EDIT: I forgot about sidechains. A sidechain implementing "confidential transactions" would help with privacy (despite not providing untraceability - that is not hiding the origin of the funds). But they don't solve fungibility: they could be seen like a mixer, and with limited liquidity. Coins seen entering in to be made more private, then seen going out. It is easy to be "hey why did you sent coins to this sidechain?", or "I don't want coins that visibly were mixed on the sidechain!".

I agree that this is exacerbated by "fiat parasites", but I disagree it comes only from this.

Even in a fully Bitcoin-based economy, I don't see why it would disappear. You could still refuse to deal with coins out of belief or social pressure. Think of the US dentist who went to kill this lion and was everywhere in the news: imagine if he had paid for the "right to kill" with bitcoins, that the entire world would know at a given instant would be on an address X. Don't you think some people out there would refuse them for a payment?
I believe it will always happen, if you can attach history to coins (in practice outputs).

You could also refuse to deal with coins out of legal fear. If you own anything (money or objets) that you know is coming from a theft, you're legally liable as well (fence in English?). If you don't know but didn't take sufficient precautions, and the circonstances should have raised suspicions from you, you're liable as well; at least where I live. Why would the legal system be any different with coins? In fact it's worse: it is much easier to do your due diligence with bitcoins than with real world items, so you can be also accused more easily.


EDIT: I forgot about sidechains. A sidechain implementing "confidential transactions" would help with privacy (despite not providing untraceability - that is not hiding the origin of the funds). But they don't solve fungibility: they could be seen like a mixer, and with limited liquidity. Coins seen entering in to be made more private, then seen going out. It is easy to be "hey why did you sent coins to this sidechain?", or "I don't want coins that visibly were mixed on the sidechain!".

Well this is not an absolute measure. The point is that each participant will have its own definition/perception. Probably some individuals won't care, others will be a bit more paranoid and ask/check the origin. Some businesses will definitely apply checks, exchanges such as coinbase already do. (they close accounts of people who gamble for instance, because this is visible on the blockchain, see the tag on explorers). So when you get coins, you are left wondering if you'll be able to transfer them for their real value to 100% of users, or only to 99%, or for which price, etc.


I don't propose anything.
Startups are doing this specifically, there are APIs already. It is so easy to use or integrate to other services, that it will be easy for everyone to complain if a service doesn't do it. I'm not talking necessarily about legal complaints, a reddit mob pointing fingers at you is bad enough as well. I agree we're not there yet for individuals, but this might come very soon for them too, probably first from tax authorities in several countries.

You didn´t get the point. It is not important what an exchange thinks your satoshis are in value, it´s important what this specific satoshi is in your value, since we are talking about the fungibility of your personal value to that satoshi. Keep in mind that this satoshi is yours in a common sense!

The market will be happy not to give a shit about those clean coins. But try to send stolen coins to see what happens.
Hint: https://www.reddit.com/r/DarkNetMarkets/comments/2zrkg6/withdrawals_halted_as_stolen_evolution_coins_make/

About the bolded part: it is a recurrent flawed argument. You're applying a view from the legacy decentralized world to a decentralized system. In a decentralized system such as Bitcoin, everything is about arbitrary preference. This results in social pressure that impedes your ability to use your coins freely (and for a constant price), since this will be all based on the other party arbitrary preference.

Fungibility is not an attribute you can achieve voluntarily. As soon as individuals can based their preference on enough factual hindsights (such as history of outputs), fungibility is broken. The only way to achieve it is by technically not giving anyone any hindsight; that is, through privacy. See this presentation (the first part is about Bitcoin).

You'll find anecdotal evidence for everything, and there's no denying that people have different points where they find they cannot/will not continue running a node, but the fact that those people are not being replaced at a higher rate has much to do, in my opinion, with the stagnation in price since the last bubble and the lack of attractive use cases. Hopefully there will be more attractive use cases for ordinary people after the next peak. Use cases that will make Bitcoin more relevant to people and help the number of nodes to grow. Nodes run on enthusiasm and nerd-cred.

I can't share that information at this moment.  

BTW, I'm still taking 1 BTC bets that a block larger than 1 MB will be included in the longest PoW chain by this time next year.  

Nothing new...
This is intimitely tied to the lack of privacy. The actual fungibility and privacy to expect from Bitcoin is wrongly grasped by most people, due to the technicity of the topic I suppose. Without a deep understanding of how Bitcoin works, you simply can't grasp it yourself and have to rely on other's claims. Those claims were wrongly of the kind "anonymous internet money!" for years. People did not take the same amount of precautions on silk road back then in 2012 than they do now. The perception is slowly changing, in that it is getting closer to reality. The reality did not change, and it comes to no surprise to those who could see it in the first place.

