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Fungibility refers to the property of an asset, typically a cryptocurrency or token, where individual units of the asset are interchangeable and indistinguishable from one another. Fungible assets can be exchanged on a one-to-one basis because each unit holds the same value and characteristics as others of the same type. This property is essential for the functioning of currencies and tokens, enabling seamless transactions and trade within decentralized networks, such as blockchain systems.