This Might Sounds Strange: Bitcoin Violates the Principle of Money Fungibility

[Paleus]

Click Here to Watch


In the video, the investment analysis of bitcoin vs. gold is also discussed in depth.

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[BlindMayorBitcorn]

If I'm willing to pay a premium for stacks of old USD's that don't have trace amounts of narcotics all over them, have I thereby broken the fungibility of cash for everyone?

[Paleus]

If I'm willing to pay a premium for stacks of old USD's that don't have trace amounts of narcotics all over them, have I thereby broken the fungibility of cash for everyone?

No. You haven't broken the principle of fungibility, you've overpaid on the market rate for that particular currency.

[BlindMayorBitcorn]

If I'm willing to pay a premium for stacks of old USD's that don't have trace amounts of narcotics all over them, have I thereby broken the fungibility of cash for everyone?

No. You haven't broken the principle of fungibility, you've overpaid on the market rate for that particular currency.

Well, whoever's overpaying for coins is overpaying for coins. That's my point.

[7788bitcoin]

I think you have the freedom of overpaying anything, including coins, as long as you are happy!

[AgentofCoin]

Click Here to Watch

Travis Patron argues that bitcoin violates the principles of money fungibility - that each individual unit of currency being of the same value does not hold true in bitcoin.

Already, businesses are springing up that are selling bitcoin with no previous transaction fee at a premium. This violates the principle of money fungibility.
...

When mining has ended, at some point, all active bitcoins will no longer be closely linked to their generation block.
So, in the future, the argument that some coins are better than others will no longer exist.

People paying a premium now for "clean" coins are perpetuating that false premise and helping those who wish to criminalize Bitcoin/bitcoin.

[Kevin77]

If I'm willing to pay a premium for stacks of old USD's that don't have trace amounts of narcotics all over them, have I thereby broken the fungibility of cash for everyone?

No. You haven't broken the principle of fungibility, you've overpaid on the market rate for that particular currency.

Well, whoever's overpaying for coins is overpaying for coins. That's my point.

Overpaying for a commodity is not a breach in financial system. Overpaying for the intention of loving the good or overselling in future are buyers freedom which has no violations or bending rules of any theory. Bitcoin is a exchange medium, just a commodity, it's up to people's wish if they want to use it as money also.

[maokoto]

I do not get it. All Bitcoin are valued the same, only that some people pay more for it.

Same happens with dollars or other currency when you buy it in another country. You can pay more or less depending or the trading shop you use, the bank you use, etc.

[dothebeats]

Say for example, I bought a sibglw US dollar for around 2 euros when the exchange rate is around 0.80 euros, would that be considered as a breach in the principles of money fungibility? If I want to pay more, I'll pay more as long as it satisfies me; that's freedom on spending regardless of some principles of money.

[brg444]

Bitcoin is perfectly fungible, this dude is clueless.

You people really need to dig into your economics book and stop conflating privacy with fungibility.

[VirosaGITS]

Bitcoin is perfectly fungible, this dude is clueless.

You people really need to dig into your economics book and stop conflating privacy with fungibility.

I get his point and i watched until the end, but i think he is wrong. Buying btc/blocks from 0x address is like buying non sequential bills at a premium. Or collection piece coins. They are all perfectly fungible. What a weird word.

Regardless if you do a purchase online and you need to pay 0.69BTC' it doesn't matter if it come from coins with no previous history or if its the most used, whore-y coin ever.

[brg444]

Bitcoin is perfectly fungible, this dude is clueless.

You people really need to dig into your economics book and stop conflating privacy with fungibility.

I get his point and i watched until the end, but i think he is wrong. Buying btc/blocks from 0x address is like buying non sequential bills at a premium. Or collection piece coins. They are all perfectly fungible. What a weird word.

Regardless if you do a purchase online and you need to pay 0.69BTC' it doesn't matter if it come from coins with no previous history or if its the most used, whore-y coin ever.

*ding ding ding*

we have a winner.

[dothebeats]

Bitcoin is perfectly fungible, this dude is clueless.

You people really need to dig into your economics book and stop conflating privacy with fungibility.

I'm no economics pro but fungibility is pretty easy to understand. Also, I think you are that user who posted that infographic about bitcoin's advantage over fiat. That might help shed some light on the matter.

[elrippo]

Bitcoin is perfectly fungible, this dude is clueless.

You people really need to dig into your economics book and stop conflating privacy with fungibility.

I get his point and i watched until the end, but i think he is wrong. Buying btc/blocks from 0x address is like buying non sequential bills at a premium. Or collection piece coins. They are all perfectly fungible. What a weird word.

Regardless if you do a purchase online and you need to pay 0.69BTC' it doesn't matter if it come from coins with no previous history or if its the most used, whore-y coin ever.

*ding ding ding*

we have a winner.

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 

[brg444]

Bitcoin is perfectly fungible, this dude is clueless.

You people really need to dig into your economics book and stop conflating privacy with fungibility.

I get his point and i watched until the end, but i think he is wrong. Buying btc/blocks from 0x address is like buying non sequential bills at a premium. Or collection piece coins. They are all perfectly fungible. What a weird word.

Regardless if you do a purchase online and you need to pay 0.69BTC' it doesn't matter if it come from coins with no previous history or if its the most used, whore-y coin ever.

*ding ding ding*

we have a winner.

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 

Try sending this satoshi to an exchange and see what they think of your "endless energy" formula.

[binaryFate]

Click Here to Watch

Travis Patron argues that bitcoin violates the principles of money fungibility - that each individual unit of currency being of the same value does not hold true in bitcoin.

Already, businesses are springing up that are selling bitcoin with no previous transaction fee at a premium. This violates the principle of money fungibility.

In the video, the investment analysis of bitcoin vs. gold is also discussed in depth.

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).

[brg444]

Click Here to Watch

Travis Patron argues that bitcoin violates the principles of money fungibility - that each individual unit of currency being of the same value does not hold true in bitcoin.

Already, businesses are springing up that are selling bitcoin with no previous transaction fee at a premium. This violates the principle of money fungibility.

In the video, the investment analysis of bitcoin vs. gold is also discussed in depth.

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).

Premium for newly mined coins is a matter of one individual's arbitrary preference and has no incidence on Bitcoin's fungibility.

To the risk of repeating myself: send these coins to an exchange and see what the market thinks of your premium.

[binaryFate]

Click Here to Watch

Travis Patron argues that bitcoin violates the principles of money fungibility - that each individual unit of currency being of the same value does not hold true in bitcoin.

Already, businesses are springing up that are selling bitcoin with no previous transaction fee at a premium. This violates the principle of money fungibility.

In the video, the investment analysis of bitcoin vs. gold is also discussed in depth.

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).

Premium for newly mined coins is a matter of one individual's arbitrary preference and has no incidence on Bitcoin's fungibility.

To the risk of repeating myself: send these coins to an exchange and see what the market thinks of your premium.

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).

[elrippo]

Bitcoin is perfectly fungible, this dude is clueless.

You people really need to dig into your economics book and stop conflating privacy with fungibility.

I get his point and i watched until the end, but i think he is wrong. Buying btc/blocks from 0x address is like buying non sequential bills at a premium. Or collection piece coins. They are all perfectly fungible. What a weird word.

Regardless if you do a purchase online and you need to pay 0.69BTC' it doesn't matter if it come from coins with no previous history or if its the most used, whore-y coin ever.

*ding ding ding*

we have a winner.

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 

Try sending this satoshi to an exchange and see what they think of your "endless energy" formula.

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!

[brg444]

Click Here to Watch

Travis Patron argues that bitcoin violates the principles of money fungibility - that each individual unit of currency being of the same value does not hold true in bitcoin.

Already, businesses are springing up that are selling bitcoin with no previous transaction fee at a premium. This violates the principle of money fungibility.

In the video, the investment analysis of bitcoin vs. gold is also discussed in depth.

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).

Premium for newly mined coins is a matter of one individual's arbitrary preference and has no incidence on Bitcoin's fungibility.

To the risk of repeating myself: send these coins to an exchange and see what the market thinks of your premium.

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).

It also seems to me you are applying concepts of the legacy system to Bitcoin. One being that there is a third party involved in transactions.

In the presentation you've linked you refer to coin "taints". If Bitcoin, as it was designed, is used in a purely peer-to-peer manner how do you propose this "taint" is advertised to the participants? If we assume that in the future every one will use Bitcoin in such a peer-to-peer way than I find it unlikely that people would be bothered by this "social pressure" you speak of. Are we expecting users to transact using wallets that support black/redlists?

Do you propose that every user will dutifully proceed with an output analysis of every coin they interact with and transaction they are involved in? At what cost?

[elrippo]

When the price of bitcoin is stable, there will be such issue.

Please define stable in a volatile system....

[binaryFate]

Click Here to Watch

Travis Patron argues that bitcoin violates the principles of money fungibility - that each individual unit of currency being of the same value does not hold true in bitcoin.

Already, businesses are springing up that are selling bitcoin with no previous transaction fee at a premium. This violates the principle of money fungibility.

In the video, the investment analysis of bitcoin vs. gold is also discussed in depth.

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).

Premium for newly mined coins is a matter of one individual's arbitrary preference and has no incidence on Bitcoin's fungibility.

To the risk of repeating myself: send these coins to an exchange and see what the market thinks of your premium.

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).

It also seems to me you are applying concepts of the legacy system to Bitcoin. One being that there is a third party involved in transactions.

In the presentation you've linked you refer to coin "taints". If Bitcoin, as it was designed, is used in a purely peer-to-peer manner how do you propose this "taint" is advertised to the participants?

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.

If we assume that in the future every one will use Bitcoin in such a peer-to-peer way than I find it unlikely that people would be bothered by this "social pressure" you speak of.

Do you propose that every user will dutifully proceed with an output analysis of every coin they interact with and transaction they are involved in? At what cost?

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.

[brg444]

Bitcoin is perfectly fungible, this dude is clueless.

You people really need to dig into your economics book and stop conflating privacy with fungibility.

I get his point and i watched until the end, but i think he is wrong. Buying btc/blocks from 0x address is like buying non sequential bills at a premium. Or collection piece coins. They are all perfectly fungible. What a weird word.

Regardless if you do a purchase online and you need to pay 0.69BTC' it doesn't matter if it come from coins with no previous history or if its the most used, whore-y coin ever.

*ding ding ding*

we have a winner.

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 

Try sending this satoshi to an exchange and see what they think of your "endless energy" formula.

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!

Can you make it clear through what method you would entrust the formula to this particular satoshi

[Amph]

When the price of bitcoin is stable, there will be such issue.

Please define stable in a volatile system....

i would say +- 5%/10% at best, especially for something like bitcoin, i doubt we can ask any better even with global adoption

[elrippo]

Bitcoin is perfectly fungible, this dude is clueless.

You people really need to dig into your economics book and stop conflating privacy with fungibility.

I get his point and i watched until the end, but i think he is wrong. Buying btc/blocks from 0x address is like buying non sequential bills at a premium. Or collection piece coins. They are all perfectly fungible. What a weird word.

Regardless if you do a purchase online and you need to pay 0.69BTC' it doesn't matter if it come from coins with no previous history or if its the most used, whore-y coin ever.

*ding ding ding*

we have a winner.

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  

Try sending this satoshi to an exchange and see what they think of your "endless energy" formula.

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!

Can you make it clear through what method you would entrust the formula to this particular satoshi

By signing a specific wallet now, in future send a message with that specific satoshi.

[binaryFate]

When the price of bitcoin is stable, there will be such issue.

It has absolutely nothing to do with fungibility...

[brg444]

Click Here to Watch

Travis Patron argues that bitcoin violates the principles of money fungibility - that each individual unit of currency being of the same value does not hold true in bitcoin.

Already, businesses are springing up that are selling bitcoin with no previous transaction fee at a premium. This violates the principle of money fungibility.

In the video, the investment analysis of bitcoin vs. gold is also discussed in depth.

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).

Premium for newly mined coins is a matter of one individual's arbitrary preference and has no incidence on Bitcoin's fungibility.

To the risk of repeating myself: send these coins to an exchange and see what the market thinks of your premium.

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).

It also seems to me you are applying concepts of the legacy system to Bitcoin. One being that there is a third party involved in transactions.

In the presentation you've linked you refer to coin "taints". If Bitcoin, as it was designed, is used in a purely peer-to-peer manner how do you propose this "taint" is advertised to the participants?

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.

If we assume that in the future every one will use Bitcoin in such a peer-to-peer way than I find it unlikely that people would be bothered by this "social pressure" you speak of.

Do you propose that every user will dutifully proceed with an output analysis of every coin they interact with and transaction they are involved in? At what cost?

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.

I don't disagree that this happens or will happen but IMO the issue as you present it is a construction of fiat parasites especially interested in undermining the privacy and fungibility of Bitcoin.

As we slowly move away from this paradigm I believe it will eventually become a non-issue. Moreover I understand there is significant progress being made toward implementation of privacy related features in things such as sidechains which contribute to solve the related issues.

The future is in the informal, black market economy. I don't suppose any participant who willingly involves himself in such shenanigan will be well regarded or trusted to transact with. That also goes for businesses who stand to lose market shares to competitors who will be wise enough not to discriminate customers based on the origin of their coins.

[Wapinter]

Say for example, I bought a sibglw US dollar for around 2 euros when the exchange rate is around 0.80 euros, would that be considered as a breach in the principles of money fungibility? If I want to pay more, I'll pay more as long as it satisfies me; that's freedom on spending regardless of some principles of money.

But the question is why would someone want to pay more for same thing which others are buying at less price?
Now lets remind ourselves what fungibility is
"Fungibility is the property of a good
or a commodity whose individual
units are capable of mutual
substitution. That is, it is the
property of essences or goods
which are "capable of being
substituted in place of one
another." Given this definition,can we say that all bitcoins are same in value at any given point of time?The answer to this simple question will explain if bitcoin is against any established principles or not

[Kprawn]

For me there are no difference between a coin freshly mined and one send through a mixer service. I have bought freshly minted fiat coins and I paid premium for them for their future collectors value, if it's still in

a uncirculated mint condition. This is just another attention seeker, looking for flaws in Bitcoin that does not exist and has nothing to do with the fungibility of the currency.

Try again, we see no problem with this or in the future. A Bitcoin is a Bitcoin... 

[binaryFate]

For me there are no difference between a coin freshly mined and one send through a mixer service. I have bought freshly minted fiat coins and I paid premium for them for their future collectors value, if it's still in

a uncirculated mint condition. This is just another attention seeker, looking for flaws in Bitcoin that does not exist and has nothing to do with the fungibility of the currency.

Try again, we see no problem with this or in the future. A Bitcoin is a Bitcoin... 

Thanks for bringing so much to the conversation.
Fungibility issues have been acknowledged (and fixes being worked on) by many prominent Bitcoin experts. But if you say there is no problem, we're good.

[binaryFate]

[...]
I don't disagree that this happens or will happen but IMO the issue as you present it is a construction of fiat parasites especially interested in undermining the privacy and fungibility of Bitcoin.

As we slowly move away from this paradigm I believe it will eventually become a non-issue. Moreover I understand there is significant progress being made toward implementation of privacy related features in things such as sidechains which contribute to solve the related issues.

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!".

[Mickeyb]

Click Here to Watch

Travis Patron argues that bitcoin violates the principles of money fungibility - that each individual unit of currency being of the same value does not hold true in bitcoin.

Already, businesses are springing up that are selling bitcoin with no previous transaction fee at a premium. This violates the principle of money fungibility.

In the video, the investment analysis of bitcoin vs. gold is also discussed in depth.

I find this as a complete BS. You can start selling US dollars that were never used as well at a premium.

I blame greed for these and these crazy business that never had enough and are just trying to find a way how to make another dollar more! That's their fault really, for starting this nonsense.

[smoothie]

Click Here to Watch

Travis Patron argues that bitcoin violates the principles of money fungibility - that each individual unit of currency being of the same value does not hold true in bitcoin.

Already, businesses are springing up that are selling bitcoin with no previous transaction fee at a premium. This violates the principle of money fungibility.

In the video, the investment analysis of bitcoin vs. gold is also discussed in depth.

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).

Premium for newly mined coins is a matter of one individual's arbitrary preference and has no incidence on Bitcoin's fungibility.

To the risk of repeating myself: send these coins to an exchange and see what the market thinks of your premium.

Didn't you already advocate not to use centralized service providers that could possibly be "back doored" into black listing bitcoins from certain addresses?

But now you use an example of sending coins to an exchange to see what the market thinks of this "premium".

[smoothie]

Click Here to Watch

Travis Patron argues that bitcoin violates the principles of money fungibility - that each individual unit of currency being of the same value does not hold true in bitcoin.

Already, businesses are springing up that are selling bitcoin with no previous transaction fee at a premium. This violates the principle of money fungibility.

In the video, the investment analysis of bitcoin vs. gold is also discussed in depth.

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).

Premium for newly mined coins is a matter of one individual's arbitrary preference and has no incidence on Bitcoin's fungibility.

To the risk of repeating myself: send these coins to an exchange and see what the market thinks of your premium.

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).

It also seems to me you are applying concepts of the legacy system to Bitcoin. One being that there is a third party involved in transactions.

In the presentation you've linked you refer to coin "taints". If Bitcoin, as it was designed, is used in a purely peer-to-peer manner how do you propose this "taint" is advertised to the participants? If we assume that in the future every one will use Bitcoin in such a peer-to-peer way than I find it unlikely that people would be bothered by this "social pressure" you speak of. Are we expecting users to transact using wallets that support black/redlists?