An interesting evolution to observe is the different answers given by people over time, to support their view/claim that Bitcoin is fungible.
Nowadays we're at "joinmarket does the trick!". Funnily enough this is the most trivial breach of fungibility we ever had (together with the premium for newly mined coins).

Except decentralization is only a scarce resource if we make it such. The node problem seems to be more reliant on the popularity of Bitcoin than the technical demands for running a full node. People need to believe in the project and get excited for it to bother with maintaining a node. The reason we've had a decline is because a lot of people lost faith in Bitcoin in the recent downturn. The technical demands are secondary.

I mean they could add code to support all popular BIPs.  Miners and node operators could express their free choice by activating one or several of them in the GUI or with a run-time parameter.  Eventually, either nothing would happen or the one of the BIPs would be activated and the market would settle on a solution with the blessing of Core

Or...they could not do this while support continues to migrate away from Core.  This would be my preference as it ends the block size limit debate AND the governance problem.  

Nope, this is not true.
In a common sense of money the argument from VirosaGITS is true, in a sense that BTC can be used to transport information the argument is untrue.
Why? Well if you hide a formula for a process to create endless energy in a satoshi, this satoshi will be far more "worth" than the satoshi created and traded next to it.
That´s where the argument for the violation of the fungibility chips in guys 

I agree.  We are presently working on a proposal called Bitcoin Unlimited that does exactly this without any voting requirement at all.  We'll see if the idea has legs over the next few weeks...

For the record, the biggest obstacle is /r/bitcoin's policy that such code is an "alt coin" and thus off topic and censored.  Many people at Core share this view.  Over time, /r/bitcoin will lose its importance; however, at present it is still the dominant medium for the dissemination of Bitcoin related information.  It is a slow process to overcome these network effects.

The biggest source of "friction" preventing a market process from resolving the block size limit debate is that many people view Bitcoin Core as the core of Bitcoin.  They are leery to use XT or modify the code themselves because hard forks are an unknown at the moment.  If Core were to facilitate this market process by supporting all popular BIPs, then the process would proceed much quicker.  This, of course, is the reason Core doesn't do this.   

For the record, Core's hesitance to allow the free-market to function is a good thing for Bitcoin in the long run. I am happy with how the debate is evolving.  It is getting people familiar with the idea that multiple protocol implementations are a positive thing for future Bitcoin governance.  Interestingly, have you noticed that block size limit topics are no longer as heavily censored on r/bitcoin but things related to decentralizing development are?  In fighting the community against the block size limit, Core has shown the community a much bigger problem: Bitcoin governance itself.

But that doesn't follow from your analogy... ughhh... my point is that you chose a poorly suited analogy to evoke a moral response which isn't relevant for this debate. You're not fighting FOR your stance, you're fighting against the opposite stance while using every dirty trick in the book. This might be effective in some environments, but if you assume that most people who care to read your posts are not idiots and are dying to hear some well thought out arguments that explains YOUR stance, it's quite annoying.

Sure, but miners won't publish blocks that they think will be rejected by the economic majority, regardless of the outcome of any BIP voting.  

Am I correct that your vision for Bitcoin is that the block size limit should be used as a policy tool by a group of experts to balance fees with security/decentralization?

For example, Core could add code to support BIP101, BIP100, and any other solutions that had popular support.  Miners could then very easily select--with a drop down menu in the GUI or with a run-time parameter--which of the proposals to flag support for in their blocks (perhaps even voting for several at the same time).  The first proposal to be activated (e.g., at the 75% threshold) would be the market-selected winner.

What happened to your analogy? Is the rainforest and endangered species of the world going to remain untouched, but we'll see forests bloated with wild game and cattle carcasses?

If Core supported free choice by users, then we'd have an easy solution to the block size limit debate: they'd make it easy for node operators to express their support for "no change," BIP100, BIP101, etc, etc.  That would solve the block size debate in a hurry.  

However, the Blockstream crew is already on record saying that the users should *not* be the ones to choose.  And this is the reason they are opposed to allowing the people an easy way to express their wishes.  

Lots of stupid analogies today. The Blockhain isn't the Amazon rainforest. Increasing blocksize will not lead to any analogous detrimental effects.

I guess we could force your analogy into the carbon footprint debate. Do you want to shut Bitcoin down or go from PoW to PoS?

You've replaced one bad analogy with another. Both reeking of statist sentiment.

Bigger blocks aren't going to destroy the rainforest and kill endangered species, and you should be ashamed for using such comparisons. Mircea would be appalled. The decentralized relay network is an asset to the miners, they would be fools to destroy it.

I mean it this time chartbuddy.