For those not familiar with what it means for something to be fungible, it refers to how interchangeable individual units of a commodity or good is.
Your Bitcoin is the same as my Bitcoin. My gold bar is the same as your gold bar.
For the longest time, I had always viewed Bitcoin as a perfectly fungible store of value. As I continue snooping the forum however, it seems that many members aren't so sure.
Bitcoin that has been 'tainted' by illicit activity has allowed exchanges to flag (and possibly freeze) any Bitcoin they deem to not be clean. Something as simple as using mixing services, coinjoin transactions, or other anonymity features is enought to have your Bitcoin flagged. Obviously, this poses a major issue, a fungibility issue. Now, my Bitcoin is not the same as yours. Mine is "tainted", while yours is "clean". This undermines the entire definition of fungibility.
I hate to come with a problem and not a solution..but I beg the question(s)..
What do we do about this?
Are there people actively trying to fix this?
Is this something that can be fixed by devs or is this a political game?
What do you do with "tainted" coins? Use a DEX and exchange back for a new set of coins?
Is this all just a bunch of nonsense and nothing to worry about?
If you recall any good discussion on this topic somewhere on this forum please drop a link.
