And in the case of ERC-1155 semi-fungible tokens (SFTs), you can substitute them for others of the same type but they still each can't be divided. They're whole, irreducible units.
For both NFTs and SFTs, I think the non-divisibility is an important component to understanding what they are. There's no "smaller denomination" of each asset in the way that Ethereum can be divided arbitrarily until you reach the minimum "wei" unit.
You're right that non-divisibility isn't a sufficient condition to be non-fungible (as with SFTs), but the way I interpreted your first sentence made it seem like it was an orthogonal condition rather than a necessary and central one. (At least for cryptocurrency assets.)
For example, with NFTs, you could make a DAO that pools together capital to purchase an NFT and can trade their share of ownership of the NFT on the open market.
Actually, come to think of it, maybe that's a great idea. If people ask questions about NFTs, they might start asking more questions about intellectual property as well, and ultimately about property rights in general. In a sense, NFT is the ultimate absentee property - it's impossible to use or occupy. It's a title to itself.
Someone pushing for intellectual property maximalism might see in NFTs a technical counterpart to the legal monopoly on the ownership of digital information. Why not encode the ownership of a copy of the newest game as a NFT, and then have the console check at startup? And similarlines of thought that I don't have the imagination to consider.
Well, such validation would continue working for as long as the blockchain on which the tokens are checked is still running, as opposed to when the manufacturer takes down their DRM servers. But that's added convenience to the user; the manufacturer actually loses a degree of control, so I don't see why they'd go for it?
https://www.bloomberg.com/news/newsletters/2021-09-09/money-...
> Imagine writing the investment memo for “20% of a picture of a dog” and being like “the most we should pay is probably about $2 million because the whole picture of the dog sold for $4 million three months ago and it can’t realistically have appreciated more than 150% since then; even if the whole picture of the dog is worth, aggressively, $10 million, this share would be worth $2 milllion.”
> One model here is that everyone on earth wants to pay $4 million for a unique picture of a dog, so if you make one unique picture of a dog and sell it for $4 million you’ll get $4 million but if you cut it into 17 billion slices each one will sell for $4 million?
I'm struggling to think of something non-fungible which is divisable, but in any case I'm pretty sure NFTs are not divisable. It might be the case that non-fungible implies non-divisable but fungible things can be divisable or not.
An example: If I trade oil, one barrel of oil with a certain spec[1] is fungible with another barrel of oil with the same spec. If I sell you some oil you don't care which specific barrel you get as long as it's the same kind of thing. Likewise if you borrow 10 dollars from me you can pay me back with any combination of notes up to the value of 10 dollars, you don't have to give me back the specific bills I gave you.
On the other hand, things like art are not fungible. If I loan a Van Gogh to a gallery I very much want the same piece to be sent back to me after the exhibition is done. It's not ok for them to send me something else. Even if it's "sunflowers" (since Van Gogh painted a few of those and they are quite similar), I want the actual one I loaned to be sent back to me.
Normal bitcoins or ETH are fungible whereas NFTs are non-fungible. The specific one you have matters usually because it represents a digital proof of ownership of some specific resource (a bored ape or whatever).
[1] The spec for oil types standardises particular grades and then people trade a standard barrel size (called a bbl which is short for "blue barrel" because they used to be painted blue). "Brent" and "WTI" are different grades. A barrel of brent is fungible with another barrel of brent but not with a barrel of WTI because that's a different grade.