Do you propose that every user will dutifully proceed with an output analysis of every coin they interact with and transaction they are involved in? At what cost?

Seems like you are applying concepts of a legacy system to bitcoin.

[smoothie]

[...]
I don't disagree that this happens or will happen but IMO the issue as you present it is a construction of fiat parasites especially interested in undermining the privacy and fungibility of Bitcoin.

As we slowly move away from this paradigm I believe it will eventually become a non-issue. Moreover I understand there is significant progress being made toward implementation of privacy related features in things such as sidechains which contribute to solve the related issues.

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!".

Yes it will call into question why someone sent coins to a side chain which has "C.T."

It almost appears that there is infrastructure being built around bitcoin to attempt to fix the privacy issue that bitcoin currently has given likely there will be no successful implementation of any form of privacy features put into bitcoin from a untraceability and unlinkiability standpoint in the near future if ever.

The reason I believe no meaningful functionality to bring more privacy to the bitcoin protocol any time soon or ever is because it would violate the social contract bitcoin has in place with corporations and businesses that are attempting to be compliant with regulators in their respective countries of operation.

[brg444]

[...]
I don't disagree that this happens or will happen but IMO the issue as you present it is a construction of fiat parasites especially interested in undermining the privacy and fungibility of Bitcoin.

As we slowly move away from this paradigm I believe it will eventually become a non-issue. Moreover I understand there is significant progress being made toward implementation of privacy related features in things such as sidechains which contribute to solve the related issues.

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!".

Something like the example you describe might occur but I find it is simply not economically sustainable on the long term. You will soon find yourself "out of business" if you choose to persist in discriminating transaction partners based on the output history of their coins. This is even more true seeing as "in a fully Bitcoin-based economy" coins would increasingly cross paths with other "tainted" ones.

Moreover, such analysis or "tracking" of coins history necessarily implies reliance on a third party which kind of defeats the purpose of peer-to-peer transaction medium. What if it was found that you refused perfectly "clean" coins based on the arbitrary intervention of a third party.

[smoothie]

Click Here to Watch

Travis Patron argues that bitcoin violates the principles of money fungibility - that each individual unit of currency being of the same value does not hold true in bitcoin.

Already, businesses are springing up that are selling bitcoin with no previous transaction fee at a premium. This violates the principle of money fungibility.

In the video, the investment analysis of bitcoin vs. gold is also discussed in depth.

I find this as a complete BS. You can start selling US dollars that were never used as well at a premium.

I blame greed for these and these crazy business that never had enough and are just trying to find a way how to make another dollar more! That's their fault really, for starting this nonsense.

Is it still BS principally when a customer gets coins that are not accepted by businesses because it was part of a theft in the past history of those particular coins?

It is BS from the User's perspective in that they are being denied usage of the coins they bought legitimately.

[brg444]

[...]
I don't disagree that this happens or will happen but IMO the issue as you present it is a construction of fiat parasites especially interested in undermining the privacy and fungibility of Bitcoin.

As we slowly move away from this paradigm I believe it will eventually become a non-issue. Moreover I understand there is significant progress being made toward implementation of privacy related features in things such as sidechains which contribute to solve the related issues.

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!".

What then if 50% of the network decides to transact on this sidechain. Again, the "social pressure" are economically self-defeating and cannot be substained in an environment where a competitor or other participants are not as bent on discriminating based on coin history. If we are to believe that reputation systems and "Web of Trust" are going to become a mainstay of the future marketplace then these are behaviors which certainly will not be encouraged nor appreciated.

[brg444]

Click Here to Watch

Travis Patron argues that bitcoin violates the principles of money fungibility - that each individual unit of currency being of the same value does not hold true in bitcoin.

Already, businesses are springing up that are selling bitcoin with no previous transaction fee at a premium. This violates the principle of money fungibility.

In the video, the investment analysis of bitcoin vs. gold is also discussed in depth.

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).

Premium for newly mined coins is a matter of one individual's arbitrary preference and has no incidence on Bitcoin's fungibility.

To the risk of repeating myself: send these coins to an exchange and see what the market thinks of your premium.

Didn't you already advocate not to use centralized service providers that could possibly be "back doored" into black listing bitcoins from certain addresses?

But now you use an example of sending coins to an exchange to see what the market thinks of this "premium".

I did.

That was just an example. I could've referred to any physical p2p exchange as well.

[brg444]

[...]
I don't disagree that this happens or will happen but IMO the issue as you present it is a construction of fiat parasites especially interested in undermining the privacy and fungibility of Bitcoin.

As we slowly move away from this paradigm I believe it will eventually become a non-issue. Moreover I understand there is significant progress being made toward implementation of privacy related features in things such as sidechains which contribute to solve the related issues.

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!".

The reason I believe no meaningful functionality to bring more privacy to the bitcoin protocol any time soon or ever is because it would violate the social contract bitcoin has in place with corporations and businesses that are attempting to be compliant with regulators in their respective countries of operation.

 

Get outta here....

Bitcoin has no such "social contract" with fiat corporations and regulators. That is absolute nonsense.

[brg444]

Click Here to Watch

Travis Patron argues that bitcoin violates the principles of money fungibility - that each individual unit of currency being of the same value does not hold true in bitcoin.

Already, businesses are springing up that are selling bitcoin with no previous transaction fee at a premium. This violates the principle of money fungibility.

In the video, the investment analysis of bitcoin vs. gold is also discussed in depth.

I find this as a complete BS. You can start selling US dollars that were never used as well at a premium.

I blame greed for these and these crazy business that never had enough and are just trying to find a way how to make another dollar more! That's their fault really, for starting this nonsense.

Is it still BS principally when a customer gets coins that are not accepted by businesses because it was part of a theft in the past history of those particular coins?

It is BS from the User's perspective in that they are being denied usage of the coins they bought legitimately.

It is BS and the customer should move his business elsewhere.

[smoothie]

[...]
I don't disagree that this happens or will happen but IMO the issue as you present it is a construction of fiat parasites especially interested in undermining the privacy and fungibility of Bitcoin.

As we slowly move away from this paradigm I believe it will eventually become a non-issue. Moreover I understand there is significant progress being made toward implementation of privacy related features in things such as sidechains which contribute to solve the related issues.

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!".

The reason I believe no meaningful functionality to bring more privacy to the bitcoin protocol any time soon or ever is because it would violate the social contract bitcoin has in place with corporations and businesses that are attempting to be compliant with regulators in their respective countries of operation.

 

Get outta here....

Bitcoin has no such "social contract" with fiat corporations and regulators. That is absolute nonsense.

We obviously disagree.

Go tell Coinbase that you as a user (hypothetically YOU are) are going to now operate on a side chain or with CT which may make it difficult for them to determine where you coins came from given the original definitive protocol for bitcoin is 100% transparent blockchain.

See how much they disagree that the social contract was NOT broken by developers of bitcoin and its users (i.e. Coinbase) for this example.

Yes we know you could care less and in your perfect world everyone is using bit coin so who needs these 3rd party businesses.

Well we aren't there yet nor will we be any time soon.

[brg444]

[...]
I don't disagree that this happens or will happen but IMO the issue as you present it is a construction of fiat parasites especially interested in undermining the privacy and fungibility of Bitcoin.

As we slowly move away from this paradigm I believe it will eventually become a non-issue. Moreover I understand there is significant progress being made toward implementation of privacy related features in things such as sidechains which contribute to solve the related issues.

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!".

The reason I believe no meaningful functionality to bring more privacy to the bitcoin protocol any time soon or ever is because it would violate the social contract bitcoin has in place with corporations and businesses that are attempting to be compliant with regulators in their respective countries of operation.

 

Get outta here....

Bitcoin has no such "social contract" with fiat corporations and regulators. That is absolute nonsense.

We obviously disagree.

Go tell Coinbase that you as a user (hypothetically YOU are) are going to now operate on a side chain or with CT which may make it difficult for them to determine where you coins came from given the original definitive protocol for bitcoin is 100% transparent blockchain.

See how much they disagree that the social contract was NOT broken by developers of bitcoin and its users (i.e. Coinbase) for this example.

Fuck Coinbase. The only reason why they'd bother with these details is because they need to suck up to fiat institutions.

What the hell would I use Coinbase for anyway? Coinbase could go bankrupt for all I know Bitcoin doesn't care and it certainly has no social contract with these banking parasites.

The whole system was built on the premise of being permissionless. You think they have a right to say anything if somehow chooses to develop privacy features on top of Bitcoin?

[smoothie]

Click Here to Watch

Travis Patron argues that bitcoin violates the principles of money fungibility - that each individual unit of currency being of the same value does not hold true in bitcoin.

Already, businesses are springing up that are selling bitcoin with no previous transaction fee at a premium. This violates the principle of money fungibility.

In the video, the investment analysis of bitcoin vs. gold is also discussed in depth.

I find this as a complete BS. You can start selling US dollars that were never used as well at a premium.

I blame greed for these and these crazy business that never had enough and are just trying to find a way how to make another dollar more! That's their fault really, for starting this nonsense.

Is it still BS principally when a customer gets coins that are not accepted by businesses because it was part of a theft in the past history of those particular coins?

It is BS from the User's perspective in that they are being denied usage of the coins they bought legitimately.

It is BS and the customer should move his business elsewhere.

Assuming he can.  

There are a lot of hypotheticals to throw out there.

But it will be interesting to see who is right in the end.

I honestly dont believe bitcoin will ever successfully implement any other protocol level functionality which allows it to operate more privately for users, meaning 100% of users can utilize this function and not get backlash from businesses/corps/govts that want everything to be 100% transparent because "terrorists".

Heck the devs can't even come to agreement on the block size issue yet we are to believe they will eventually implement a protocol level change that introduces new privacy features for users?

 

[brg444]

Click Here to Watch

Travis Patron argues that bitcoin violates the principles of money fungibility - that each individual unit of currency being of the same value does not hold true in bitcoin.

Already, businesses are springing up that are selling bitcoin with no previous transaction fee at a premium. This violates the principle of money fungibility.

In the video, the investment analysis of bitcoin vs. gold is also discussed in depth.

I find this as a complete BS. You can start selling US dollars that were never used as well at a premium.

I blame greed for these and these crazy business that never had enough and are just trying to find a way how to make another dollar more! That's their fault really, for starting this nonsense.

Is it still BS principally when a customer gets coins that are not accepted by businesses because it was part of a theft in the past history of those particular coins?

It is BS from the User's perspective in that they are being denied usage of the coins they bought legitimately.

It is BS and the customer should move his business elsewhere.

Assuming he can.  

There are a lot of hypotheticals to throw out there.

But it will be interesting to see who is right in the end.

I honestly dont believe bitcoin will ever successfully implement any other protocol level functionality which allows it to operate more privately for users, meaning 100% of users can utilize this function and not get backlash from businesses/corps/govts that want everything to be 100% transparent because "terrorists".

Heck the devs can't even come to agreement on the block size issue yet we are to believe they will eventually implement a protocol level change that introduces new privacy features for users?

 

No one is suggesting it would be implemented on the protocol level. Do you know what sidechains are?

[smoothie]

[...]
I don't disagree that this happens or will happen but IMO the issue as you present it is a construction of fiat parasites especially interested in undermining the privacy and fungibility of Bitcoin.

As we slowly move away from this paradigm I believe it will eventually become a non-issue. Moreover I understand there is significant progress being made toward implementation of privacy related features in things such as sidechains which contribute to solve the related issues.

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!".

The reason I believe no meaningful functionality to bring more privacy to the bitcoin protocol any time soon or ever is because it would violate the social contract bitcoin has in place with corporations and businesses that are attempting to be compliant with regulators in their respective countries of operation.

 

Get outta here....

Bitcoin has no such "social contract" with fiat corporations and regulators. That is absolute nonsense.

We obviously disagree.

Go tell Coinbase that you as a user (hypothetically YOU are) are going to now operate on a side chain or with CT which may make it difficult for them to determine where you coins came from given the original definitive protocol for bitcoin is 100% transparent blockchain.

See how much they disagree that the social contract was NOT broken by developers of bitcoin and its users (i.e. Coinbase) for this example.

Fuck Coinbase. The only reason why they'd bother with these details is because they need to suck up to fiat institutions.

What the hell would I use Coinbase for anyway? Coinbase could go bankrupt for all I know Bitcoin doesn't care and it certainly has no social contract with these banking parasites.

The whole system was built on the premise of being permissionless. You think they have a right to say anything if somehow chooses to develop privacy features on top of Bitcoin?

I dont use Coinbase either but if you use my example you will see my point.

People will use centralized services for some time to come. And I think it will be that way to a certain extent for a very long time, doesnt matter the system.

Your supposed perfect world where everyone uses bitcoin to transact and says "fuck you" to any business attempting to operate as an exchange, mixer, payment processor is not going to happen any time soon (within the next 5-10 years), if ever.

Sure bitcoin will be still around but I doubt there will be that perfect scenario where the issues I've brought up do not exist.

Just because you do not choose to use 3rd party centralized services to transact does not stop others from doing it. And ignoring that fact is actually very ignorant as sometimes you have to put yourself in the shoes of others to really understand what the implications of those people choosing to operate/transact mean for the overall marketplace.

[brg444]

[...]
I don't disagree that this happens or will happen but IMO the issue as you present it is a construction of fiat parasites especially interested in undermining the privacy and fungibility of Bitcoin.

As we slowly move away from this paradigm I believe it will eventually become a non-issue. Moreover I understand there is significant progress being made toward implementation of privacy related features in things such as sidechains which contribute to solve the related issues.

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!".

The reason I believe no meaningful functionality to bring more privacy to the bitcoin protocol any time soon or ever is because it would violate the social contract bitcoin has in place with corporations and businesses that are attempting to be compliant with regulators in their respective countries of operation.

 

Get outta here....

Bitcoin has no such "social contract" with fiat corporations and regulators. That is absolute nonsense.

We obviously disagree.

Go tell Coinbase that you as a user (hypothetically YOU are) are going to now operate on a side chain or with CT which may make it difficult for them to determine where you coins came from given the original definitive protocol for bitcoin is 100% transparent blockchain.

See how much they disagree that the social contract was NOT broken by developers of bitcoin and its users (i.e. Coinbase) for this example.

Fuck Coinbase. The only reason why they'd bother with these details is because they need to suck up to fiat institutions.

What the hell would I use Coinbase for anyway? Coinbase could go bankrupt for all I know Bitcoin doesn't care and it certainly has no social contract with these banking parasites.

The whole system was built on the premise of being permissionless. You think they have a right to say anything if somehow chooses to develop privacy features on top of Bitcoin?

I dont use Coinbase either but if you use my example you will see my point.

People will use centralized services for some time to come. And I think it will be that way to a certain extent for a very long time, doesnt matter the system.

Your supposed perfect world where everyone uses bitcoin to transact and says "fuck you" to any business attempting to operate as an exchange, mixer, payment processor is not going to happen any time soon (within the next 5-10 years), if ever.

Sure bitcoin will be still around but I doubt there will be that perfect scenario where the issues I've brought up do not exist.

Just because you do not choose to use 3rd party centralized services to transact does not stop others from doing it. And ignoring that fact is actually very ignorant as sometimes you have to put yourself in the shoes of others to really understand what the implications of those people choosing to operate/transact mean for the overall marketplace.

Coinbase is to be used to buy bitcoins. If you are intelligent enough you will move them out of there ASAP.

If you are one of these noobs you describe you will buy from Coinbase and use their wallet but seeing as you've bought from them you should expect to have "clean" coins, no? 

What you are essentially saying is that people unable to use Bitcoin as it is intended to be might encounter problems.... well frankly that's too bad for them but it has no incidence on Bitcoin.

That's like saying Bitcoin has a security issue because of Mt. Gox. No, the problem is the user, not the technology.

[smoothie]

Click Here to Watch

Travis Patron argues that bitcoin violates the principles of money fungibility - that each individual unit of currency being of the same value does not hold true in bitcoin.

Already, businesses are springing up that are selling bitcoin with no previous transaction fee at a premium. This violates the principle of money fungibility.

In the video, the investment analysis of bitcoin vs. gold is also discussed in depth.

I find this as a complete BS. You can start selling US dollars that were never used as well at a premium.

I blame greed for these and these crazy business that never had enough and are just trying to find a way how to make another dollar more! That's their fault really, for starting this nonsense.

Is it still BS principally when a customer gets coins that are not accepted by businesses because it was part of a theft in the past history of those particular coins?

It is BS from the User's perspective in that they are being denied usage of the coins they bought legitimately.

It is BS and the customer should move his business elsewhere.

Assuming he can.  

There are a lot of hypotheticals to throw out there.

But it will be interesting to see who is right in the end.

I honestly dont believe bitcoin will ever successfully implement any other protocol level functionality which allows it to operate more privately for users, meaning 100% of users can utilize this function and not get backlash from businesses/corps/govts that want everything to be 100% transparent because "terrorists".

Heck the devs can't even come to agreement on the block size issue yet we are to believe they will eventually implement a protocol level change that introduces new privacy features for users?

 

No one is suggesting it would be implemented on the protocol level. Do you know what sidechains are?

Do you? Has it been implemented yet?

I don't see it anywhere. Nor anyone using it on the public domain in the bitcoin community.

Do you even know how it would work with bitcoin down to the core level of interoperating within the source?

Do you know for sure that there would not need to be a protocol change that perhaps might be unforeseen at first glance of the proposed system?

It's easy to say "aha we have a solution - SIDE CHAINS!" before actually implementing it, and see if there are any problems in the implementation as you roll it out and fully test it.

