What Is the Fundamental Difference between Fungible and Non-Fungible Tokens in a Financial Context?

Fungible tokens, like ERC-20 stablecoins, are mutually interchangeable, meaning any one unit is identical in value and function to another. They are ideal for currencies, debt, and equity representations.

Non-fungible tokens (NFTs), like ERC-721, are unique and non-interchangeable, representing distinct assets such as a specific bond or a fractional share of real estate. This distinction dictates their use in financial products.