What is fungibility?

Fungibility is when something can be swapped for another of the same kind, just like trading toys at recess.

Imagine you and your friend both have a red ball. If one of you wants to trade balls, it doesn’t matter which red ball you give, they’re both the same in this case. That’s what fungibility means: things that can be easily exchanged because they're all alike.

Think about cookies. If your mom baked a batch of chocolate chip cookies, and she gives you one to eat, it doesn’t matter which cookie you took, they’re all the same size, taste, and shape. You could swap your cookie with your brother’s, and no one would notice.

But if the cookies had different flavors or shapes, like one was a sugar cookie and another had sprinkles, then swapping them might feel more special or different. That means they're not as fungible.

So, fungibility is all about how easy it is to swap things that are alike, just like trading balls or eating cookies!