I don't, nor do I care. The side chain approach has its own flaws. You will still be able to see what bitcoins go into and come out of side chains, hence why coins can be "flagged" that use SC.

[smoothie]

[...]
I don't disagree that this happens or will happen but IMO the issue as you present it is a construction of fiat parasites especially interested in undermining the privacy and fungibility of Bitcoin.

As we slowly move away from this paradigm I believe it will eventually become a non-issue. Moreover I understand there is significant progress being made toward implementation of privacy related features in things such as sidechains which contribute to solve the related issues.

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!".

The reason I believe no meaningful functionality to bring more privacy to the bitcoin protocol any time soon or ever is because it would violate the social contract bitcoin has in place with corporations and businesses that are attempting to be compliant with regulators in their respective countries of operation.

 

Get outta here....

Bitcoin has no such "social contract" with fiat corporations and regulators. That is absolute nonsense.

We obviously disagree.

Go tell Coinbase that you as a user (hypothetically YOU are) are going to now operate on a side chain or with CT which may make it difficult for them to determine where you coins came from given the original definitive protocol for bitcoin is 100% transparent blockchain.

See how much they disagree that the social contract was NOT broken by developers of bitcoin and its users (i.e. Coinbase) for this example.

Fuck Coinbase. The only reason why they'd bother with these details is because they need to suck up to fiat institutions.

What the hell would I use Coinbase for anyway? Coinbase could go bankrupt for all I know Bitcoin doesn't care and it certainly has no social contract with these banking parasites.

The whole system was built on the premise of being permissionless. You think they have a right to say anything if somehow chooses to develop privacy features on top of Bitcoin?

I dont use Coinbase either but if you use my example you will see my point.

People will use centralized services for some time to come. And I think it will be that way to a certain extent for a very long time, doesnt matter the system.

Your supposed perfect world where everyone uses bitcoin to transact and says "fuck you" to any business attempting to operate as an exchange, mixer, payment processor is not going to happen any time soon (within the next 5-10 years), if ever.

Sure bitcoin will be still around but I doubt there will be that perfect scenario where the issues I've brought up do not exist.

Just because you do not choose to use 3rd party centralized services to transact does not stop others from doing it. And ignoring that fact is actually very ignorant as sometimes you have to put yourself in the shoes of others to really understand what the implications of those people choosing to operate/transact mean for the overall marketplace.

Coinbase is to be used to buy AND SELL bitcoins. If you are intelligent enough you will move them out of there ASAP.

If you are one of these noobs you describe you will buy from Coinbase and use their wallet but seeing as you've bought from them you should expect to have "clean" coins, no?  

What you are essentially saying is that people unable to use Bitcoin as it is intended to be might encounter problems.... well frankly that's too bad for them but it has no incidence on Bitcoin.

That's like saying Bitcoin has a security issue because of Mt. Gox. No, the problem is the user, not the technology.

FTFY as people still use coinbase to cash out to fiat.

Don't forget that caveat.

A user not being able to have their bitcoin accepted by a business like coinbase is not the users fault...it is because the block chain allows analysis to be done to determine if a certain address has stolen bitcoins or used for illegal means flagged by a past crime.

That isn't the users flaw. It is the flaw of having a 100% transparent ledger.

[smoothie]

Adam Back talking about weak fungibility: https://www.youtube.com/watch?v=3dAdI3Gzodo&feature=youtu.be&t=28m31s

[smoothie]

http://www.alphr.com/news/385735/stallman-calls-for-truly-anonymous-alternative-to-bitcoin

[johnyj]

Stopped watching after he laid out the so called 4 properties of money. Those people who learn knowledge of money from books will never understand how money works

[elrippo]

http://www.alphr.com/news/385735/stallman-calls-for-truly-anonymous-alternative-to-bitcoin

That would be Monero.

One option yes, almost every protocol other then SHA-256 is better for your anonymity 

[Johnny Mnemonic]

Centralized fiat is fungible by decree.

The only way for a decentralized money to be fungible is for its units to be completely indistinguishable. Sorry, but Bitcoin does not meet that requirement.

Now, perhaps you can argue if it will matter in the future, but the question of whether or not Bitcoin is fungible has been asked and answered. It simply is not.

[brg444]

Centralized fiat is fungible by decree.

The only way for a decentralized money to be fungible is for its units to be completely indistinguishable. Sorry, but Bitcoin does not meet that requirement.

Now, perhaps you can argue if it will matter in the future, but the question of whether or not Bitcoin is fungible has been asked and answered. It simply is not

Satoshis are undistinguishable. If I spend two different inputs of one satoshi to the same output you will not be able to identify which is which.

[Gleb Gamow]

I do not get it. All Bitcoin are valued the same, only that some people pay more for it.

Same happens with dollars or other currency when you buy it in another country. You can pay more or less depending or the trading shop you use, the bank you use, etc.

When I visited India back in '91, the official exchange rate was 25 rupees to $1, but I was able to purchase them for 35:1 on the Black [market] (their lingo). Ironically, the exchange transpired in the very hotels I stayed and always with one caveat: They wanted one dollar bills. Nothing larger. Fortunately, I was made aware of that fact prior to leaving the States. A cup of tea costed 1 rupee, and a steak dinner at a fine establishment was just over two bucks worth of rupees. While in Bombay (prior to the name change), I didn't even crack spending over a hundred bucks for my three-day stay there at two upscale hotels that years later were hit by terrorists.

[binaryFate]

Centralized fiat is fungible by decree.

The only way for a decentralized money to be fungible is for its units to be completely indistinguishable. Sorry, but Bitcoin does not meet that requirement.

Now, perhaps you can argue if it will matter in the future, but the question of whether or not Bitcoin is fungible has been asked and answered. It simply is not

Satoshis are undistinguishable. If I spend two different inputs of one satoshi to the same output you will not be able to identify which is which.

You can't tell which of the two inputs they come from, but they're distinguishable from all other satoshis of other transactions.
The history of an output isn't a one single trail but a tree. Doesn't mean this history doesn't exist (and isn't potentially meaningful).

[VirosaGITS]

Centralized fiat is fungible by decree.

The only way for a decentralized money to be fungible is for its units to be completely indistinguishable. Sorry, but Bitcoin does not meet that requirement.

Now, perhaps you can argue if it will matter in the future, but the question of whether or not Bitcoin is fungible has been asked and answered. It simply is not

Satoshis are undistinguishable. If I spend two different inputs of one satoshi to the same output you will not be able to identify which is which.

You can't tell which of the two inputs they come from, but they're distinguishable from all other satoshis of other transactions.
The history of an output isn't a one single trail but a tree. Doesn't mean this history doesn't exist (and isn't potentially meaningful).

And you can distinguish bills from their serial number. Having a ledger of all transaction prior does not change the weight value of the Bitcoins. Electronic transaction are just the same.

[binaryFate]

And you can distinguish bills from their serial number.

Fiat money is fungible by law.
That is the only way to make items that can definitely be distinguished by the population (physically speaking for cash notes) fungible: enforce it by law!
This has always been the case in all fiat systems since this historical affair with the bank of Scotland in 1748: http://www.paybits.net/blog/why-fungibility-matters/

Now if you have a decentralized system such as a cryptocurrency, law is of no use. The only remaining way to obtain fungibility is therefore that items are indistiguishable. So we have: privacy <=> fungibility. QED.

[Johnny Mnemonic]

Centralized fiat is fungible by decree.

The only way for a decentralized money to be fungible is for its units to be completely indistinguishable. Sorry, but Bitcoin does not meet that requirement.

Now, perhaps you can argue if it will matter in the future, but the question of whether or not Bitcoin is fungible has been asked and answered. It simply is not

Satoshis are undistinguishable. If I spend two different inputs of one satoshi to the same output you will not be able to identify which is which.

You can't tell which of the two inputs they come from, but they're distinguishable from all other satoshis of other transactions.
The history of an output isn't a one single trail but a tree. Doesn't mean this history doesn't exist (and isn't potentially meaningful).

And you can distinguish bills from their serial number. Having a ledger of all transaction prior does not change the weight value of the Bitcoins. Electronic transaction are just the same.

I think you need to reread my comment again, particularly the part where I assert that "centralized fiat is fungible by decree." Bills don't have to be distinguishable because a central authority guarantees (and enforces) their value.

(un)Fortunately, Bitcoin doesn't have a central bank or regulating authority, so the only way to guarantee fungibility is to have totally indistinguishable units.

The mere presence of a business that doesn't accept certain coins is proof that the coin isn't fungible, as such discrimination would otherwise be impossible.

[AtheistAKASaneBrain]

If I'm willing to pay a premium for stacks of old USD's that don't have trace amounts of narcotics all over them, have I thereby broken the fungibility of cash for everyone?

Well I think its way more obscure with cash. With Bitcoin there is a global ledger, which is cool, but it introduces problems such as fungibiltiy or lack of it. Therefore, we need increase anonymity. We can't end up with Bitcoins that are more valuable because they are "fresh", this misses the point of fungibility.

[smoothie]

Centralized fiat is fungible by decree.

The only way for a decentralized money to be fungible is for its units to be completely indistinguishable. Sorry, but Bitcoin does not meet that requirement.

Now, perhaps you can argue if it will matter in the future, but the question of whether or not Bitcoin is fungible has been asked and answered. It simply is not

Satoshis are undistinguishable. If I spend two different inputs of one satoshi to the same output you will not be able to identify which is which.

You can't tell which of the two inputs they come from, but they're distinguishable from all other satoshis of other transactions.
The history of an output isn't a one single trail but a tree. Doesn't mean this history doesn't exist (and isn't potentially meaningful).

And you can distinguish bills from their serial number. Having a ledger of all transaction prior does not change the weight value of the Bitcoins. Electronic transaction are just the same.

How efficient is it to try to distinguish bills from each other using serial #?

Pretty damn tedious. It isn't like each bill is in a format that is instantly able to be analyzed across the globe.

How many people actually distinguish dollar bills by serial? Not many I presume because it is inefficient unlike bitcoin's transparent ledger.


I think it does change the weight value given it can be more efficiently scrutinized against globally and able to setup road blocks (black lists) through a digital format.

Kind of hard to implement the same type of black listing system for physical cash.

[BoscoMurray]

If Bitcoin wants to be the best that a currency can possibly be, then surely we need:

1. As close as possible to 100% fungibility.
2. Privacy in transactions - the same as cash transactions.

Anything less than both of these is probably some kind of compromise and/or influenced by institutions (banks, gov, etc). Without the best efforts to achieve these two things, Bitcoin will never be as good as it could be. But that's OK, there is another.

[smoothie]

If Bitcoin wants to be the best that a currency can possibly be, then surely we need:

1. As close as possible to 100% fungibility.
2. Privacy in transactions - the same as cash transactions.

Anything less than both of these is probably some kind of compromise and/or influenced by institutions (banks, gov, etc). Without the best efforts to achieve these two things, Bitcoin will never be as good as it could be. But that's OK, there is another.

1 & 2 will never happen with bitcoin. Too much political hurdles to overcome to even make a change in the size of blocks, let alone adding anonymity features to the protocol.

[brg444]

If Bitcoin wants to be the best that a currency can possibly be, then surely we need:

1. As close as possible to 100% fungibility.
2. Privacy in transactions - the same as cash transactions.

Anything less than both of these is probably some kind of compromise and/or influenced by institutions (banks, gov, etc). Without the best efforts to achieve these two things, Bitcoin will never be as good as it could be. But that's OK, there is another.

1 & 2 will never happen with bitcoin. Too much political hurdles to overcome to even make a change in the size of blocks, let alone adding anonymity features to the protocol.

Bitcoin is not limited to its blockchain.

[brg444]

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.

[BoscoMurray]

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.

Why design it to rely on something when it can be built into the core protocol, eliminating "improper use"?

[brg444]

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.

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.

[binaryFate]

These recurring fungibility threads have FUD written all over them.

Well, next time I won't waste my time explaining myself if you label it as mere FUD in the end.

[brg444]

These recurring fungibility threads have FUD written all over them.

Well, next time I won't waste my time explaining myself if you label it as mere FUD in the end.

Did you start this thread?

I appreciate your "explanations", I simply disagree with them. I'm not certain whether you are involved or not with the Monero project but you should know I appreciate the efforts made toward more private alternatives.

I'm merely pointing out that there is a recurrent trend recently from certain pundits that seem interested in making this "fungibility" debate the next great "Bitcoin issue".

[Johnny Mnemonic]

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.

Right. As long as I don't use Bitcoin for anything that money is useful for, then fungibility won't be a problem  

So the future of all crypto commerce depends on everyone doing it correctly. Let's stick with localbitcoins and craigslist trades forever. And while we're at it we should all be living in coops. And fuck those businesses who refuse to accept your stolen money because of "liability concerns" ... they're obviously doing it wrong. Satoshi's vision has no room for such B.S. monetary principle's like fungibility.

[Johnny Mnemonic]

These recurring fungibility threads have FUD written all over them.

Well, next time I won't waste my time explaining myself if you label it as mere FUD in the end.

Did you start this thread?

I appreciate your "explanations", I simply disagree with them. I'm not certain whether you are involved or not with the Monero project but you should know I appreciate the efforts made toward more private alternatives.

I'm merely pointing out that there is a recurrent trend recently from certain pundits that seem interested in making this "fungibility" debate the next great "Bitcoin issue".

The problem is that it's becoming impossible to criticize bitcoin without it immediately being labelled "FUD". The criticism is necessary for it to evolve, but unfortunately a lot of people think that it's already perfect and no improvements can be made ... we can all just sit on this platform that was designed 6+ years ago and expect there to never be issues.

That's not the way the world works. There will always be incentives to do things that work against Satoshi's intentions, and there has to be constant evolution to stay ahead of that.

[binaryFate]

These recurring fungibility threads have FUD written all over them.

Well, next time I won't waste my time explaining myself if you label it as mere FUD in the end.

Did you start this thread?

I appreciate your "explanations", I simply disagree with them. I'm not certain whether you are involved or not with the Monero project but you should know I appreciate the efforts made toward more private alternatives.

I'm merely pointing out that there is a recurrent trend recently from certain pundits that seem interested in making this "fungibility" debate the next great "Bitcoin issue".

Ah sorry, I thought you were talking about all the conversation going on here, rather than the OP deciding to create a new thread.
We'll agree to disagree then

[brg444]

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.

Right. As long as I don't use Bitcoin for anything that money is useful for, then fungibility won't be a problem  

So the future of all crypto commerce depends on everyone doing it correctly. Let's stick with localbitcoins and craigslist trades forever. And while we're at it we should all be living in coops. And fuck those businesses who refuse to accept your stolen money because of "liability concerns" ... they're obviously doing it wrong. Satoshi's vision has no room for such B.S. monetary principle's like fungibility.

I'm guessing you also hail from the bizarro fiat zombies world where money is literally burning holes through pockets and you have got to spend it like RIGHT NOW.

Either way.. yes I do believe the future of crypto commerce depends on participants not relying on third parties.

I'm not sure why that sounds so strange? If that is not the plan why bother with crypto at all?

Again, I could careless if some fiat store starts using all kinds of blacklisting services I'll be glad to avoid doing business with them and as I've previously said they'll soon discover this is not an economically sustainable model. How will you feel, as a customer, being discriminated because a couple of your satoshis once crossed paths with "tainted" coins?

A relevant read:

https://bitcoinism.liberty.me/only-the-black-market-matters/

[brg444]

These recurring fungibility threads have FUD written all over them.

Well, next time I won't waste my time explaining myself if you label it as mere FUD in the end.

Did you start this thread?

I appreciate your "explanations", I simply disagree with them. I'm not certain whether you are involved or not with the Monero project but you should know I appreciate the efforts made toward more private alternatives.

I'm merely pointing out that there is a recurrent trend recently from certain pundits that seem interested in making this "fungibility" debate the next great "Bitcoin issue".

The problem is that it's becoming impossible to criticize bitcoin without it immediately being labelled "FUD". The criticism is necessary for it to evolve, but unfortunately a lot of people think that it's already perfect and no improvements can be made ... we can all just sit on this platform that was designed 6+ years ago and expect there to never be issues.

That's not the way the world works. There will always be incentives to do things that work against Satoshi's intentions, and there has to be constant evolution to stay ahead of that.

Of course.

The thing is... the fungibility of Bitcoin is hardly a thing you can criticize. Privacy issues? Sure, go right ahead but a careful analysis of the fungibility FUD shows that the arguments simply do not hold up. That is because most of them are looking at Bitcoin from behind fiat lenses which is the definition of trying to fit a square peg into a round hole.

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.

[BoscoMurray]

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.

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.

[gentlemand]

These people violating fungibility by paying a premium for 'clean' coins are doing so on a purely voluntary and totally pointless basis. As soon as they move again they're contaminated. When exchanges and merchants have a two tier price structure is when I'd worry but there won't be anything left to worry about by that time.

[thejaytiesto]

And you can distinguish bills from their serial number.

Fiat money is fungible by law.
That is the only way to make items that can definitely be distinguished by the population (physically speaking for cash notes) fungible: enforce it by law!
This has always been the case in all fiat systems since this historical affair with the bank of Scotland in 1748: http://www.paybits.net/blog/why-fungibility-matters/

Now if you have a decentralized system such as a cryptocurrency, law is of no use. The only remaining way to obtain fungibility is therefore that items are indistiguishable. So we have: privacy <=> fungibility. QED.

Indeed, but what can be realistically done about this? You are either have full anonimity (something like Monero) or you have pseudoanonimity (something like Bitcoin). Is there something in between at all? It seems that unless you go 100% anonymous (or as anonymous as possible) by default, then you will not have a system that is as fungible as possible.

