How Does True Fungibility Benefit a Currency?
True fungibility is a fundamental property of sound money. It ensures that every unit of the currency is accepted equally, regardless of its history.
This prevents discrimination against specific units, which is essential for a liquid and efficient market. In the context of crypto, it means a coin's value is purely based on market dynamics, not its past transactions, enhancing its role as a medium of exchange.
Glossar
True Fungibility
Equivalence ⎊ True fungibility, within the context of cryptocurrency, options, and derivatives, signifies an absolute interchangeability of assets, irrespective of origin or specific attributes.
Fungibility
Definition ⎊ Fungibility is the economic characteristic where individual units of an asset are perfectly interchangeable because they carry the same intrinsic value and utility regardless of prior history.
Lack of Fungibility
Differentiation ⎊ Lack of fungibility within cryptocurrency, options, and derivatives stems from inherent distinctions between nominally identical assets, impacting market efficiency and pricing mechanisms.
Currency
Definition ⎊ Currency, in this financial context, represents a medium of exchange, store of value, or unit of account, encompassing both fiat denominations and decentralized digital assets.