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Why should we invest in Semi Fungible Crypto Token?

  • Pragya Soni
  • Nov 15, 2021
Why should we invest in Semi Fungible Crypto Token? title banner

We all have used coupons or vouchers at least once in our life. Here you can count a mobile recharging coupon or a gift voucher we receive at the time of festival. Have you noted how these coupons and vouchers are different from other forms of currencies? 

 

First thing is obviously their crypto nature, i.e., they are not a form of physical money. But still, they are way too different from a cryptocurrency. What are they referred to as? Well, this form of money is called a semi-fungible crypto token. Here are all the important terms related to it step by step.

 

Fungible Crypto Token and Non-Fungible Crypto Token
 

Earlier, there existed two types of cryptocurrencies. Fungible and Non-fungible token. First let us understand the difference between these two. 

 

Fungible crypto tokens

 

Fungible crypto tokens are the interchangeable currencies. The majority of crypto investors trade their money in fungible crypto. In normal words, fungible tokens are the money that can be replaced or interchanged with other tokens without any loss in between. For example, Ether and Bitcoin.

 

Non-fungible crypto tokens
 

Like Ether or US dollar, Non-fungible crypto tokens (NFTs) can’t be interchanged or replaced. Each currency in this category has a distinct characteristic. Non-fungible crypto is blockchain-based currency i.e., it is stored in a blockchain. Every non-fungible crypto token has following feature:

 

  1. Indivisible: NFTs are indivisible in nature. They can never be purchased in fractions.

 

  1. Indestructible: NFTs are indestructible in nature. It can’t be created or destroyed.

 

  1. Immutable: NFTs can’t be interchanged or replaced.

 

  1. Verifiable: NFTs are more easily verifiable than fungible crypto tokens.


 

What is a Semi-Fungible Crypto Token?

 

As the name suggests, a semi-fungible crypto token has the characteristics of both fungible and non-fungible crypto tokens. Semi-fungible tokens (SFTs) are the new set of tokens. They can act as both fungible and non-fungible crypto tokens throughout their lifecycle. 

 

Considering a daily life example, a gift voucher can be treated as a semi-fungible token. As it has the same value as an identical voucher with the same expiration date and thus are interchangeable too. 

 

Let us consider a particular example, suppose you own a ticket to a music concert. The ticket can be exchanged with the other ticket of the same face value. But once the concert expires the ticket will expire and so does its face value.

 

The process of fungible crypto tokens transforming into non-fungible crypto tokens gives rise to the case of semi-fungible crypto tokens.

 

At the beginning, the semi-fungible crypto token acts as a fungible token. Once a semi-fungible crypto token is redeemed, it loses its face value. And, then the expired token turned into a non-fungible crypto token.

 

Uses of semi-fungible crypto token

 

The major use of semi-fungible crypto tokens is in the gaming industry. They make trading of things like weapons and gold-bars easier. Also, coupons, vouchers, and gift cards are some other daily-life examples of semi-fungible items.

 

Read source, development of semi-fungible tokens

 

Recommended blog - Blockchain in Gaming Industry

 

How to create a semi-fungible crypto token?

 

If you are thinking of creating a semi-fungible token there is a way in which you can mint a semi-fungible crypto by using Ethereum’s ERC-1155 standard. The ERC-1155 is the combination of the ERC-20 and ERC-721. 

 

The former one is a process for fungible tokens and the latter one is non-fungible token standard. It was developed by blockchain developers The Sandbox, Horizon Games and Enjin in 2017. It is basically a computer program that self-executes the functions according to the conditions. 

 

Read more about the process of mining semi-fungible crypto tokens.

 

What are the advantages of semi-fungible crypto tokens?


Advantages of Semi-fungible crypto tokens are as follows.Can be used in variety of wayRemains a fungible assetA pro in gaming industryRepresentation of non-fungible tokenFlexibility

Advantages of Semi-fungible Crypto Tokens


There are many reasons for which semi-fungible crypto tokens are more preferred than fungible and non-fungible crypto tokens. Mentioned below are the advantages of semi-fungible tokens:

 

Remains a fungible asset
 

The semi-fungible crypto token once traded from its original owner remains as a fungible token. This feature gives these tokens more liquidity as their face value is retained across the transfer and exchanges.

 

 

Can be used in a variety of ways
 

The semi-fungible tokens are verifiable in nature. Thus, they help in verifying different attributes. Thus, it can be used in a variety of ways. Like a semi-fungible token can be used as a single ticket as well as a non-fungible asset. 

 

 

A pro in gaming industry

 

The semi-fungible crypto is widely used in the gaming industry. It can be used to represent weapons or any other items in the game. In games, the history of the use of the token is saved. And so, does it value, when traded from one player to another.

 

Related blog - Top 10 NFT games

 

 

Representation of non-fungible token
 

A semi-fungible token can act as non-fungible token too or can represent its subset. The feature unlocks its ability to trade partial items in a game. 

 

 

Built on the top of Ethereum blockchain
 

Semi-fungible tokens are built on the top of Ethereum blockchain. This gives the tokens benefit from the current infrastructure and cases.

 

 

Competitive advantage

 

Semi-fungible crypto tokens are ERC-721 compliant. It gives them a competitive advantage unlike other tokens.

 

 

Flexibility

 

The semi-fungible crypto tokens are more flexible in nature when compared to fungible tokens and non-fungible tokens. Thus, these tokens ease the experience of gamers and players while playing. 

 

As now they can afford any weapon or item in the game easily. And developers find their developing and coding process easier while using semi-fungible tokens.
 

 

Scope of the semi-fungible crypto tokens in near future

 

It is obvious that the coming world will be more digital and technical. Semi-fungible items will definitely have more value in the future as compared to the present. They crave a way for modernization and digitalization. 

 

Semi-fungible coupons become more trustable as their face value is lost after redeemed once. And, even after losing their face value they still exist as a non-fungible coupon. 

 

They play a vital role in the applications where fungible and non-fungible currencies don’t work. They are safer compared to both physical and digital currencies. Also, the semi-fungible tokens are built on the top of Ethereum blockchain, thus enterprises will definitely find exclusive solutions to build around them.

 

Recommended blog - Blockchain Mining

 

In broader words, semi-fungible crypto tokens can be named as underdogs of the cryptocurrency world. Semi-fungible crypto tokens bridge the gap between cryptocurrencies and non-fungible tokens. 

 

Related blog - Future of Cryptocurrency

 

Many organizations and business models use the semi-fungible crypto tokens to serve their different purposes and needs. Once traded by the original owner, these tokens can’t be traded again. This feature strengthens its asset value. 

 

At the initial stage, they work as a fungible token and at the end transform into a non-fungible token. The semi-fungible tokens ease the experience of gamers, players, and the developers. It also helps in improving the liquidity of the assets. Thus, because of their flexible character, semi-fungible crypto tokens have a huge scope in the coming era.

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