[Johnny Mnemonic]

I'm guessing you also hail from the bizarro fiat zombies world where money is literally burning holes through pockets and you have got to spend it like RIGHT NOW.

Actually, I'm part of this community because I want to see a future where decentralized crypto eventually replaces fiat. Sure, it's fun to be a hippie anarchist living outside "the system" for the time being. But some of us are trying to change the world. And in the real, modern world, consumers transact with businesses.

Either way.. yes I do believe the future of crypto commerce depends on participants not relying on third parties.

I'm not sure why that sounds so strange? If that is not the plan why bother with crypto at all?

It sounds so strange because crypto is supposed to be trustless! It shouldn't have to "depend" on anything! It shouldn't have to depend on businesses being cool and it shouldn't have to depend on people not shopping at Walmart and it shouldn't have to depend on us all using side chains.

Again, I could careless if some fiat store starts using all kinds of blacklisting services I'll be glad to avoid doing business with them and as I've previously said they'll soon discover this is not an economically sustainable model.

You should, because it's proof your money isn't equal! And pretending otherwise won't make it so.

How will you feel, as a customer, being discriminated because a couple of your satoshis once crossed paths with "tainted" coins?

I would feel shitty knowing that such discrimination wouldn't even be impossible if only Bitcoin were fungible.

And are you actually suggesting that businesses have never discriminated against their customers despite it being bad for business? Do you live in the United States?

A relevant read:

https://bitcoinism.liberty.me/only-the-black-market-matters/

The article seems to be making my point. I'm against the whole regulation and cleanliness direction. Improving Bitcoin's fungibility makes regulation more difficult, which doesn't exactly hurt the black markets.

[Johnny Mnemonic]

The thing is... the fungibility of Bitcoin is hardly a thing you can criticize. Privacy issues? Sure, go right ahead but a careful analysis of the fungibility FUD shows that the arguments simply do not hold up. That is because most of them are looking at Bitcoin from behind fiat lenses which is the definition of trying to fit a square peg into a round hole.  

Which argument doesn't hold up? The fact that the units aren't interchangeable? Hmm let's see:

So far we have:
- Exchanges refusing previously stolen coins
- Wallet services banning customers who use gambling sites
- Miners selling freshly minted coins at a premium

I don't know about you, but to me it's starting to seem like the units aren't interchangeable.

[brg444]

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.

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:

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.

[AgentofCoin]

The thing is... the fungibility of Bitcoin is hardly a thing you can criticize. Privacy issues? Sure, go right ahead but a careful analysis of the fungibility FUD shows that the arguments simply do not hold up. That is because most of them are looking at Bitcoin from behind fiat lenses which is the definition of trying to fit a square peg into a round hole.  

Which argument doesn't hold up? The fact that the units aren't interchangeable? Hmm let's see:

So far we have:
- Exchanges refusing previously stolen coins
- Wallet services banning customers who use gambling sites
- Miners selling freshly minted coins at a premium

I don't know about you, but to me it's starting to seem like the units aren't interchangeable.

If the time comes that certain coins are considered permanently clean and others permanently dirty in a future regulated world system,
the community as a whole should purposefully contaminate all clean coins found on the blockchain.

Dirty coins can be purchased at a discount, at that time, and we will send them to the clean address accounts.
The coins have now been co-mingled with a "dirty batch" and when the user sends his "clean coins" out from the "dirty",
the exchanges and banks will claim they are still dirty. There is no way to prove the user didn't add the dirty coins himself.

Thus, all talks about clean versus dirty is worthless in the long run. IMO.

Edit: This should probably be done before a system is devised to keep "clean coins" isolated from the dirty.
Best to do this on a rolling basis every year till end of mining. Also contaminate all exchange's cold storage addresses and etc.

[BoscoMurray]

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.

OK, I understand that you are differentiating privacy and fungibility, but I believe you need perfect privacy to have perfect fungibility.

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:

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.

I'm intent on the best a crypto can be, period.

Who mentioned FIAT? If, one day everyone is using only Bitcoin, how will you buy your passport from the government if they won't accept your tainted coins?

[Johnny Mnemonic]

If the time comes that certain coins are considered permanently clean and others permanently dirty in a future regulated world system,
the community as a whole should purposefully contaminate all clean coins found on the blockchain.

And what incentive does anyone have in doing that? Should we use the Bitcoin Honor System(TM) and hope people are willing to devalue their clean money?

I have a better idea. Fungibility.

[Johnny Mnemonic]

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.

Privacy and fungibility are only distinct in currencies with a central regulating authority. Bitcoin, however, is decentralized. So in this context, privacy and fungibility are interdependent and of equal meaning for most purposes.

[brg444]

I'm guessing you also hail from the bizarro fiat zombies world where money is literally burning holes through pockets and you have got to spend it like RIGHT NOW.

Actually, I'm part of this community because I want to see a future where decentralized crypto eventually replaces fiat. Sure, it's fun to be a hippie anarchist living outside "the system" for the time being. But some of us are trying to change the world. And in the real, modern world, consumers transact with businesses.

Understand that I was mostly addressing your interpretation of what "money is useful for" as if your bitcoins are only good if you can spend them at Bitpay affiliated merchants. Transacting with businesses that are only interested in Bitcoin because of the free press it provides them and proceed to dump your payments to fiat are in no way helpful in "changing the world".

Either way.. yes I do believe the future of crypto commerce depends on participants not relying on third parties.

I'm not sure why that sounds so strange? If that is not the plan why bother with crypto at all?

It sounds so strange because crypto is supposed to be trustless! It shouldn't have to "depend" on anything! It shouldn't have to depend on businesses being cool and it shouldn't have to depend on people not shopping at Walmart and it shouldn't have to depend on us all using side chains.

Yet you choose to depend on Bitpay, Coinbases and the likes to handle your Bitcoin business. That's a rather curious rhetoric.

Again, I could careless if some fiat store starts using all kinds of blacklisting services I'll be glad to avoid doing business with them and as I've previously said they'll soon discover this is not an economically sustainable model.

You should, because it's proof your money isn't equal! And pretending otherwise won't make it so.

No, it shows that economic participants may enforce arbitrary preference especially when they have to suck up to their banking sponsors. If the Chinese spot down the street doesn't accept my gold bullion it doesn't mean my "money is not equal", they just don't want to deal with it. In the same way, fiat businesses don't want to deal with Bitcoin so they rely on third-parties to process these transactions. Users that decide to deal with such businesses do so at their own risk as it works against the p2p principles of Bitcoin.

How will you feel, as a customer, being discriminated because a couple of your satoshis once crossed paths with "tainted" coins?

I would feel shitty knowing that such discrimination wouldn't even be impossible if only Bitcoin were fungible.

And are you actually suggesting that businesses have never discriminated against their customers despite it being bad for business? Do you live in the United States?

Again, the problem is not one of fungibility, but that a Bitcoin business would decide to snoop into his customers' coin history and discriminate him on that basis. I would advise you stay away from these kinds as surely no good will come out of them.

[brg444]

The thing is... the fungibility of Bitcoin is hardly a thing you can criticize. Privacy issues? Sure, go right ahead but a careful analysis of the fungibility FUD shows that the arguments simply do not hold up. That is because most of them are looking at Bitcoin from behind fiat lenses which is the definition of trying to fit a square peg into a round hole.  

Which argument doesn't hold up? The fact that the units aren't interchangeable? Hmm let's see:

So far we have:
- Exchanges refusing previously stolen coins
- Wallet services banning customers who use gambling sites
- Miners selling freshly minted coins at a premium

I don't know about you, but to me it's starting to seem like the units aren't interchangeable.

- Arbitrary third-party discrimination
- Arbitrary third-party discrimination
- Arbitrary user preference. If I decide to pay 2000$/oz for certain gold coins, that doesn't make gold non-fungible does it?

[brg444]

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.

OK, I understand that you are differentiating privacy and fungibility, but I believe you need perfect privacy to have perfect fungibility.

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:

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.

I'm intent on the best a crypto can be, period.

Who mentioned FIAT? If, one day everyone is using only Bitcoin, how will you buy your passport from the government if they won't accept your tainted coins?

 

This here, shows how little imagination and foresight you have. In a world where everyone is using Bitcoin, there will be no such thing as state issued passports.

[brg444]

If the time comes that certain coins are considered permanently clean and others permanently dirty in a future regulated world system,
the community as a whole should purposefully contaminate all clean coins found on the blockchain.

And what incentive does anyone have in doing that? Should we use the Bitcoin Honor System(TM) and hope people are willing to devalue their clean money?

I have a better idea. Fungibility.

The idea is not that one should have an incentive to do it but that it is possible.

If I can willingly contaminate every known addresses containing "clean" coins this just goes to show you how worthless and patently unworkable the concept of blacklisting is.

[Johnny Mnemonic]

Transacting with businesses that are only interested in Bitcoin because of the free press it provides them and proceed to dump your payments to fiat are in no way helpful in "changing the world".

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

Either way.. yes I do believe the future of crypto commerce depends on participants not relying on third parties.

I'm not sure why that sounds so strange? If that is not the plan why bother with crypto at all?

It sounds so strange because crypto is supposed to be trustless! It shouldn't have to "depend" on anything! It shouldn't have to depend on businesses being cool and it shouldn't have to depend on people not shopping at Walmart and it shouldn't have to depend on us all using side chains.

Yet you choose to depend on Bitpay, Coinbases and the likes to handle your Bitcoin business. That's a rather curious rhetoric.

We all depend on them at this point if we ever want crypto to really grow. Coinbase is pretty much the only easy way to get Bitcoin if you live in the U.S. and you're not willing to mine it or meet people from craigslist or localbtc (my mother being an example). I assume you'll disagree but let's table that discussion for another time.

Again, I could careless if some fiat store starts using all kinds of blacklisting services I'll be glad to avoid doing business with them and as I've previously said they'll soon discover this is not an economically sustainable model.

You should, because it's proof your money isn't equal! And pretending otherwise won't make it so.

No, it shows that economic participants may enforce arbitrary preference especially when they have to suck up to their banking sponsors. If the Chinese spot down the street doesn't accept my gold bullion it doesn't mean my "money is not equal", they just don't want to deal with it. In the same way, fiat businesses don't want to deal with Bitcoin so they rely on third-parties to process these transactions. Users that decide to deal with such businesses do so at their own risk.

They are unnecessary risks that could be avoided or completely eliminated with protocol improvements.

How will you feel, as a customer, being discriminated because a couple of your satoshis once crossed paths with "tainted" coins?

I would feel shitty knowing that such discrimination wouldn't even be impossible if only Bitcoin were fungible.

And are you actually suggesting that businesses have never discriminated against their customers despite it being bad for business? Do you live in the United States?

Again, the problem is not one of fungibility, but that a Bitcoin business would decide to snoop into his customers' coin history and discriminate him on that basis. I would advise you stay away from these kinds as surely no good will come out of them.

This seems to be a disagreement in definitions. Regardless, it seems my goals with crypto are more ambitious than yours. I envision a system that cannot be corrupted. No business, no matter how shady, should have the ability to discriminate against its customers. And no government, no matter how powerful, should have the ability to pressure businesses to do so.

[VirosaGITS]

I understand its easier to do than real money, but is this not the same thing as saying "We won't accept any Bills that became in contact with cocaine in their lifetime."?
You don't see shops rejecting bills because they came into the money of criminal once, so, why would this become a problem for BTC?

[Johnny Mnemonic]

The idea is not that one should have an incentive to do it but that it is possible.

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.

If I can willingly contaminate every known addresses containing "clean" coins this just goes to show you how worthless and patently unworkable the concept of blacklisting is.

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

[RodeoX]

I don't see it? If the price is 2.1BTC then it does not matter what bitcoin you send, the price is the same. The price you PAY for a bitcoin varies, but not the value. I might be able to sell you a dollar for $1.05, however that does not mean dollars have lost their fungibility.

[Johnny Mnemonic]

I understand its easier to do than real money, but is this not the same thing as saying "We won't accept any Bills that became in contact with cocaine in their lifetime."?
You don't see shops rejecting bills because they came into the money of criminal once, so, why would this become a problem for BTC?

You don't see shops rejecting bills because it is illegal for them to do so. Fiat is fungible because governments enforce it.

Bitcoin has no central authority to enforce anything, so it's fungibility must come at the protocol level.

[BoscoMurray]

I don't see it? If the price is 2.1BTC then it does not matter what bitcoin you send, the price is the same. The price you PAY for a bitcoin varies, but not the value. I might be able to sell you a dollar for $1.05, however that does not mean dollars have lost their fungibility.

If someone won't accept your tainted coins, then you may be able to swap 1.1 BTC of tainted coins and receive 1.0 BTC of clean coins in return. You could then spend your clean coins, but you've lost 0.1 BTC.

[VirosaGITS]

I don't see it? If the price is 2.1BTC then it does not matter what bitcoin you send, the price is the same. The price you PAY for a bitcoin varies, but not the value. I might be able to sell you a dollar for $1.05, however that does not mean dollars have lost their fungibility.

And some coins or bills with specific history, serial number or print are worth more. Misprint, etc. That doesn't mean that the dollars isint the same value. Imagine if you could own the very first Genesis BTC, it would be like owning the very first bill ever made.

That doesn't mean a btc to another, the value is different.

I understand its easier to do than real money, but is this not the same thing as saying "We won't accept any Bills that became in contact with cocaine in their lifetime."?
You don't see shops rejecting bills because they came into the money of criminal once, so, why would this become a problem for BTC?

You don't see shops rejecting bills because it is illegal for them to do so. Fiat is fungible because governments enforce it.

Bitcoin has no central authority to enforce anything, so it's fungibility must come at the protocol level.

I see what you mean, but its fungibility isint being called to question right now, and if it does, then we can come up with a solution then, or just enforce it by law. And then maybe, money doesn't need to be fungible, when its a decentralized entity like Bitcoin. But its still fungible.

You will always receive the amounts you're supposed.

Any different value to BTC would be attributed by the buyer.

Its like having a guy that will pay more for bills print on a certain year. It doesnt actually change the value of the bill. Its just a damn entity that decide he,s going to pay more or less based on his criteria.

Bills arent indistinguishable from one another. And Bitcoin is not either. If this boil down to being able to spend it without revealing all the previous transaction, than so be it, wait for sidechains.

[Johnny Mnemonic]

The thing is... the fungibility of Bitcoin is hardly a thing you can criticize. Privacy issues? Sure, go right ahead but a careful analysis of the fungibility FUD shows that the arguments simply do not hold up. That is because most of them are looking at Bitcoin from behind fiat lenses which is the definition of trying to fit a square peg into a round hole.  

Which argument doesn't hold up? The fact that the units aren't interchangeable? Hmm let's see:

So far we have:
- Exchanges refusing previously stolen coins
- Wallet services banning customers who use gambling sites
- Miners selling freshly minted coins at a premium

I don't know about you, but to me it's starting to seem like the units aren't interchangeable.

- Arbitrary third-party discrimination [which would not be possible with fungible money]
- Arbitrary third-party discrimination [which would not be possible with fungible money]
- Arbitrary user preference [which would not be possible with fungible money]

FTFY

If I decide to pay 2000$/oz for certain gold coins, that doesn't make gold non-fungible does it?

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.

[AgentofCoin]

If the time comes that certain coins are considered permanently clean and others permanently dirty in a future regulated world system,
the community as a whole should purposefully contaminate all clean coins found on the blockchain.

And what incentive does anyone have in doing that? Should we use the Bitcoin Honor System(TM) and hope people are willing to devalue their clean money?

I have a better idea. Fungibility.

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.

[Johnny Mnemonic]

I see what you mean, but its fungibility isint being called to question right now, and if it does, then we can come up with a solution then, or just enforce it by law. And then maybe, money doesn't need to be fungible, when its a decentralized entity like Bitcoin. But its still fungible.

If we suddenly need government help to make Bitcoin fungible, we might as well go back to fiat and pass more laws to limit crooked banking practices. While we're at it we should just elect better politicians and vote third party

I'm not trying to be a jerk. I just feel like the spirit of crypto is about taking these matters into our own hands.

[VirosaGITS]

If the time comes that certain coins are considered permanently clean and others permanently dirty in a future regulated world system,
the community as a whole should purposefully contaminate all clean coins found on the blockchain.

And what incentive does anyone have in doing that? Should we use the Bitcoin Honor System(TM) and hope people are willing to devalue their clean money?

I have a better idea. Fungibility.

I meant that other bitcoin users, who have "dirty coins" should send some to "clean addresses".
There is no way of exchanges and banks to know whether the coins that are moved forward from that address contain the "dirty coins".
And so, all coins within that addresses would be outright considered "dirty".
If all addresses are "dirtied" than there is no fungibility problem. All coins become dirty.

Well machines can sift through a lot more data than "is at any point...?" so this argument would still stand against coins that was dirty before "the great Bitcoin mudfight" to make all coins dirty.

There's also the added problems that more new clean coins are made every 9.9~ minutes on average. And if you add a few satoshis to new or old clean coins, it doesn't really make them dirtied.

Its not hard to have the clean/unclean system ignore "dirtying" of less than x.

You would need to actually mix all the coins with all the coins. Doesn't sound doable.

I see what you mean, but its fungibility isint being called to question right now, and if it does, then we can come up with a solution then, or just enforce it by law. And then maybe, money doesn't need to be fungible, when its a decentralized entity like Bitcoin. But its still fungible.

If we suddenly need government help to make Bitcoin fungible, we might as well go back to fiat and pass more laws to limit crooked banking practices. While we're at it we should just elect better politicians and vote third party

On step at a time, but yeah its ridiculous. Also it will not become a problem or be needed.

