better money, just an alternative currency. The variety is also greater in cryptocurrencies than in cryptocurrency. Hermsdorf emphasizes that this makes trading and speculation much more risky and confusing.
For speculation with crypto money, it is crucial that the basic money amount M0 is replaced by crypto money like Bitcoin. This amount of basic money is currently mainly managed by a small group of central banks. If this does not succeed, according to von Hermsdorf, fiat money will continue to dominate in the 21st century.
Regarding cryptocurrency speculation, the question arises as to which of the technologies has the greatest potential for sight deposits, quasi-money, credit money, etc. According to Hermsdorf, cryptocurrencies are more volatile and uncertain than cryptocurrency. Although some people have become millionaires trading cryptocurrencies, just as many have lost their profits.
NFTs express individual values
NFTs (non-fungible tokens) are digital assets that are not exchangeable or replaceable. According to Hermsdorf, non-fungible assets can be used to express individual values and make them visible to other people. Things often have historical or emotional value. Like most cryptocurrencies, NFTs are based on a blockchain. This means that current and historical ownership can be clearly assigned. Hermsdorf also points to a wide range of possible applications in connection with NFTs. In addition to digital works of art and pieces of music, there are also items from computer games, such as new shoes for your own Fortnite avatar. According to Hermsdorf, however, the current hype masks the conceptual limitations of NFTs.
Is Bitcoin Cryptocurrency?
The Bitcoin was developed in 2009 and declared by the inventor Satoshi Nakamoto as an electronic cash system. Hermsdorf points out that the term cash can have different meanings. On the one hand, cash can be the generally accepted means of payment. On the other hand, the designation can mean that transactions are finally concluded by paying with cash and there is no longer any counterparty risk for the cash recipient.
Bitcoin can be used as a means of payment or as a store of value. Due to the variety of payment methods in the western world, Bitcoin is used here more as a store of value. However, there are also countries in which Bitcoin is the only available electronic means of payment, according to the expert Hermsdorf. Depending on your perspective, Bitcoin can be crypto money, a crypto asset or a crypto currency. In the meantime, not only companies and investors are investing in Bitcoin, but also the first states, which means that the national currency monopoly is increasingly taking a back seat.
M. Wieser / Editor finanzen.net
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