Fungibility

In economics and law, fungibility is the property of something whose individual units are considered fundamentally interchangeable with each other. For example, the fungibility of money means that a $100 bill (note) is considered entirely equivalent to another $100 bill, or to twenty $5 bills and so on, and therefore a person who borrows $100 in the form of a $100 bill can repay the money with another $100 bill, with twenty $5 bills and so on. Non-fungible items are not considered substitutable in the same manner, even if essentially identical. Fungibility is an important concept in finance and commerce, where financial securities, currencies and physical commodities such as gold and oil are normally considered fungible. Fungibility affects how legal rights, such as the ownership of assets in custody and the right to receive goods under a contract, apply in certain circumstances, and it thereby simplifies trading and custody. Fungibility refers only to the equivalence and indistinguishability of each unit of a commodity or other thing with other units of the same thing, and not to the ability to easily trade it for something else or the equivalence of two things in value.