[brg444]

The idea is not that one should have an incentive to do it but that it is possible.

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.

If I can willingly contaminate every known addresses containing "clean" coins this just goes to show you how worthless and patently unworkable the concept of blacklisting is.

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

Have you considered that every government, anywhere in the world, could tomorrow pass legislation that would make Bitcoin transactions in the country illegal.

Does that also make Bitcoin patently unworkable?

[brg444]

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.

Users paying a premium on freshly mined coins is also an example of collectibles.

[brg444]

If the time comes that certain coins are considered permanently clean and others permanently dirty in a future regulated world system,
the community as a whole should purposefully contaminate all clean coins found on the blockchain.

And what incentive does anyone have in doing that? Should we use the Bitcoin Honor System(TM) and hope people are willing to devalue their clean money?

I have a better idea. Fungibility.

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.

This guy here, he gets it.

[AgentofCoin]

If the time comes that certain coins are considered permanently clean and others permanently dirty in a future regulated world system,
the community as a whole should purposefully contaminate all clean coins found on the blockchain.

And what incentive does anyone have in doing that? Should we use the Bitcoin Honor System(TM) and hope people are willing to devalue their clean money?

I have a better idea. Fungibility.

I meant that other bitcoin users, who have "dirty coins" should send some to "clean addresses".
There is no way of exchanges and banks to know whether the coins that are moved forward from that address contain the "dirty coins".
And so, all coins within that addresses would be outright considered "dirty".
If all addresses are "dirtied" than there is no fungibility problem. All coins become dirty.

Well machines can sift through a lot more data than "is at any point...?" so this argument would still stand against coins that was dirty before "the great Bitcoin mudfight" to make all coins dirty.

There's also the added problems that more new clean coins are made every 9.9~ minutes on average. And if you add a few satoshis to new or old clean coins, it doesn't really make them dirtied.

Its not hard to have the clean/unclean system ignore "dirtying" of less than x.

You would need to actually mix all the coins with all the coins. Doesn't sound doable.

...

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 truly dirty or clean anymore.

[Johnny Mnemonic]

The idea is not that one should have an incentive to do it but that it is possible.

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.

If I can willingly contaminate every known addresses containing "clean" coins this just goes to show you how worthless and patently unworkable the concept of blacklisting is.

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

Have you considered that every government, anywhere in the world, could tomorrow pass legislation that would make Bitcoin transactions in the country illegal.

Does that also make Bitcoin patently unworkable?

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?

[brg444]

If the time comes that certain coins are considered permanently clean and others permanently dirty in a future regulated world system,
the community as a whole should purposefully contaminate all clean coins found on the blockchain.

And what incentive does anyone have in doing that? Should we use the Bitcoin Honor System(TM) and hope people are willing to devalue their clean money?

I have a better idea. Fungibility.

I meant that other bitcoin users, who have "dirty coins" should send some to "clean addresses".
There is no way of exchanges and banks to know whether the coins that are moved forward from that address contain the "dirty coins".
And so, all coins within that addresses would be outright considered "dirty".
If all addresses are "dirtied" than there is no fungibility problem. All coins become dirty.

Well machines can sift through a lot more data than "is at any point...?" so this argument would still stand against coins that was dirty before "the great Bitcoin mudfight" to make all coins dirty.

There's also the added problems that more new clean coins are made every 9.9~ minutes on average. And if you add a few satoshis to new or old clean coins, it doesn't really make them dirtied.

Its not hard to have the clean/unclean system ignore "dirtying" of less than x.

You would need to actually mix all the coins with all the coins. Doesn't sound doable.

...

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.

Precisely.

I've repeated this ad nauseam but it needs to be emphasized: all units within the system are perfectly indistinguishable and can be trivially substituted with one another. This, is fungibility.  

[Johnny Mnemonic]

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.

Users paying a premium on freshly mined coins is also an example of collectibles.

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

[brg444]

The idea is not that one should have an incentive to do it but that it is possible.

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.

If I can willingly contaminate every known addresses containing "clean" coins this just goes to show you how worthless and patently unworkable the concept of blacklisting is.

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

Have you considered that every government, anywhere in the world, could tomorrow pass legislation that would make Bitcoin transactions in the country illegal.

Does that also make Bitcoin patently unworkable?

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?

You don't seem to understand what I'm alluding to.

If your solution to the governments' intention on cracking down on "illicit" money is to make all money potentially illicit then don't be surprised when they decide to outright ban you form of money seeing as their blacklisting scheme doesn't work

[brg444]

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.

Users paying a premium on freshly mined coins is also an example of collectibles.

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

I think it has absolutely no incidence on Bitcoin. This is purely a subjective valuation on the part of the buyer.

[brg444]

Transacting with businesses that are only interested in Bitcoin because of the free press it provides them and proceed to dump your payments to fiat are in no way helpful in "changing the world".

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

These businesses don't accept Bitcoin, they don't even have a wallet address.

I'm sorry but it should be clear by now that this type of "merchant acceptance" and "mainstream awareness" has proven to be an utter failure in term of growing adoption and support.

[Johnny Mnemonic]

I've repeated this ad nauseam but it needs to be emphasized: all units within the system are perfectly indistinguishable and can be trivially substituted with one another. This, is fungibility.  

I understand the technical difference between inputs and addresses but from a transactional standpoint it doesn't matter, because blockchain analysis services still ultimately determine your money's worth.

[Johnny Mnemonic]

If your solution to the governments' intention on cracking down on "illicit" money is to make all money potentially illicit then don't be surprised when they decide to outright ban you form of money seeing as their blacklisting scheme doesn't work

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

[brg444]

If your solution to the governments' intention on cracking down on "illicit" money is to make all money potentially illicit then don't be surprised when they decide to outright ban you form of money seeing as their blacklisting scheme doesn't work

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

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.

[VirosaGITS]

I've repeated this ad nauseam but it needs to be emphasized: all units within the system are perfectly indistinguishable and can be trivially substituted with one another. This, is fungibility.  

I understand the technical difference between inputs and addresses but from a transactional standpoint it doesn't matter, because blockchain analysis services still ultimately determine your money's worth.

And FIAT's value isint based on its numerical value, its based on the purchasing power of the currency, the value goes up and down, depending on supply and demand. The second you compare how different currency work, you're just going away from the fungibility fundamentals, that need not even apply to BTC.

[franky1]

some shops refuse to accept bank notes over $20
some shops refuse to accept payment in penny coins

some shops refuse to accept any cash at all and only accept cards
some shops refuse to accept cards and only accept cash

some shops refuse to take cheques.. some shops prefer cheques..

there is always extra fee's or costs depending on irrational reasons. there are even people paying hundreds of dollars just for a specific dollar coin..

theres people that have weird reason to pay more for a bank note that has a mystical serial number, that can bring luck.

the short story is.. soo what..
the funny part about buying freshly mined coins for a premium is the same as buying a new car..
.. as soon as it transfers ownership to you, its no longer new and fresh and automatically loses value straight away. meaning that there is no financial
incentive to do it. and is just a preference thing.. it does not mean other coins are not fungible.. its just a trend.. and not something that will affect the whole economy

.. afterall more second hand cars are bought compared to new cars per year

[AgentofCoin]

...
the funny part about buying freshly mined coins for a premium is the same as buying a new car..
.. as soon as it transfers ownership to you, its no longer new and fresh and automatically loses value straight away.
...

That is a great comparison and may be the proper perspective.
Nonetheless, it will be interesting to see how this market turns out in the far future.

[BillyBobJoe]

I do not get it. All Bitcoin are valued the same, only that some people pay more for it.

Same happens with dollars or other currency when you buy it in another country. You can pay more or less depending or the trading shop you use, the bank you use, etc.

And to expand on your point, I think. In some parts of the world older generation of US $100 bills are considered less valuable than the latest, newest US $100 bills.

[smoothie]

If the time comes that certain coins are considered permanently clean and others permanently dirty in a future regulated world system,
the community as a whole should purposefully contaminate all clean coins found on the blockchain.

And what incentive does anyone have in doing that? Should we use the Bitcoin Honor System(TM) and hope people are willing to devalue their clean money?

I have a better idea. Fungibility.

I see a pattern happening here:

1. Issues raised with Bitcoin's fungibility get brought to light

2. Supporters of bitcoin's "fungibility" propose solution X

3. Those who want to see reality for what it is go on to debunk solution X given it is a patch to the system and not an actualy addition to bitcoin's protocol which attempts to fix bitcoin's fungibility issues in a ROUND-ABOUT-WAY.

4. repeat step 2 & 3 for solution X+1 until X+n is reached

5. agree to disagree


There are so many supposed solutions to fixing bitcoin's fungibility problem but they don't hit the issue head on. It is always some sort of off chain (outside of bitocin protocol) PATCH/mechanism which does not fix anything deterministically 100%.

[VirosaGITS]

If the time comes that certain coins are considered permanently clean and others permanently dirty in a future regulated world system,
the community as a whole should purposefully contaminate all clean coins found on the blockchain.

And what incentive does anyone have in doing that? Should we use the Bitcoin Honor System(TM) and hope people are willing to devalue their clean money?

I have a better idea. Fungibility.

I see a pattern happening here:

1. Issues raised with Bitcoin's fungibility get brought to light

2. Supporters of bitcoin's "fungibility" propose solution X

3. Those who want to see reality for what it is go on to debunk solution X given it is a patch to the system and not an actualy addition to bitcoin's protocol which attempts to fix bitcoin's fungibility issues in a ROUND-ABOUT-WAY.

4. repeat step 2 for solution X+1 until X+n is reached

5. agree to disagree


There are so many supposed solutions to fixing bitcoin's fungibility problem but they don't hit the issue head on. It is always some sort of of chain (outside of bitocin protocol) PATCH which does not fix anything deterministically 100%.

Fungibility isint a problem in the first place. Its not because a dead man said it need to be fungible than the principle still hold true. I very much doubt he could foresee hundreds of years in the future that money would become digital and ethereal.

Now we're in the era of Security.

[smoothie]

I don't see it? If the price is 2.1BTC then it does not matter what bitcoin you send, the price is the same. The price you PAY for a bitcoin varies, but not the value. I might be able to sell you a dollar for $1.05, however that does not mean dollars have lost their fungibility.

dollars are given fungibility by the U.S. government

Hardly a comparable analogy to use as bitcoin is not government decreed as fungible.

[smoothie]

I don't see it? If the price is 2.1BTC then it does not matter what bitcoin you send, the price is the same. The price you PAY for a bitcoin varies, but not the value. I might be able to sell you a dollar for $1.05, however that does not mean dollars have lost their fungibility.

And some coins or bills with specific history, serial number or print are worth more. Misprint, etc. That doesn't mean that the dollars isint the same value. Imagine if you could own the very first Genesis BTC, it would be like owning the very first bill ever made.

That doesn't mean a btc to another, the value is different.

I understand its easier to do than real money, but is this not the same thing as saying "We won't accept any Bills that became in contact with cocaine in their lifetime."?
You don't see shops rejecting bills because they came into the money of criminal once, so, why would this become a problem for BTC?

You don't see shops rejecting bills because it is illegal for them to do so. Fiat is fungible because governments enforce it.

Bitcoin has no central authority to enforce anything, so it's fungibility must come at the protocol level.

I see what you mean, but its fungibility isint being called to question right now, and if it does, then we can come up with a solution then, or just enforce it by law. And then maybe, money doesn't need to be fungible, when its a decentralized entity like Bitcoin. But its still fungible.

You will always receive the amounts you're supposed.

Any different value to BTC would be attributed by the buyer.

Its like having a guy that will pay more for bills print on a certain year. It doesnt actually change the value of the bill. Its just a damn entity that decide he,s going to pay more or less based on his criteria.

Bills arent indistinguishable from one another. And Bitcoin is not either. If this boil down to being able to spend it without revealing all the previous transaction, than so be it, wait for sidechains.

I believe fungibility is an issue from a technical standpoint that a business can create a black list of addresses that contain "tainted" coins.

The issue is not as made a spectacle of the block size debate but it is still an issue that will need addressing either now or later.

I prefer to be proactive so if the developers/community want to be reactive that is their choice with associated consequences (who knows what these are yet as we are in uncharted waters).

Enforce what by law? Fungibility of bitcoin? What government or technical feature will do that? If the plan is to create a protocol enforcement mechanism and it is rolled out 100% successfully then I agree that would be a good step. Anything else is just hogwash and hand waving.

Wrong. bitcoin is distinguishable from other bitcoin on the chain. Hence you can see coins from one address and coins from other addresses. Meaning each coin has a distinct history on the block chain making them DISTINGUISHABLE from a protocol level.

[smoothie]

...wait for sidechains.

Any coins going into a side chain or out of will have the ability for them to be flagged as "suspicious" or whatever tag TPTB want to tag it with.

Side chains are not a reality yet and in my view if they become a reality as long as they are not enforceable at the protocol level to allow more privacy/fungibility of bitcoin then it is a moot point in having SCs altogether.

There are so many implications of SCs one of which is who is going to secure the block chain if all miners are pointed to the main chain? Even if you merge mine SCs not all miners will switch to a merge mined chain thus you will have some supporting it and some not supporting it. It will be less secure than main chain.

how is that better than changing the issues at the protocol level? My guess "it's good enough" would be the response. I disagree if that is the answer.

[smoothie]

some shops refuse to accept bank notes over $20
some shops refuse to accept payment in penny coins

some shops refuse to accept any cash at all and only accept cards
some shops refuse to accept cards and only accept cash

some shops refuse to take cheques.. some shops prefer cheques..

there is always extra fee's or costs depending on irrational reasons. there are even people paying hundreds of dollars just for a specific dollar coin..

theres people that have weird reason to pay more for a bank note that has a mystical serial number, that can bring luck.

the short story is.. soo what..
the funny part about buying freshly mined coins for a premium is the same as buying a new car..
.. as soon as it transfers ownership to you, its no longer new and fresh and automatically loses value straight away. meaning that there is no financial
incentive to do it. and is just a preference thing.. it does not mean other coins are not fungible.. its just a trend.. and not something that will affect the whole economy

.. afterall more second hand cars are bought compared to new cars per year

Define this word otherwise I am not sure how you view it 100%. It seems that the major disagreements in this thread stem from the definition of what fungibility associated with bitcoin is.

[smoothie]

If the time comes that certain coins are considered permanently clean and others permanently dirty in a future regulated world system,
the community as a whole should purposefully contaminate all clean coins found on the blockchain.

And what incentive does anyone have in doing that? Should we use the Bitcoin Honor System(TM) and hope people are willing to devalue their clean money?

I have a better idea. Fungibility.

I see a pattern happening here:

1. Issues raised with Bitcoin's fungibility get brought to light

2. Supporters of bitcoin's "fungibility" propose solution X

3. Those who want to see reality for what it is go on to debunk solution X given it is a patch to the system and not an actualy addition to bitcoin's protocol which attempts to fix bitcoin's fungibility issues in a ROUND-ABOUT-WAY.

4. repeat step 2 for solution X+1 until X+n is reached

5. agree to disagree


There are so many supposed solutions to fixing bitcoin's fungibility problem but they don't hit the issue head on. It is always some sort of of chain (outside of bitocin protocol) PATCH which does not fix anything deterministically 100%.

Fungibility isint a problem in the first place. Its not because a dead man said it need to be fungible than the principle still hold true. I very much doubt he could foresee hundreds of years in the future that money would become digital and ethereal.

Now we're in the era of Security.

So in the future if you took your bitcoins to all bitcoin merchants to spend them or exchange them and you are denied doing so because of your coins being tainted that's not a problem?

I would see it as a problem.

[VirosaGITS]

If the time comes that certain coins are considered permanently clean and others permanently dirty in a future regulated world system,
the community as a whole should purposefully contaminate all clean coins found on the blockchain.

And what incentive does anyone have in doing that? Should we use the Bitcoin Honor System(TM) and hope people are willing to devalue their clean money?

I have a better idea. Fungibility.

I see a pattern happening here:

1. Issues raised with Bitcoin's fungibility get brought to light

2. Supporters of bitcoin's "fungibility" propose solution X

3. Those who want to see reality for what it is go on to debunk solution X given it is a patch to the system and not an actualy addition to bitcoin's protocol which attempts to fix bitcoin's fungibility issues in a ROUND-ABOUT-WAY.

4. repeat step 2 for solution X+1 until X+n is reached

5. agree to disagree


There are so many supposed solutions to fixing bitcoin's fungibility problem but they don't hit the issue head on. It is always some sort of of chain (outside of bitocin protocol) PATCH which does not fix anything deterministically 100%.

Fungibility isint a problem in the first place. Its not because a dead man said it need to be fungible than the principle still hold true. I very much doubt he could foresee hundreds of years in the future that money would become digital and ethereal.

Now we're in the era of Security.

So in the future if you took your bitcoins to all bitcoin merchants to spend them or exchange them and you are denied doing so because of your coins being tainted that's not a problem?

I would see it as a problem.

Thats like saying all the shops in the world will stop accepting bills printed after a certain date, or refusing all bills that ever got some woman perfume on it. Its just not feasible. Most merchants that accept online transactions, FIAT AND BTC don't give a shit about USD or BTC, they get paid in the currency they want.

And payment processors that handle BTC live on BTC, so suiciding by refusing 90% of coins is not going to happen.

[smoothie]

If the time comes that certain coins are considered permanently clean and others permanently dirty in a future regulated world system,
the community as a whole should purposefully contaminate all clean coins found on the blockchain.

