Topic: This Might Sounds Strange: Bitcoin Violates the Principle of Money Fungibility - page 2. (Read 6318 times)

Fungibility is related to value not identity.For example if someone lend me 1 btc now I can return him 1 btc or 0.1 btc 10 times or in whatever small units I want thus bitcoin is fungible

I think I do. I'd like to see privacy as the default, and there can be a transparent side chain. Privacy should be of utmost importance. I imagine more transactions would benefit from privacy, and less of them from transparency.

I'm trying to say that the issues non-fungibility would cause in previous currency does not apply to Bitcoin. What i call it, what you call it, it does not matter. If it does not cause any problem, then it does not cause any issues. Its quite simple.

Since whether it is fungible or not become irrelevant. Whether we agree or not on if BTC is fungible or not, also become irrelevant.

We can discuss it for academic reasons, but saying it create problem in practice is a bit silly.

it appears to be a difference of what you define fungibility is to you brg444 and how I choose to define it to me.

To each his own.

Fiat gets its fungibility from governments.

Hard to compare the two really.

You originally made an analogy and all I can do is take that analogy and run with it. If you had something else to say in a more elegant way you should have said that instead of your broken analogy that fell apart just on the enforceability topic between the two (bitcoin and fiat "blacklisting").

It isn't my fault that you gave such a bad analogy that didn't hold up when you really put it into practice from a regulatory stand point.

Yeah it doesn't matter right now but it definitely can matter in the future. I've never said it is a huge problem right now, but only that it can be a big problem in the future if things don't go in the direction you are bias to.

Neither of us know the future (as we are in uncharted waters with bitcoin) but I do know that there is a possibility for fungibility (or distinguishability) to be a hot topic of discussion and potentially a problem with bitcoin's usage (given the legacy banking system is still around).

Transparency of the ledger does change something...the ability to discriminate. You can't discriminate with using fiat as it is government decreed to be accepted for payment of debts public and private as well as payment for goods and services that is the medium of exchange. That is the difference.

Bitcoin has it is constructed requires a transparent ledger. Such a ledger also has its perks.

Do you appreciate what a sidechain is and how it helps resolves issues with Bitcoin's limited extensibility and functions?

I should have said: I'd like it in Bitcoin, not in a side chain

Coming soon to a sidechain near you.

It was said that, the second any of these satoshi is connected to a dirty satoshi, since its not possible to discriminate individually, then all sats from that transaction are dirty. And i said that is ridiculous and discriminating as such is just doing so for the sake of the arguments.

Its ridiculous but that seem to be what is being said and that however is something i directly do not agree with.

please tell that companies like coinbase... they do that already.
but i guess no one cares because it only matters if you want to sell bitcoins...and those people seem to be bad anyway ;-)

I think I can understand all of the points being made now, and my preference is that nobody has any way to discriminate against a satoshi based purely on it's previous transaction history. Whether this is fungibility or not (I can see why it is perceived to be), this is all I desire

Here is a transaction:

https://blockchain.info/tx/a7f71be180e6180c48c1631009999a79a117947f00912beb466c594bd7eba3ad

Unless you can demonstrate to me exactly which satoshis from outputs A,B,C went into input D,E then our discussion here is done.

That is what fungibility means.

Yes I know you can identify and track the outputs history yet it is certain you cannot differentiate the units in each of them.

This is what fungibility is.

Its because you aim on a specific word or sentence and ignore what the analogy its trying to explain. Its like a angry bull that is seeing red;

I'm saying, the transaction history of Bills but even more so the transaction history of FIAT which most of it is done Online is the same as Bitcoin. The transaction history is there, its available, just not publicly.

Yet FIAT is still finely fungible and in that aspect, BTC is just as well, the difference is that BTC's ledger is publicly available, for transparency. That does not change anything.

Everyone is able to discriminate either way, it just does not matter if they do.

So for FIAT and for BTC, fungibility is not a problem.

Your own analogy of bills dated or marked with perfume was debunked by me showing a clear difference in the enforceability of acceptance of denial of physical cash vs Bitcoin.

You never retorted but rather ignored the glaring problem with your analogy.

Go back and read your own post.

Exactly.

Bitcoin is a ledger and if you consider that all units within a ledger are equal then Bitcoin is perfectly fungible, no matter the movement history of its units.

Personally, i'm saying the concept of grading a currency's fungibility is fine, but its not a problem or even really applicable for Bitcoin, since fungibility not meant to apply to a transaction history.

Its possible to argue semantics, but the fact remain that it is not an issue and as long as there are exchanges who take any for the full price, it does not matter if some does not.

And since those exchanges thrives on the value of bitcoin and getting the most traffic possible, refusing certain BTC based on transaction history is simply not going to happen.

TLDR: Fungibility does not apply to a currency,s transaction history, ledger. That BTC has a public ledger does not change that fact. You can start cherrypicking but the clerk at the market you're buying stuff from really does not give a damn about the Bill,s transaction history, but it could be asked, just as it could be checked for BTC.

BTC is not any different, its just transparent.


Thats because fungibility cause a problem for normal currency, but it does not for Bitcoin. Its like a different universe with different laws of physics. Its facts, not ignorance.

Your complains are all about Bitcoin's privacy.

Bitcoin is perfectly fungible. The simple and undebatable observation that every single satoshis are perfectly indistinguishable & capable of mutual substitution are proof enough of this.

The problem is that people have a mostly incorrect interpretation of what fungibility is.

Until they come to accept that fungibility is a property inherent to a system and is not dependent on arbitrary decisions made by its users then they will never realize that what they are in fact discussing is an issue with Bitcoin's privacy/transparency

My main concern is people saying that bitcoins imperfect fungibility is not and could not be a problem at any magnitude.

Outright saying fungibility does not apply to Bitcoin is pure ignorance of the facts.

Are we discussing the fact that Bitcoin is not perfectly fungible, or how big an issue a lack of fungibility is?

Adam Back considers that Bitcoin is not perfectly fungible when he says:


Here's the full transcript of an interview with him about Confidential Transactions: https://www.weusecoins.com/adam-back-confidential-transactions/

Having read this thread I am actually coming around to the idea that fungibility is not as big a problem as I'd thought before.

I think the point some are trying to make is that since people (peers or third-parties) could trace historical movements of bitcoins, they could refuse them based on this history. It is a possibility, that's all. Whether in a world where Bitcoin exists alongside FIAT or not, it is still possible.


More Adam Back:


So there are ways to improve fungibility, therefore it cannot be perfect in its current state. Regardless of how uneconomically viable you may think it is to exploit this imperfection, it is impossible to know how and who will exploit this in the future. Businesses might not survive by following such practices, but is it so impossible to imagine that government probably would exploit if it gives them greater control of people or trade? I'd say that's a distinct possibility, and this is my biggest worry.

Surely the best solution is perfect privacy (unlinkable, untraceable transactions), providing perfect fungibility. The best of both worlds. Why compromise?