Fungibility

Fungibility is the property of an asset whose units are interchangeable, so that any one unit functions and is valued exactly like any other. Cash is fungible: one ten-euro note substitutes perfectly for another. Most cryptocurrencies are designed the same way, which is why one unit of a token is treated as equal to any other unit of it. Non-fungible assets, by contrast, are individually distinguishable, which is what NFTs represent on chain. Fungibility can weaken in practice. Because public blockchains keep permanent transaction histories, analytics firms and exchanges can flag coins that passed through sanctioned or stolen-funds addresses, so technically identical units may be treated differently by counterparties even though the protocol itself makes no distinction.