And what incentive does anyone have in doing that? Should we use the Bitcoin Honor System(TM) and hope people are willing to devalue their clean money?

I have a better idea. Fungibility.

I see a pattern happening here:

1. Issues raised with Bitcoin's fungibility get brought to light

2. Supporters of bitcoin's "fungibility" propose solution X

3. Those who want to see reality for what it is go on to debunk solution X given it is a patch to the system and not an actualy addition to bitcoin's protocol which attempts to fix bitcoin's fungibility issues in a ROUND-ABOUT-WAY.

4. repeat step 2 for solution X+1 until X+n is reached

5. agree to disagree


There are so many supposed solutions to fixing bitcoin's fungibility problem but they don't hit the issue head on. It is always some sort of of chain (outside of bitocin protocol) PATCH which does not fix anything deterministically 100%.

Fungibility isint a problem in the first place. Its not because a dead man said it need to be fungible than the principle still hold true. I very much doubt he could foresee hundreds of years in the future that money would become digital and ethereal.

Now we're in the era of Security.

So in the future if you took your bitcoins to all bitcoin merchants to spend them or exchange them and you are denied doing so because of your coins being tainted that's not a problem?

I would see it as a problem.

Thats like saying all the shops in the world will stop accepting bills printed after a certain date, or refusing all bills that ever got some woman perfume on it. Its just not feasible. Most merchants that accept online transactions, FIAT AND BTC don't give a shit about USD or BTC, they get paid in the currency they want.

And payment processors that handle BTC live on BTC, so suiciding by refusing 90% of coins is not going to happen.

Wrong.

You are comparing a digital transparent decentralized ledger (virtual and globally accessible in an instant) to physical analogies of perfume and dates printed on piece of paper?

come on you can't compare the two as if they are equal ways to black list a currency from usage.

You can clearly see where bitcoins come from and go to ON THE BLOCK CHAIN
with the touch of a button and some software for parsing the block chain . <------ EFFICIENT

You can't clearly see your examples globally and instantly for blacklisting. <-----not EFFICIENT
^ Nor can you easily trace the exact/full history of each physical fiat bill efficiently.



90%? Where did you come up with that number? You don't know the exact mechanism for black listing to be put into place at some future date. There are probably 50 shades of black listing that will probably spring up at some point depending upon each government/regulatory department's discretion.

[Beliathon]

Bitcoin can and will violate anything it damn well pleases. That's a privilege you get when you're a genius who rewrites all the rules (including but not limited to the very meaning of the principle of fungibility) with a brilliant invention.

[smoothie]

Bitcoin can and will violate anything it damn well pleases. That's a privilege you get when you're a genius who rewrites all the rules (including but not limited to the very meaning of the principle of fungibility) with a brilliant invention.

exactly how is the principal of fungibility rewritten by the creation of bitcoin?

Please be clear and specific with your argument.

[VirosaGITS]

If the time comes that certain coins are considered permanently clean and others permanently dirty in a future regulated world system,
the community as a whole should purposefully contaminate all clean coins found on the blockchain.

And what incentive does anyone have in doing that? Should we use the Bitcoin Honor System(TM) and hope people are willing to devalue their clean money?

I have a better idea. Fungibility.

I see a pattern happening here:

1. Issues raised with Bitcoin's fungibility get brought to light

2. Supporters of bitcoin's "fungibility" propose solution X

3. Those who want to see reality for what it is go on to debunk solution X given it is a patch to the system and not an actualy addition to bitcoin's protocol which attempts to fix bitcoin's fungibility issues in a ROUND-ABOUT-WAY.

4. repeat step 2 for solution X+1 until X+n is reached

5. agree to disagree


There are so many supposed solutions to fixing bitcoin's fungibility problem but they don't hit the issue head on. It is always some sort of of chain (outside of bitocin protocol) PATCH which does not fix anything deterministically 100%.

Fungibility isint a problem in the first place. Its not because a dead man said it need to be fungible than the principle still hold true. I very much doubt he could foresee hundreds of years in the future that money would become digital and ethereal.

Now we're in the era of Security.

So in the future if you took your bitcoins to all bitcoin merchants to spend them or exchange them and you are denied doing so because of your coins being tainted that's not a problem?

I would see it as a problem.

Thats like saying all the shops in the world will stop accepting bills printed after a certain date, or refusing all bills that ever got some woman perfume on it. Its just not feasible. Most merchants that accept online transactions, FIAT AND BTC don't give a shit about USD or BTC, they get paid in the currency they want.

And payment processors that handle BTC live on BTC, so suiciding by refusing 90% of coins is not going to happen.

Wrong.

You are comparing a digital transparent decentralized ledger (virtual and globally accessible in an instant) to physical analogies of perfume and dates printed on piece of paper?

come on you can't compare the two as if they are equal ways to black list a currency from usage.

You can clearly see where bitcoins come from and go to ON THE BLOCK CHAIN
with the touch of a button and some software for parsing the block chain . <------ EFFICIENT

You can't clearly see your examples globally and instantly for blacklisting. <-----not EFFICIENT
^ Nor can you easily trace the exact/full history of each physical fiat bill efficiently.



90%? Where did you come up with that number? You don't know the exact mechanism for black listing to be put into place at some future date. There are probably 50 shades of black listing that will probably spring up at some point depending upon each government/regulatory department's discretion.

No, not wrong. Comparing it to fiat is just fine. You're using an idea, term and criteria that was built with no knowledge of how things could be in the future.

The point is, *you* are using a term used for criteria on previous kind money and *you* are applying it to Bitcoin. *You* are basing your perspective on dated concept that hold no value here.

And you. The 90% come from you. Even in the case 90% of merchants, and thats magnitude higher than it could happen in the worse case scenario. Then those going through that system would just collapse.

Payments processor pays merchants in the currency they want, if they stop accepting any non clean 0x coins, the BTC portion of their dealings would just die.

You're suggesting a problem based on fungibility when there is actually... None. Is there a problem with spending X vs Y bitcoin? No.

Will there be one? No.

So what i been saying in the few posts, if that wasn't clear enough, is that your whole perspective, your whole argument is based on a fallacy.

[smoothie]

If the time comes that certain coins are considered permanently clean and others permanently dirty in a future regulated world system,
the community as a whole should purposefully contaminate all clean coins found on the blockchain.

And what incentive does anyone have in doing that? Should we use the Bitcoin Honor System(TM) and hope people are willing to devalue their clean money?

I have a better idea. Fungibility.

I see a pattern happening here:

1. Issues raised with Bitcoin's fungibility get brought to light

2. Supporters of bitcoin's "fungibility" propose solution X

3. Those who want to see reality for what it is go on to debunk solution X given it is a patch to the system and not an actualy addition to bitcoin's protocol which attempts to fix bitcoin's fungibility issues in a ROUND-ABOUT-WAY.

4. repeat step 2 for solution X+1 until X+n is reached

5. agree to disagree


There are so many supposed solutions to fixing bitcoin's fungibility problem but they don't hit the issue head on. It is always some sort of of chain (outside of bitocin protocol) PATCH which does not fix anything deterministically 100%.

Fungibility isint a problem in the first place. Its not because a dead man said it need to be fungible than the principle still hold true. I very much doubt he could foresee hundreds of years in the future that money would become digital and ethereal.

Now we're in the era of Security.

So in the future if you took your bitcoins to all bitcoin merchants to spend them or exchange them and you are denied doing so because of your coins being tainted that's not a problem?

I would see it as a problem.

Thats like saying all the shops in the world will stop accepting bills printed after a certain date, or refusing all bills that ever got some woman perfume on it. Its just not feasible. Most merchants that accept online transactions, FIAT AND BTC don't give a shit about USD or BTC, they get paid in the currency they want.

And payment processors that handle BTC live on BTC, so suiciding by refusing 90% of coins is not going to happen.

Wrong.

You are comparing a digital transparent decentralized ledger (virtual and globally accessible in an instant) to physical analogies of perfume and dates printed on piece of paper?

come on you can't compare the two as if they are equal ways to black list a currency from usage.

You can clearly see where bitcoins come from and go to ON THE BLOCK CHAIN
with the touch of a button and some software for parsing the block chain . <------ EFFICIENT

You can't clearly see your examples globally and instantly for blacklisting. <-----not EFFICIENT
^ Nor can you easily trace the exact/full history of each physical fiat bill efficiently.



90%? Where did you come up with that number? You don't know the exact mechanism for black listing to be put into place at some future date. There are probably 50 shades of black listing that will probably spring up at some point depending upon each government/regulatory department's discretion.

No, not wrong. Comparing it to fiat is just fine. You're using an idea, term and criteria that was built with no knowledge of how things could be in the future.

The point is, *you* are using a term used for criteria on previous kind money and *you* are applying it to Bitcoin. *You* are basing your perspective on dated concept that hold no value here.

And you. The 90% come from you. Even in the case 90% of merchants, and thats magnitude higher than it could happen in the worse case scenario. Then those going through that system would just collapse.

Payments processor pays merchants in the currency they want, if they stop accepting any non clean 0x coins, the BTC portion of their dealings would just die.

You're suggesting a problem based on fungibility when there is actually... None. Is there a problem with spending X vs Y bitcoin? No.

Will there be one? No.

So what i been saying in the few posts, if that wasn't clear enough, is that your whole perspective, your whole argument is based on a fallacy.

1. Fungibility is a concept used on money previous to bit coin - yes

2. Fungibility of fiat is different from bitcoin. Fiat fungibility is decreed by law (at least in the U.S.) bit coin fungibility is decreed by no CENTRAL authority/business/company. So the topic of fungibility is up to the marketplace and any laws/regulations that are enforced upon said businesses. Fungibility of precious metals such as gold and silver has its own take on it in its respective market place much like bitcoin. Only thing with precious metals you can't black list certain atoms of silver or gold.  

You can't tell where a paper dollar has been by looking at it. You can't tell its completely transactional history by looking at it. Nor can you tell where an atom of silver or gold has been and its transactional history from the day it was dug out of the earth. Their respective histories are hard to identify. Bitcoins on the block chain are easily identified.

3. You tried to equate all shops in the world stopping accepting bills with a particular date on them or perfume on them. THIS very comparison when used as an analogy of bitcoin blacklisting in reference to the concept of fungibility (every unit of account in a system is interchangeable and indistinguishable) is a flawed comparison as one is a physical form that cannot be efficiently executed (your example) and my example where a bitcoin business or government authority posts a digital list of addresses that are not to be accepted for commerce, which every person with an internet connection has access to, can be done efficiently.

The two scenarios are worlds apart in terms of the ability to execute such tasks separately.

4. You say that fungibility holds "no value" here? How is it not a valuable topic of discussion or concern when a bitcoin user (BOB) buys bitcoins from someone buy does not realize those coins were stolen from an exchange (via a hack/heist) now bob is being told his coins are not accepted at particular merchants and in some cases his coins could be confiscated if he deposits it to an exchange and they refuse to allow him to have it because "coins are blacklisted" by a government authority who regulates said business. <---- You see no value in fungibility here at all?

5. The 90% did not come from me. Please post a quote/link. I never mentioned 90% to my knowledge.

6. Bitpay just stopped accepting "tainted" bitcoins from their own black list not even a month ago.  LINK: https://www.reddit.com/r/Bitcoin/comments/3mea6b/bitpay_is_blacklisting_certain_bitcoins_rejecting/

7. Is there a problem? In my view yes there is. At the moment it isn't at the crux of everyone's attention like THA BLAWK SAIZE DEEHBATE but it will be if users start getting turned away from using/spending/exchanging their bitcoins because those coins have a history from a past theft/crime.

My argument is based on fact.

MTGOX refused to allow bitcoinica coins to go back to their depositors after bitcoinica was hacked. BTC-e disallowed withdraw/exchange of the coins from the evolution marketplace theft. Bitpay is black listing certain bitcoins and rejecting customers.

Fallacy? No.... fact! Get it straight.

As I said, right now the issue of fungibility is not a hot topic like other topics but it is a huge issue for users that want to have a currency that is fungible and allows them to have financial privacy. At some point I see the topic of bitcoin fungibility being in the bitcoin headlines more and more as time goes on. Time will tell if I am right.

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

[toknormal]

smoothie - I think you've got your knickers in a twist over privacy vs fungibility.

First of all, Bitcoin is anonymous. Bitcoin addresses are not synonymous with individuals or legal entities, thats why in all the heists there have been so far no one has yet been caught.

Secondly, even though the whole world can see tokens move from one address to another (which is an essential requirement by the way, for an unbacked monetary medium) no-one can know WHY they moved. i.e. they may have changed hands, they may not, they may have been used in a purchase or they may have been transferred to a trusted third party. Therefore, the ability to 'track' coins is meaningless - it does not detract from their fungibility unless combined with information acquired from OUTWITH the blockchain. A residual level of background mixing mitigates even this problem for all practical purposes.

Thirdly, the solution you allude to all over these threads is not a solution to fungibility at all. It's a solution to PRIVACY in the case where monetary addresses are synonymous with people (e.g. the fiat credit money system).

Fungibility in a cash system, makes the money anonymous as opposed to private, but a prerequisite of fungibility is maximum visibility and transparency - not obscurity.

[RodeoX]

I don't see it? If the price is 2.1BTC then it does not matter what bitcoin you send, the price is the same. The price you PAY for a bitcoin varies, but not the value. I might be able to sell you a dollar for $1.05, however that does not mean dollars have lost their fungibility.

If someone won't accept your tainted coins, then you may be able to swap 1.1 BTC of tainted coins and receive 1.0 BTC of clean coins in return. You could then spend your clean coins, but you've lost 0.1 BTC.

Perhaps that will happen in the future. Currently I am unaware of anyone who will not take "tainted" coins. I spend bitcoin all the time and have never had a retailer ask about the coins I send. Just as I have never had a retailer scrape my $20 bill for the presence of cocaine. They know that I would just shop elsewhere if they tried that stuff with my money.
Who would ever agree to giving a business more money because the money you own was once used in a crime? How does that even help?

[pereira4]

If the time comes that certain coins are considered permanently clean and others permanently dirty in a future regulated world system,
the community as a whole should purposefully contaminate all clean coins found on the blockchain.

And what incentive does anyone have in doing that? Should we use the Bitcoin Honor System(TM) and hope people are willing to devalue their clean money?

I have a better idea. Fungibility.

I see a pattern happening here:

1. Issues raised with Bitcoin's fungibility get brought to light

2. Supporters of bitcoin's "fungibility" propose solution X

3. Those who want to see reality for what it is go on to debunk solution X given it is a patch to the system and not an actualy addition to bitcoin's protocol which attempts to fix bitcoin's fungibility issues in a ROUND-ABOUT-WAY.

4. repeat step 2 for solution X+1 until X+n is reached

5. agree to disagree


There are so many supposed solutions to fixing bitcoin's fungibility problem but they don't hit the issue head on. It is always some sort of of chain (outside of bitocin protocol) PATCH which does not fix anything deterministically 100%.

Fungibility isint a problem in the first place. Its not because a dead man said it need to be fungible than the principle still hold true. I very much doubt he could foresee hundreds of years in the future that money would become digital and ethereal.

Now we're in the era of Security.

How it isn't a problem? Of course it is. If someone gives you a payment to an address of yours, and someone finds out that's your address and the Bitcoins you recieved happen to be traceable black to criminal money, let's see if you still think fungibility is a problem.

[brg444]

If the time comes that certain coins are considered permanently clean and others permanently dirty in a future regulated world system,
the community as a whole should purposefully contaminate all clean coins found on the blockchain.

And what incentive does anyone have in doing that? Should we use the Bitcoin Honor System(TM) and hope people are willing to devalue their clean money?

I have a better idea. Fungibility.

I see a pattern happening here:

1. Issues raised with Bitcoin's fungibility get brought to light

2. Supporters of bitcoin's "fungibility" propose solution X

3. Those who want to see reality for what it is go on to debunk solution X given it is a patch to the system and not an actualy addition to bitcoin's protocol which attempts to fix bitcoin's fungibility issues in a ROUND-ABOUT-WAY.

4. repeat step 2 for solution X+1 until X+n is reached

5. agree to disagree


There are so many supposed solutions to fixing bitcoin's fungibility problem but they don't hit the issue head on. It is always some sort of of chain (outside of bitocin protocol) PATCH which does not fix anything deterministically 100%.

Fungibility isint a problem in the first place. Its not because a dead man said it need to be fungible than the principle still hold true. I very much doubt he could foresee hundreds of years in the future that money would become digital and ethereal.

Now we're in the era of Security.

So in the future if you took your bitcoins to all bitcoin merchants to spend them or exchange them and you are denied doing so because of your coins being tainted that's not a problem?

I would see it as a problem.

Thats like saying all the shops in the world will stop accepting bills printed after a certain date, or refusing all bills that ever got some woman perfume on it. Its just not feasible. Most merchants that accept online transactions, FIAT AND BTC don't give a shit about USD or BTC, they get paid in the currency they want.

And payment processors that handle BTC live on BTC, so suiciding by refusing 90% of coins is not going to happen.

Wrong.

You are comparing a digital transparent decentralized ledger (virtual and globally accessible in an instant) to physical analogies of perfume and dates printed on piece of paper?

come on you can't compare the two as if they are equal ways to black list a currency from usage.

You can clearly see where bitcoins come from and go to ON THE BLOCK CHAIN
with the touch of a button and some software for parsing the block chain . <------ EFFICIENT

You can't clearly see your examples globally and instantly for blacklisting. <-----not EFFICIENT
^ Nor can you easily trace the exact/full history of each physical fiat bill efficiently.



