Fungible vs Non-Fungible Tokens: Explained

The words “fungible” and “non-fungible” get thrown around a lot in crypto. But understanding what they mean—and how tokens work across different blockchains—can help you invest, build, and store your assets more safely. This guide breaks it down with today’s standards, cross-chain nuances, and 2025-relevant context.

What “fungible” and “non-fungible” mean

• Fungible tokens are interchangeable. Each unit is identical and divisible, just like dollars or liters of gasoline. Most cryptocurrencies and stablecoins fall into this category.
• Non-fungible tokens (NFTs) are unique. Each token has distinct attributes and provenance, like a digital collectible, ticket, or credential.

On Ethereum, fungible tokens usually follow the ERC‑20 standard, while NFTs commonly use ERC‑721. Some collections—especially in gaming—use ERC‑1155 to combine both fungible and non-fungible items in one contract.

• ERC‑20: fungible tokens such as governance tokens and stablecoins. See the specification in the official EIP‑20.
• ERC‑721: unique tokens for collectibles, tickets, identity, and more. Spec: EIP‑721.
• ERC‑1155: multi-token standard that supports both fungible and non-fungible items with batch transfers and reduced gas. Spec: EIP‑1155.

New to NFTs on Ethereum? The community guide on ethereum.org is a great primer.

Beyond Ethereum: other chains and token models

• Solana uses SPL programs for both fungible tokens and NFTs. Developers typically work with the SPL Token Program and metadata standards in the broader Solana ecosystem.
• Bitcoin does not have smart contracts in the same way, but inscriptions and “Ordinals” introduced a method of attaching data to individual satoshis, enabling NFT‑like artifacts on Bitcoin. For a technical overview, see the Bitcoin Optech topic on Ordinals and inscriptions.

These models differ in how they represent identity, store metadata, and handle transfers and royalties. If you bridge assets or trade across chains, confirm the standard your wallet or marketplace supports.

How token standards actually affect users

• Interchangeability and pricing: ERC‑20 tokens pool liquidity across centralized and decentralized exchanges because every unit is the same. NFTs price each token individually or by collection traits.
• Metadata and permanence: Many NFTs store media off-chain. It’s best practice to use content-addressed storage such as IPFS or archival storage like Arweave, so the asset remains accessible even if a server goes down.
• Fees and batching: ERC‑1155 can batch-mint and transfer items, reducing gas for large drops and game inventories compared to ERC‑721.

What’s new and why it matters in 2025

• Cheaper L2 activity after EIP‑4844: Ethereum’s Dencun upgrade brought blob-carrying transactions that have reduced costs on rollups, making high‑volume NFT and gaming use cases far more practical. See the Ethereum Foundation’s writeup on Dencun on mainnet.
• RWAs meet fungible tokens: Tokenization of real-world assets continues to gain traction for on-chain liquidity and settlement. Major institutions are experimenting with tokenized funds on public chains, reinforcing the value of fungible token standards for compliance‑aware finance. For broader context on institutional tokenization, see the IMF’s analysis of tokenization in financial markets.
• NFTs evolve from art to utility: Beyond collectibles, teams are issuing tickets, memberships, loyalty points, and in-game assets. The flexibility of ERC‑1155 and dynamic metadata techniques are expanding what “ownership” can do programmatically. Explore NFT use cases on ethereum.org.

How to evaluate a token before you buy or build

• Standard and chain: Is it ERC‑20, ERC‑721, or ERC‑1155? SPL? Ordinals? This determines wallet compatibility, fees, and marketplace support.
• Contract quality: Verify the contract address on a block explorer. Read the source if verified, and review minting and transfer logic.
• Metadata hosting: Prefer IPFS or Arweave to avoid reliance on a single server that could disappear.
• Royalties and permissions: Understand whether royalties are enforced on-chain or at the marketplace layer, and check what approvals you’re granting.
• Custody and security: Use wallets that clearly display human‑readable transactions and support typed data so you know what you’re signing.

For typed structured data, Ethereum’s EIP‑712 helps wallets show readable messages for approvals like Permit and SetApprovalForAll.

Common risks and how to stay safe

• Malicious approvals: Attackers often trick users into granting unlimited token or NFT approvals. Periodically review and revoke unused permissions using reputable tools, and follow best practices from the Ethereum community’s security guidance.
• Phishing: Double‑check URLs, never sign blind messages, and verify collection contract addresses before purchasing.
• Bridge risk: Moving tokens across chains introduces smart contract and operational risk. Only bridge what you can afford to risk and stick to well‑audited protocols.

You can also learn the basics of approvals and revoking allowances via the educational resources at Revoke.cash Learn.

Custody: matching your token type with the right setup

• Everyday payments and low‑value holdings: A mobile wallet may be sufficient.
• High‑value fungible tokens and NFTs: Consider a hardware wallet for offline private keys, and use a separate hot wallet for daily interactions.

If you frequently mint NFTs, sign listings, or manage ERC‑20 treasury funds, a wallet that supports clear signing and broad token standards can reduce mistakes. OneKey hardware wallets are open‑source, support major chains like Ethereum and Solana, and display human‑readable details for common transactions and EIP‑712 typed messages—useful when approving NFT marketplace actions or ERC‑20 allowances. This combination of offline key storage and clear signing helps you avoid dangerous approvals while keeping ownership under your control.

Quick FAQ

• Are ERC‑20 tokens always currencies? Not necessarily. Many represent governance, points, or utility credits, but they remain fungible by design.
• Can NFTs be semi‑fungible? Yes. ERC‑1155 lets you define classes of items where multiple copies exist, blending fungible and non‑fungible behavior.
• Do NFTs store the image on-chain? Usually no. The token points to metadata that references media, ideally via IPFS or Arweave for persistence.

Bottom line

Fungible tokens excel at liquidity and interchangeability, while non‑fungible tokens unlock uniqueness, provenance, and programmable ownership. Understanding the standards—ERC‑20, ERC‑721, and ERC‑1155—and how they appear across Ethereum, Solana, and even Bitcoin’s inscriptions will make you a smarter trader, builder, and custodian. As costs drop on rollups and tokenization grows, choosing the right custody setup and practicing safe approvals matter more than ever. If you secure significant holdings or sign transactions regularly, a OneKey hardware wallet can add a robust layer of offline protection and clear signing to your workflow.