These recurring fungibility threads have FUD written all over them.
It is not a problem and will never be if you use Bitcoin as intended.
It is not a problem and will never be if you use Bitcoin as intended.
Why design it to rely on something when it can be built into the core protocol, eliminating "improper use"?
You don't have to rely on anything to use Bitcoin and not be involved with any of this "fungibility" FUD.
Quite the opposite: as long as you deal with your Bitcoin business in a purely peer-to-peer way, as Satoshi intended, this is not a problem.
A fully private chain involves trade-offs, it is not so simple as "stick ring signatures into Bitcoin and we're done here".
That's why sidechains are the most natural evolution if you desire to transact anonymously.
You seem to dismiss the privacy/fungibility problem, and at the same time suggest a solution. If privacy/fungibility were not a problem, you wouldn't need a side chain to fix it.
Perhaps a side chain will give the privacy/fungibility desired. But then only coins which spend their entire life on that chain will remain private and fungible. Will people also need to check so they can be sure they are using a privacy side chain? There's that reliance again... What if the side chain decides to remove its privacy features at some stage? Find a new one?
Fungibility issues are not FUD, they are fact. The evidence shows this - so the only example I know if is Coinbase, but that's just the beginning. Say at some stage government regulations stipulate tainted coins will not be accepted in certain institutions/retailers/wherever. Are your Bitcoins still fungible then?
There is also the fact that leaving Bitcoin unchanged is enabling one of the greatest surveillance tools of all time. It may not be as simple as sticking ring-signatures in there to fix it, however I think we should do something instead of ignoring a glaring problem.
Hold on here. I'm not dismissing the privacy issues. While the two may seem related they are not the same and my position is that fungibility is not a problem.
Do we need a sidechain to eventually accommodate private transactions? You bet. Does Bitcoin's transparent ledger creates a fungibility issue, absolutely not.
(By the way you seem a bit confused as to what sidechains are. May I advise you read up a bit on them before we move forward with this particular aspect of our discussion )
Now as for your "facts", let us address them. Somehow you propose that because a fiat regulated third-party discriminated certain coins based on their history that it reflects on Bitcoin's fungibility. Should we be any surprised that a US bank attempts to undermine the viability & trust of a currency they do not control?
If you are intent on going through Coinbase to process your Bitcoin transactions then you are completely missing the point and might as well use your VISA credit card.
Bitcoin enables unprecedented proliferation of the black market/informal economy. There are no government regulations or "blacklists" that will resist this change of paradigm. Discrimination of economic participants based on the origins of their money is a one way street to destruction of your market reputation.
Again:
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Bitcoin exists so that you can work outside of this system. I understand it takes a bit of foresight to imagine a world where KYC/AML are not a thing anymore but understand that it is coming and it will be all because of Bitcoin.