90%? Where did you come up with that number? You don't know the exact mechanism for black listing to be put into place at some future date. There are probably 50 shades of black listing that will probably spring up at some point depending upon each government/regulatory department's discretion.

No, not wrong. Comparing it to fiat is just fine. You're using an idea, term and criteria that was built with no knowledge of how things could be in the future.

The point is, *you* are using a term used for criteria on previous kind money and *you* are applying it to Bitcoin. *You* are basing your perspective on dated concept that hold no value here.

And you. The 90% come from you. Even in the case 90% of merchants, and thats magnitude higher than it could happen in the worse case scenario. Then those going through that system would just collapse.

Payments processor pays merchants in the currency they want, if they stop accepting any non clean 0x coins, the BTC portion of their dealings would just die.

You're suggesting a problem based on fungibility when there is actually... None. Is there a problem with spending X vs Y bitcoin? No.

Will there be one? No.

So what i been saying in the few posts, if that wasn't clear enough, is that your whole perspective, your whole argument is based on a fallacy.

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

The constant and obvious flaw in your argument is that any fungibility "issues" you refer to involves a third-party.

I think I've sufficiently explained why the concerns makes absolutely no sense from an economic standpoint and all you can provide to support your position is isolate incident involving arbitrary discrimination from third parties.

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.

[johnyj]

If someone gives you a payment to an address of yours, and someone finds out that's your address and the Bitcoins you received happen to be traceable black to criminal money, let's see if you still think fungibility is a problem.

I'm sure one of the cashes in your wallet has been used for drug dealing or they are stolen, but to reclaim that cash from you, police must be able to provide enough evidence that you have some direct relation with those criminals, so eventually no one cares, simply because it takes too much resource to trace those criminal actions that the police department will simply go bankrupt because of that

Similarly, you can trace the bitcoin that is from criminal source, but you have to provide enough evidence that the receiver has anything to do with those criminals, which is also extremely resource consuming from law enforcement point of view. So unless it is a really large amount of coin involved, no one cares. Of course if it is 100K bitcoins then police might get some incentive to trace it, since their expense will be covered by the auction of those forfeited coins

In today's fiat money system, as you receive money from your customer, unless you are a finance institution which must follow AML/KYC rules, you have no obligation to know the identity of the buyer if it is less than 10K dollar/euro. Then even if you get criminal money flow into your account, law enforcement can not charge you, nor can they forfeit your money because of the transaction. The traceability of fiat money is even higher than bitcoin in today's banking system, but still it does not change the fungibility of fiat money (digital)

[Betwrong]

...
the funny part about buying freshly mined coins for a premium is the same as buying a new car..
.. as soon as it transfers ownership to you, its no longer new and fresh and automatically loses value straight away.
...

That is a great comparison and may be the proper perspective.
Nonetheless, it will be interesting to see how this market turns out in the far future.

Since most people do not like to use their head much this market will be booming IMO. Take for example so-called "clean" water or "GMO free" products.

[RodeoX]

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?

[brg444]

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?

Exactly, this is economical suicide

[VirosaGITS]

If the time comes that certain coins are considered permanently clean and others permanently dirty in a future regulated world system,
the community as a whole should purposefully contaminate all clean coins found on the blockchain.

And what incentive does anyone have in doing that? Should we use the Bitcoin Honor System(TM) and hope people are willing to devalue their clean money?

I have a better idea. Fungibility.

I see a pattern happening here:

1. Issues raised with Bitcoin's fungibility get brought to light

2. Supporters of bitcoin's "fungibility" propose solution X

3. Those who want to see reality for what it is go on to debunk solution X given it is a patch to the system and not an actualy addition to bitcoin's protocol which attempts to fix bitcoin's fungibility issues in a ROUND-ABOUT-WAY.

4. repeat step 2 for solution X+1 until X+n is reached

5. agree to disagree


There are so many supposed solutions to fixing bitcoin's fungibility problem but they don't hit the issue head on. It is always some sort of of chain (outside of bitocin protocol) PATCH which does not fix anything deterministically 100%.

Fungibility isint a problem in the first place. Its not because a dead man said it need to be fungible than the principle still hold true. I very much doubt he could foresee hundreds of years in the future that money would become digital and ethereal.

Now we're in the era of Security.

So in the future if you took your bitcoins to all bitcoin merchants to spend them or exchange them and you are denied doing so because of your coins being tainted that's not a problem?

I would see it as a problem.

Thats like saying all the shops in the world will stop accepting bills printed after a certain date, or refusing all bills that ever got some woman perfume on it. Its just not feasible. Most merchants that accept online transactions, FIAT AND BTC don't give a shit about USD or BTC, they get paid in the currency they want.

And payment processors that handle BTC live on BTC, so suiciding by refusing 90% of coins is not going to happen.

Wrong.

You are comparing a digital transparent decentralized ledger (virtual and globally accessible in an instant) to physical analogies of perfume and dates printed on piece of paper?

come on you can't compare the two as if they are equal ways to black list a currency from usage.

You can clearly see where bitcoins come from and go to ON THE BLOCK CHAIN
with the touch of a button and some software for parsing the block chain . <------ EFFICIENT

You can't clearly see your examples globally and instantly for blacklisting. <-----not EFFICIENT
^ Nor can you easily trace the exact/full history of each physical fiat bill efficiently.



90%? Where did you come up with that number? You don't know the exact mechanism for black listing to be put into place at some future date. There are probably 50 shades of black listing that will probably spring up at some point depending upon each government/regulatory department's discretion.

No, not wrong. Comparing it to fiat is just fine. You're using an idea, term and criteria that was built with no knowledge of how things could be in the future.

The point is, *you* are using a term used for criteria on previous kind money and *you* are applying it to Bitcoin. *You* are basing your perspective on dated concept that hold no value here.

And you. The 90% come from you. Even in the case 90% of merchants, and thats magnitude higher than it could happen in the worse case scenario. Then those going through that system would just collapse.

Payments processor pays merchants in the currency they want, if they stop accepting any non clean 0x coins, the BTC portion of their dealings would just die.

You're suggesting a problem based on fungibility when there is actually... None. Is there a problem with spending X vs Y bitcoin? No.

Will there be one? No.

So what i been saying in the few posts, if that wasn't clear enough, is that your whole perspective, your whole argument is based on a fallacy.

1. Fungibility is a concept used on money previous to bit coin - yes

2. Fungibility of fiat is different from bitcoin. Fiat fungibility is decreed by law (at least in the U.S.) bit coin fungibility is decreed by no CENTRAL authority/business/company. So the topic of fungibility is up to the marketplace and any laws/regulations that are enforced upon said businesses. Fungibility of precious metals such as gold and silver has its own take on it in its respective market place much like bitcoin. Only thing with precious metals you can't black list certain atoms of silver or gold.  

You can't tell where a paper dollar has been by looking at it. You can't tell its completely transactional history by looking at it. Nor can you tell where an atom of silver or gold has been and its transactional history from the day it was dug out of the earth. Their respective histories are hard to identify. Bitcoins on the block chain are easily identified.

3. You tried to equate all shops in the world stopping accepting bills with a particular date on them or perfume on them. THIS very comparison when used as an analogy of bitcoin blacklisting in reference to the concept of fungibility (every unit of account in a system is interchangeable and indistinguishable) is a flawed comparison as one is a physical form that cannot be efficiently executed (your example) and my example where a bitcoin business or government authority posts a digital list of addresses that are not to be accepted for commerce, which every person with an internet connection has access to, can be done efficiently.

The two scenarios are worlds apart in terms of the ability to execute such tasks separately.

4. You say that fungibility holds "no value" here? How is it not a valuable topic of discussion or concern when a bitcoin user (BOB) buys bitcoins from someone buy does not realize those coins were stolen from an exchange (via a hack/heist) now bob is being told his coins are not accepted at particular merchants and in some cases his coins could be confiscated if he deposits it to an exchange and they refuse to allow him to have it because "coins are blacklisted" by a government authority who regulates said business. <---- You see no value in fungibility here at all?

5. The 90% did not come from me. Please post a quote/link. I never mentioned 90% to my knowledge.

6. Bitpay just stopped accepting "tainted" bitcoins from their own black list not even a month ago.  LINK: https://www.reddit.com/r/Bitcoin/comments/3mea6b/bitpay_is_blacklisting_certain_bitcoins_rejecting/

7. Is there a problem? In my view yes there is. At the moment it isn't at the crux of everyone's attention like THA BLAWK SAIZE DEEHBATE but it will be if users start getting turned away from using/spending/exchanging their bitcoins because those coins have a history from a past theft/crime.

My argument is based on fact.

MTGOX refused to allow bitcoinica coins to go back to their depositors after bitcoinica was hacked. BTC-e disallowed withdraw/exchange of the coins from the evolution marketplace theft. Bitpay is black listing certain bitcoins and rejecting customers.

Fallacy? No.... fact! Get it straight.

As I said, right now the issue of fungibility is not a hot topic like other topics but it is a huge issue for users that want to have a currency that is fungible and allows them to have financial privacy. At some point I see the topic of bitcoin fungibility being in the bitcoin headlines more and more as time goes on. Time will tell if I am right.

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

You still do not understand one word of what i said. You don't even understand the 90% bits. You say its a problem, its only a problem if nearly all do it. Hence 90%. I'll simplify.

If 5% of the volume from sellers and exchanges decide to block any non clean BTC coins, what does happen?

That business will be brought to the rest of 95%.

If 40% of the volume from sellers and exchanges decide to block any non clean BTC coins, what does happen?

That business will be brought to the rest of 60%

And thats goes on and on, until about 90%.

If that didn't explain clearly enough, i'll explain that too;

As long as people can go somewhere and get full value with their coins, the other portion that does not value those coins at the exchange rate will just be walked around. Its not a complicated concept.

TLDR: Fungibility is not a concept relevant to BTC.

Conclusion: Everything you say is based on a Fallacy.

[smoothie]

If the time comes that certain coins are considered permanently clean and others permanently dirty in a future regulated world system,
the community as a whole should purposefully contaminate all clean coins found on the blockchain.

And what incentive does anyone have in doing that? Should we use the Bitcoin Honor System(TM) and hope people are willing to devalue their clean money?

I have a better idea. Fungibility.

I see a pattern happening here:

1. Issues raised with Bitcoin's fungibility get brought to light

2. Supporters of bitcoin's "fungibility" propose solution X

3. Those who want to see reality for what it is go on to debunk solution X given it is a patch to the system and not an actualy addition to bitcoin's protocol which attempts to fix bitcoin's fungibility issues in a ROUND-ABOUT-WAY.

4. repeat step 2 for solution X+1 until X+n is reached

5. agree to disagree


There are so many supposed solutions to fixing bitcoin's fungibility problem but they don't hit the issue head on. It is always some sort of of chain (outside of bitocin protocol) PATCH which does not fix anything deterministically 100%.

Fungibility isint a problem in the first place. Its not because a dead man said it need to be fungible than the principle still hold true. I very much doubt he could foresee hundreds of years in the future that money would become digital and ethereal.

Now we're in the era of Security.

So in the future if you took your bitcoins to all bitcoin merchants to spend them or exchange them and you are denied doing so because of your coins being tainted that's not a problem?

I would see it as a problem.

Thats like saying all the shops in the world will stop accepting bills printed after a certain date, or refusing all bills that ever got some woman perfume on it. Its just not feasible. Most merchants that accept online transactions, FIAT AND BTC don't give a shit about USD or BTC, they get paid in the currency they want.

And payment processors that handle BTC live on BTC, so suiciding by refusing 90% of coins is not going to happen.

Wrong.

You are comparing a digital transparent decentralized ledger (virtual and globally accessible in an instant) to physical analogies of perfume and dates printed on piece of paper?

come on you can't compare the two as if they are equal ways to black list a currency from usage.

You can clearly see where bitcoins come from and go to ON THE BLOCK CHAIN
with the touch of a button and some software for parsing the block chain . <------ EFFICIENT

You can't clearly see your examples globally and instantly for blacklisting. <-----not EFFICIENT
^ Nor can you easily trace the exact/full history of each physical fiat bill efficiently.



90%? Where did you come up with that number? You don't know the exact mechanism for black listing to be put into place at some future date. There are probably 50 shades of black listing that will probably spring up at some point depending upon each government/regulatory department's discretion.

No, not wrong. Comparing it to fiat is just fine. You're using an idea, term and criteria that was built with no knowledge of how things could be in the future.

The point is, *you* are using a term used for criteria on previous kind money and *you* are applying it to Bitcoin. *You* are basing your perspective on dated concept that hold no value here.

And you. The 90% come from you. Even in the case 90% of merchants, and thats magnitude higher than it could happen in the worse case scenario. Then those going through that system would just collapse.

Payments processor pays merchants in the currency they want, if they stop accepting any non clean 0x coins, the BTC portion of their dealings would just die.

You're suggesting a problem based on fungibility when there is actually... None. Is there a problem with spending X vs Y bitcoin? No.

Will there be one? No.

So what i been saying in the few posts, if that wasn't clear enough, is that your whole perspective, your whole argument is based on a fallacy.

1. Fungibility is a concept used on money previous to bit coin - yes

2. Fungibility of fiat is different from bitcoin. Fiat fungibility is decreed by law (at least in the U.S.) bit coin fungibility is decreed by no CENTRAL authority/business/company. So the topic of fungibility is up to the marketplace and any laws/regulations that are enforced upon said businesses. Fungibility of precious metals such as gold and silver has its own take on it in its respective market place much like bitcoin. Only thing with precious metals you can't black list certain atoms of silver or gold.  

You can't tell where a paper dollar has been by looking at it. You can't tell its completely transactional history by looking at it. Nor can you tell where an atom of silver or gold has been and its transactional history from the day it was dug out of the earth. Their respective histories are hard to identify. Bitcoins on the block chain are easily identified.

3. You tried to equate all shops in the world stopping accepting bills with a particular date on them or perfume on them. THIS very comparison when used as an analogy of bitcoin blacklisting in reference to the concept of fungibility (every unit of account in a system is interchangeable and indistinguishable) is a flawed comparison as one is a physical form that cannot be efficiently executed (your example) and my example where a bitcoin business or government authority posts a digital list of addresses that are not to be accepted for commerce, which every person with an internet connection has access to, can be done efficiently.

The two scenarios are worlds apart in terms of the ability to execute such tasks separately.

4. You say that fungibility holds "no value" here? How is it not a valuable topic of discussion or concern when a bitcoin user (BOB) buys bitcoins from someone buy does not realize those coins were stolen from an exchange (via a hack/heist) now bob is being told his coins are not accepted at particular merchants and in some cases his coins could be confiscated if he deposits it to an exchange and they refuse to allow him to have it because "coins are blacklisted" by a government authority who regulates said business. <---- You see no value in fungibility here at all?

5. The 90% did not come from me. Please post a quote/link. I never mentioned 90% to my knowledge.

6. Bitpay just stopped accepting "tainted" bitcoins from their own black list not even a month ago.  LINK: https://www.reddit.com/r/Bitcoin/comments/3mea6b/bitpay_is_blacklisting_certain_bitcoins_rejecting/

7. Is there a problem? In my view yes there is. At the moment it isn't at the crux of everyone's attention like THA BLAWK SAIZE DEEHBATE but it will be if users start getting turned away from using/spending/exchanging their bitcoins because those coins have a history from a past theft/crime.

My argument is based on fact.

MTGOX refused to allow bitcoinica coins to go back to their depositors after bitcoinica was hacked. BTC-e disallowed withdraw/exchange of the coins from the evolution marketplace theft. Bitpay is black listing certain bitcoins and rejecting customers.

Fallacy? No.... fact! Get it straight.

As I said, right now the issue of fungibility is not a hot topic like other topics but it is a huge issue for users that want to have a currency that is fungible and allows them to have financial privacy. At some point I see the topic of bitcoin fungibility being in the bitcoin headlines more and more as time goes on. Time will tell if I am right.

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

You still do not understand one word of what i said. You don't even understand the 90% bits. You say its a problem, its only a problem if nearly all do it. Hence 90%. I'll simplify.

If 5% of the volume from sellers and exchanges decide to block any non clean BTC coins, what does happen?

That business will be brought to the rest of 95%.

If 40% of the volume from sellers and exchanges decide to block any non clean BTC coins, what does happen?

That business will be brought to the rest of 60%

And thats goes on and on, until about 90%.

If that didn't explain clearly enough, i'll explain that too;

As long as people can go somewhere and get full value with their coins, the other portion that does not value those coins at the exchange rate will just be walked around. Its not a complicated concept.

TLDR: Fungibility is not a concept relevant to BTC.

Conclusion: Everything you say is based on a Fallacy.

Keep telling yourself that.

Just because you say something does not make it true.

Let's agree to disagree.

[VirosaGITS]

If the time comes that certain coins are considered permanently clean and others permanently dirty in a future regulated world system,
the community as a whole should purposefully contaminate all clean coins found on the blockchain.

And what incentive does anyone have in doing that? Should we use the Bitcoin Honor System(TM) and hope people are willing to devalue their clean money?

I have a better idea. Fungibility.

I see a pattern happening here:

1. Issues raised with Bitcoin's fungibility get brought to light

2. Supporters of bitcoin's "fungibility" propose solution X

3. Those who want to see reality for what it is go on to debunk solution X given it is a patch to the system and not an actualy addition to bitcoin's protocol which attempts to fix bitcoin's fungibility issues in a ROUND-ABOUT-WAY.

