What Are Non-fungible Assets?

Fungibility, essentially whether something is unique or not, is an important part of a digital asset’s identity, and can define what roles they are able to take on. In the crypto space, this term is most commonly used in reference to NFTs. Here, the phrase “non-fungible” refers to a single indivisible object – the NFT. Unlike in other cases where the word “token” refers to the actual digital asset or contract, the "token" in NFT refers to the one and only indivisible digital item. 

Non-fungible assets (NFAs) are different from NFTs in several important ways. The term describes non-fungibility within a collection of similar assets being issued by a single party. They differ from NFTs in two very important ways.

1. Only a single entity besides the issuer is allowed to hold units of this asset. 

2. The identity of the entity that is associated with the asset cannot be changed. The asset and the identity of the entity for which it has been issued form an unbreakable bond.

So NFAs differ from NFTs in who can hold them (one authorized entity), and the fact that they can represent more than one “item.” For specific businesses, this is a game-changer. Storage certificates, for example, can now be issued securely to clients without the risk of manipulation. They can also work in the role of an accounting token. NFAs also have use cases like making correspondence banking possible on a blockchain, as the technology ensures a 100% safe and compliant conversion of values from each customer account (which is implemented as its own distinguished digital asset, which only the customer can hold) to the destination account.

Author:

Johannes Schweifer is the CEO of CoreLedger, a company empowering businesses of all sizes to access the benefits of blockchain technology. Schweifer co-founded several blockchain start-ups, including Bitcoin Suisse. He’s a passionate problem-solver, holding a master’s degree in Chemistry and a Ph.D. in distributed computing and quantum chemistry.