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

But even that doesn't get the small-blockians interested.  I'm genuinely stumped by that.

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.

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?

The thing I do not see being addressed here is the WHO part? Who is offering a different price on tainted coins? I have not seen this, is there such a place? Consider that any business that rejects certain coins is rejecting profits. Obviously another place would take them at full value and the original business would be the loser. Not the customer, not bitcoin, not the businesses that do take them. What logical business would ever do such a thing and leave money on the table? The only way a taint system could survive is worldwide enforcement of a global law requiring it.
Guess what is not going to happen?

You have not referenced any links/quotes/examples that prove my argument is flawed.

Of course it couldn't since Bitcoin being what it is, it allows its users to make complete abstraction of obsolete fiat regulations.

If you agree to this then you also need to admit that this is also true of aforementioned blacklisting and other "taint" practices. The entirety of the efforts being put into "mapping" the blockchain and listing addresses today are made by fiat parasites. I would dare say ONLY third-parties enforce such regulations and invest any money into them.

As such, when involved in purely peer-to-peer transactions Bitcoin users will scarcely, if ever, encounter this type of discrimination. The reason, again, is that it isn't economically sustainable, or yet even affordable. Be sure that what I'm suggesting is that the informal economy will crowd out and ruin any such conventions.

Participants in a p2p transaction either decide to oblige with the market's price or make a subjective offer according to arbitrary valuations. Consider that these participants are in competition with the market and as such the other side can themselves prefer to accomodate the other party or find the next best offer. With regards to Bitcoin the market is global.

Easy. I explain.

We remove the 1MB size limit, and replace it a first limit stating that a block cannot be completed in less than one hour, and another limit saying that a block cannot take more than 6 hours to complete. The software would not be allowed to run after that time limit, it would be terminated, and the result would be a new block.

As computing power increases, size of blocks would gradually increase.

And how would this ban of decentralized illicit money be enforced?

I disagree. It might not be the end goal, but acceptance is an important step that increases awareness and support.

Do you think that's a good thing for Bitcoin? Is that what you want it to become? A collectible?

Not at all! That's the spirit of crypto! It can't (easily) be stopped, or regulated. I want that same attitude about fungibility. Instead of refusing to transact with shady businesses, simply make it impossible!

Why is that such a bad thing?

I do not understand.

Lets say you have an address with one "clean bitcoin", call it "1cBTC".
Now I send 5000 "dirty" satoshis into that address. That address has now been contaminated.
So, in turn, with coin control, you move your "1cBTC" to a new address and leave the 5000 satoshis behind.

Now, you decide to move your "1cBTC" to Coinbase. Does Coinbase know that the 5000 satoshis left behind are the true dirty through the protocol?
I do not believe so. They would have to take your word on it that you left the true dirty behind.
They do not know if you moved proper inputs and could not actually trust you. So, they would deem you too risky and now dirty.

If you contaminate a single address once, other companies, banks, or other, do not know if you are dirty or clean anymore.

I meant that other bitcoin users, who have "dirty coins" should send some to "clean addresses".

There is no way for exchanges and banks to know whether the coins that are moved forward from that (clean) address contain the "dirty coins".
And so, all coins within that addresses would be outright considered "dirty".

If all addresses are "dirtied" then there is no fungibility problem. All coins become dirty.

If all coins are dirtied, there can be no "dirty coin" blacklisting on the Bitcoin blockchain.

Now you're making fiat comparisons. Even if you're not talking about fiat, you're talking about collectibles. I'm talking about decentralized cryptocurrency.

I realize this is out of context but it's exactly how I feel about our fungibility argument. You think we shouldn't transact with businesses who discriminate, and I think it should be possible to discriminate in the first place.


Either that, or it shows you how worthless and patently unworkable Bitcoin is.