Crypto 101: What Are Semi-Fungible Tokens?

Crypto Token

The rise of Non-Fungible Tokens has increased the interest in fungibility in the last few years. Over the last 12 months, the sales of NFTs surged to over $49 million. Within the first quarter of its introduction, the buying and selling of these tokens grew day by day by millions. 

This has led to the growth of different tokens, including semi-fungible tokens. However, what are they really, and what do they do?

Fungible Tokens

For you to understand the aspects behind semi-fungible tokens, you have to understand Fungible Tokens. 

Fungible Tokens are any crypto belongings that are simply interchangeable without either party being better than the other or suffering losses. Therefore, there is no distinction between two Ethers or Bitcoins. 

Other fungible tokens include cash such as US dollars. Being fungible means simply being changeable with similar tokens or different without leading to no change in worth. 

Non-Fungible Tokens 

On the other hand, Non-Fungible Tokens are collectibles made of highly innovative artworks, digital property, soundtracks, etc. The worth of a Non- Fungible Tokens is dependent on its special features, rarity, the developer, and the blockchain it’s developed on. 

This means that you cannot exchange an SFT token the same way dollars can be exchanged. Each NFT has the following traits: 

  • Indivisible
  • Indestructible 
  • Immutable
  • Verifiable 

What Are Semi-Fungible Tokens?

This is the newest entity in the family of fungible and NFTs. In their lifecycle, semi-fungible tokens can become either fungible or non-fungible throughout their lifecycle. 

Similar to fungible tokens, SFT can be traded for like tokens of the same equivalence. On the contrary, semi-fungible tokens can be redeemed. However, once they lose their worth, they become fungible. 

In simple terms, this can similarly be understood as Yugioh playing cards. At one time, they had grown tremendously, but once the game became popular, they now act as important memories. Additionally, others have a completely new worth. 

Therefore, SFT get their worth through the transition from fungible to non-fungible tokens. 

How to Create Semi-Fungible Tokens?

The best way to create Semi-fungible tokens is to mint them through Ethereum’s ERC-1155 standard. Ethereum’s ERC-1155 standard is one of the blueprints available on the Ethereum blockchain and is compatible with other ERC projects. 

The ERC-1155 standard offers you a combination of the ERC-20 (fungible token) and ERC-721 (non-fungible token) traits. This has made it simple to manage both entities on a single, smart contract blockchain. 

How Do You Use Semi-Fungible Tokens ?

SFTs are mostly useful in the crypto gaming entities that use fungible elements such as in-game currency like gold bars. It can also be used in the gaming industry, where non-fungible items like weapons are utilized. 

In that sense, they help gamers interchangeably trade both types of tokens. For instance, it gives games the ability to trade weapons for gold bars. 

Simply Interchangeable!

Semi Fungible tokens are the newest crypto valuables in the Fungible and Non-Fungible families. They have the ability to be both Fungible and Non-fungible through their life cycle. 

Additionally, they are similar to fungible tokens such that they can be traded for identical SFTs. You can create an NFT by using Ethereum’s ERC-1155 standard. 

Once created, SFTs are mostly useful in the gaming world. They allow gamers to be able to trade fungible tokens and non-Fungible ones. In simple terms, it’s way easier to trade weapons and gold bars now since the launch of SFTs.