4. repeat step 2 for solution X+1 until X+n is reached

5. agree to disagree


There are so many supposed solutions to fixing bitcoin's fungibility problem but they don't hit the issue head on. It is always some sort of of chain (outside of bitocin protocol) PATCH which does not fix anything deterministically 100%.

Fungibility isint a problem in the first place. Its not because a dead man said it need to be fungible than the principle still hold true. I very much doubt he could foresee hundreds of years in the future that money would become digital and ethereal.

Now we're in the era of Security.

So in the future if you took your bitcoins to all bitcoin merchants to spend them or exchange them and you are denied doing so because of your coins being tainted that's not a problem?

I would see it as a problem.

Thats like saying all the shops in the world will stop accepting bills printed after a certain date, or refusing all bills that ever got some woman perfume on it. Its just not feasible. Most merchants that accept online transactions, FIAT AND BTC don't give a shit about USD or BTC, they get paid in the currency they want.

And payment processors that handle BTC live on BTC, so suiciding by refusing 90% of coins is not going to happen.

Wrong.

You are comparing a digital transparent decentralized ledger (virtual and globally accessible in an instant) to physical analogies of perfume and dates printed on piece of paper?

come on you can't compare the two as if they are equal ways to black list a currency from usage.

You can clearly see where bitcoins come from and go to ON THE BLOCK CHAIN
with the touch of a button and some software for parsing the block chain . <------ EFFICIENT

You can't clearly see your examples globally and instantly for blacklisting. <-----not EFFICIENT
^ Nor can you easily trace the exact/full history of each physical fiat bill efficiently.



90%? Where did you come up with that number? You don't know the exact mechanism for black listing to be put into place at some future date. There are probably 50 shades of black listing that will probably spring up at some point depending upon each government/regulatory department's discretion.

No, not wrong. Comparing it to fiat is just fine. You're using an idea, term and criteria that was built with no knowledge of how things could be in the future.

The point is, *you* are using a term used for criteria on previous kind money and *you* are applying it to Bitcoin. *You* are basing your perspective on dated concept that hold no value here.

And you. The 90% come from you. Even in the case 90% of merchants, and thats magnitude higher than it could happen in the worse case scenario. Then those going through that system would just collapse.

Payments processor pays merchants in the currency they want, if they stop accepting any non clean 0x coins, the BTC portion of their dealings would just die.

You're suggesting a problem based on fungibility when there is actually... None. Is there a problem with spending X vs Y bitcoin? No.

Will there be one? No.

So what i been saying in the few posts, if that wasn't clear enough, is that your whole perspective, your whole argument is based on a fallacy.

1. Fungibility is a concept used on money previous to bit coin - yes

2. Fungibility of fiat is different from bitcoin. Fiat fungibility is decreed by law (at least in the U.S.) bit coin fungibility is decreed by no CENTRAL authority/business/company. So the topic of fungibility is up to the marketplace and any laws/regulations that are enforced upon said businesses. Fungibility of precious metals such as gold and silver has its own take on it in its respective market place much like bitcoin. Only thing with precious metals you can't black list certain atoms of silver or gold.  

You can't tell where a paper dollar has been by looking at it. You can't tell its completely transactional history by looking at it. Nor can you tell where an atom of silver or gold has been and its transactional history from the day it was dug out of the earth. Their respective histories are hard to identify. Bitcoins on the block chain are easily identified.

3. You tried to equate all shops in the world stopping accepting bills with a particular date on them or perfume on them. THIS very comparison when used as an analogy of bitcoin blacklisting in reference to the concept of fungibility (every unit of account in a system is interchangeable and indistinguishable) is a flawed comparison as one is a physical form that cannot be efficiently executed (your example) and my example where a bitcoin business or government authority posts a digital list of addresses that are not to be accepted for commerce, which every person with an internet connection has access to, can be done efficiently.

The two scenarios are worlds apart in terms of the ability to execute such tasks separately.

4. You say that fungibility holds "no value" here? How is it not a valuable topic of discussion or concern when a bitcoin user (BOB) buys bitcoins from someone buy does not realize those coins were stolen from an exchange (via a hack/heist) now bob is being told his coins are not accepted at particular merchants and in some cases his coins could be confiscated if he deposits it to an exchange and they refuse to allow him to have it because "coins are blacklisted" by a government authority who regulates said business. <---- You see no value in fungibility here at all?

5. The 90% did not come from me. Please post a quote/link. I never mentioned 90% to my knowledge.

6. Bitpay just stopped accepting "tainted" bitcoins from their own black list not even a month ago.  LINK: https://www.reddit.com/r/Bitcoin/comments/3mea6b/bitpay_is_blacklisting_certain_bitcoins_rejecting/

7. Is there a problem? In my view yes there is. At the moment it isn't at the crux of everyone's attention like THA BLAWK SAIZE DEEHBATE but it will be if users start getting turned away from using/spending/exchanging their bitcoins because those coins have a history from a past theft/crime.

My argument is based on fact.

MTGOX refused to allow bitcoinica coins to go back to their depositors after bitcoinica was hacked. BTC-e disallowed withdraw/exchange of the coins from the evolution marketplace theft. Bitpay is black listing certain bitcoins and rejecting customers.

Fallacy? No.... fact! Get it straight.

As I said, right now the issue of fungibility is not a hot topic like other topics but it is a huge issue for users that want to have a currency that is fungible and allows them to have financial privacy. At some point I see the topic of bitcoin fungibility being in the bitcoin headlines more and more as time goes on. Time will tell if I am right.

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

You still do not understand one word of what i said. You don't even understand the 90% bits. You say its a problem, its only a problem if nearly all do it. Hence 90%. I'll simplify.

If 5% of the volume from sellers and exchanges decide to block any non clean BTC coins, what does happen?

That business will be brought to the rest of 95%.

If 40% of the volume from sellers and exchanges decide to block any non clean BTC coins, what does happen?

That business will be brought to the rest of 60%

And thats goes on and on, until about 90%.

If that didn't explain clearly enough, i'll explain that too;

As long as people can go somewhere and get full value with their coins, the other portion that does not value those coins at the exchange rate will just be walked around. Its not a complicated concept.

TLDR: Fungibility is not a concept relevant to BTC.

Conclusion: Everything you say is based on a Fallacy.

Keep telling yourself that.

Just because you say something does not make it true.

Let's agree to disagree.

Well we can do that, but i'm not saying i agree or do not agree. I'm saying you're raising alarm about a fire where there is none. I'm just stating empirical facts;

Are exchanges over or devaluating certain Bitcoins depending on their history?

The answer is simply no. Therefore you are wrong, no matter what i think.

But i can agree to stop arguing. We both made our points clear and others who read this are welcome to make their own opinions, since i think from both aisle, all that was said should give all the needed information.

[BoscoMurray]

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:

some of the analysis you talked about could potentially lead to some currency units which you might receive for no fault of your own being somewhat tainted or frowned upon or, you know, so things are generally okay at the moment and the fact of it's been treated as fungible, but there is a slight risk that could degrade at some point.

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:

I mean, it increases indirectly so it doesn't directly -- I mean, so what bitcoin does have is a way to improve fungibility somewhat is the idea that the addresses are not reused.  So, you know, when you make a payment and it split into a payment and change address the some ambiguity as to which was the payment and which was the change.  And as that flows through the system and, you know, there are thousands of transactions in a big graphic it becomes increasingly not ambiguous as to, you know, it was --

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?

[smoothie]

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.

[brg444]

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:

some of the analysis you talked about could potentially lead to some currency units which you might receive for no fault of your own being somewhat tainted or frowned upon or, you know, so things are generally okay at the moment and the fact of it's been treated as fungible, but there is a slight risk that could degrade at some point.

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:

I mean, it increases indirectly so it doesn't directly -- I mean, so what bitcoin does have is a way to improve fungibility somewhat is the idea that the addresses are not reused.  So, you know, when you make a payment and it split into a payment and change address the some ambiguity as to which was the payment and which was the change.  And as that flows through the system and, you know, there are thousands of transactions in a big graphic it becomes increasingly not ambiguous as to, you know, it was --

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 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

[brg444]

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.

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.

[VirosaGITS]

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

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.

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.

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.

[brg444]

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

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.

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.

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.

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.

[smoothie]

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

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.

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.

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 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.

[VirosaGITS]

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

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.

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.

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 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.

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.

[brg444]

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.

[BoscoMurray]

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

[onemorexmr]

I think I can understand all of the points being made now, and my preference is that nobody has anyway 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

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 ;-)

[VirosaGITS]

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.

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.

[brg444]

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

Coming soon to a sidechain near you.

[BoscoMurray]

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

Coming soon to a sidechain near you.

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

[brg444]

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

Coming soon to a sidechain near you.

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

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?

[smoothie]

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

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.

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.

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 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.

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.

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.

[smoothie]

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.

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.

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.

[VirosaGITS]

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.

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.

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.

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.

[BoscoMurray]

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

Coming soon to a sidechain near you.

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

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 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.

[Wapinter]

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.

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

[smoothie]

https://www.youtube.com/watch?v=ak1iojpiHpM&feature=youtu.be&t=33m6s

Andreas A. seems to believe that bitcoin can work on its "fungibility".  

Andreas: "We need to address the issue of fungibility..."

      ...     "the metric of economic inclusion is very much affected by the fungibility and black lists ..."

Also...

Dr. Adam Back says in regards to Bitcoin (in Feb 2014) - https://www.youtube.com/watch?v=3dAdI3Gzodo&feature=youtu.be&t=28m31s

"Weak fungibility: Feature & bug"


"Fungibility provides privacy as a side effect"


"Bitcoin privacy is fragile (Shamir & Dorit network analysis)"


By Dr. Adam Back's definition of fungibility PLUS(+) his statement of "Bitcoin privacy is fragile" you therefore can deduce Dr. Adam Back also believes that Bitcoin's fungibility is also fragile.

[brg444]

Spare us your appeal to authority please  

It just demonstrates that these guys, as smart as they are (have my doubts about Andreas), are also guilty of using wrong terminologies.

[smoothie]

Spare us your appeal to authority please  

It just demonstrates that these guys, as smart as they are (have my doubts about Andreas), are also guilty of using wrong terminologies.

Spare me your assumptions of my "appeal to authority".

Speak for yourself. There is no "us" in "you".

You don't have to like what Dr. Adam Back and Andreas A. have said on record. But it is what they said.

And no they are not my leader nor are they my authority, if you were presuming that.

I guess to you what they say does not matter. That's fine.

No one is making you listen to me nor them. Just put me on ignore if you cant handle it.  

[jonald_fyookball]

Already, businesses are springing up that are selling bitcoin with no previous transaction fee at a premium. This violates the principle of money fungibility.
 

What businesses?  Quite doubtful many people would pay for "clean" Bitcoins.

[smoothie]

Already, businesses are springing up that are selling bitcoin with no previous transaction fee at a premium. This violates the principle of money fungibility.
 

What businesses?  Quite doubtful many people would pay a premium (?) for "clean" Bitcoins.

I'm sure they would pay for "clean" coins... but would some people a premium for coins just minted with only the coinbase transaction history from the miner?

I could see that if someone has a fear of receiving coins associated with a crime.

[brg444]

To give a more lay explanation of why /u/brg444 is right about the difference between fungibility and privacy, consider a transaction where you consolidate one tainted satoshi into an address along with 10 untainted Bitcoin. Once those inputs are combined in a single address, there is no way to distinguish the tainted satoshi from the others. If you spent each of those millions of satoshis to different addresses, there would be no way to determine which address had the tainted satoshi.
The only way you could enforce any kind of tainting logic would be to taint the address, not the satoshi. That would effectively mean that you 'tainted' 10 Bitcoin in order to track the single satoshi. If you did do that, it's likely that tainted coins would rapidly outnumber untainted coins because any tainted coins effectively infect all the clean coins they interact with. Untainted coins might command a premium, but they would almost certainly become impractically rare to treat as the only valid currency.

https://www.reddit.com/r/Bitcoin/comments/3psbz7/re_blockchain_alliance_please_explain_how_is_an/cw9n8qs

[smoothie]

You can't have privacy in a currency without fungibility.

LINK: http://diyhpl.us/wiki/transcripts/scalingbitcoin/privacy-and-fungibility/

"Privacy is the weakest link in censorship resistance. Fungibility is an absolute necessity for any medium of exchange. The properties of money include fungibility. Without privacy you may not be able to have fungibility."

[brg444]

You can't have privacy in a currency without fungibility.

LINK: http://diyhpl.us/wiki/transcripts/scalingbitcoin/privacy-and-fungibility/

"Privacy is the weakest link in censorship resistance. Fungibility is an absolute necessity for any medium of exchange. The properties of money include fungibility. Without privacy you may not be able to have fungibility."

Thanks for the link, I actually sat at that roundtable.

Anyway as to your confusion read above.

[iCEBREAKER]

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.

Taint measurement is about shades of probability and degrees of separation, not "exactly which" outputs went into inputs.

Fungibility means different things to different people.  The common definition the the one that (as Dr Backamoto quipped) provides privacy as a side effect.

In the aggregate (so as to ignore individual nodes' idiosyncratic black/white lists) at the neutral protocol level, all satoshis are fungible.

At the socioeconomic level, you may identify and track the outputs history THUS it is certain you CAN differentiate the units.

As fresh clean coins sell for a premium and an entire new anti-privacy industry grows around the task of differentiating the units, sweeping claims of blanket 'Fungible...Because Sovereign' will get the Willy Wonka 'tell me more' eye-rolling treatment.

And I say that as someone who *almost* entirely agrees with the #b-a 'there are no tainted BTC, only tainted institutions' POV.

[smoothie]

I'm reposting this here as I believe it is relevant:


I love bitcoin and what it was created to be. But in light of the ability for regulatory authorities to ban or blacklist specific coins that have a certain address history association personally I see bitcoin as losing its fungibility in that respect.

Sure "Bitcoin is not the problem" is one way of looking at it, but other side of the argument is that "why not just fix that issue by disallowing transactions to be tracked by default and just have privacy features on by default?"

We know the answer: Too much opposition to changing the core protocol allow that to happen.

So the argument has those two sides...

SIDE A: Bitcoin is broken via fungibility because one can discriminate some coins to be accepted vs others based on block chain analysis.

SIDE B: Bitcoin is not broken and the financial system and businesses who choose to discriminate certain coins from being spent/exchanged in 3rd party businesses are broken (and the problem).

Two sides and probably both right in their own respect.

Although the arguments and sides exist it doesn't change the fact that businesses/govt/individuals can discriminate from accepting certain coins based on block chain analysis of their respective histories.

We have to remember that bitcoin does exist in this current world no matter how much we disagree with TPTB or the broken legacy monetary system. As long as that type of system exists there will be some issues concerning discriminating against accepting certain coins from certain addresses.

THOUGHT SCENARIO EXERCISE DEALING WITH COIN DISCRIMINATION
This thought experiment is to merely be just that an experiment and is not intended to give people ideas on what to do or not do in certain scenarios

You are an average joe looking to trade cash for bitcoins or some object like (gold coin) for bitcoins. Assuming you know each of the possible scenarios are true below.

BOB has bitcoins he wants to trade/exchange with you.

Which scenarios below would you consider not trading with BOB and discriminating against accepting his BTC for payment or trade?

Which scenarios would you trade with BOB and not discriminate against doing a trade?

BOB wants to trade you his BTC is the same person who just:

A. Robbed an old lady of her BTC by ransacking her house then beating the crap out of her.

B. Sold Kiddie porn for BTC

C. Ordered and executed a terrorist attack on a city killing a few hundred people and was paid in BTC to do so

D. Evading taxes with BTC

E. Was paid in BTC for prositution

F. Sold illegal drugs for BTC


Now if you really think about it, people can and will discriminate if they know or suspect something has happened with those BTC.

Would you accept BTC for trade or payment knowing that one of those things happened?

Which ones would you discriminated against more than others?

This brings in different shades of discrimination. As not every person would necessarily pick all of them to discriminate against. Some might even pick all of them to discriminated against. Some possibly would not care.

[VirosaGITS]

I'm reposting this here as I believe it is relevant:


I love bitcoin and what it was created to be. But in light of the ability for regulatory authorities to ban or blacklist specific coins that have a certain address history association personally I see bitcoin as losing its fungibility in that respect.

Sure "Bitcoin is not the problem" is one way of looking at it, but other side of the argument is that "why not just fix that issue by disallowing transactions to be tracked by default and just have privacy features on by default?"

We know the answer: Too much opposition to changing the core protocol allow that to happen.

So the argument has those two sides...

SIDE A: Bitcoin is broken via fungibility because one can discriminate some coins to be accepted vs others based on block chain analysis.

SIDE B: Bitcoin is not broken and the financial system and businesses who choose to discriminate certain coins from being spent/exchanged in 3rd party businesses are broken (and the problem).

Two sides and probably both right in their own respect.

Although the arguments and sides exist it doesn't change the fact that businesses/govt/individuals can discriminate from accepting certain coins based on block chain analysis of their respective histories.

We have to remember that bitcoin does exist in this current world no matter how much we disagree with TPTB or the broken legacy monetary system. As long as that type of system exists there will be some issues concerning discriminating against accepting certain coins from certain addresses.

THOUGHT SCENARIO EXERCISE DEALING WITH COIN DISCRIMINATION
This thought experiment is to merely be just that an experiment and is not intended to give people ideas on what to do or not do in certain scenarios

You are an average joe looking to trade cash for bitcoins or some object like (gold coin) for bitcoins. Assuming you know each of the possible scenarios are true below.

BOB has bitcoins he wants to trade/exchange with you.

Which scenarios below would you consider not trading with BOB and discriminating against accepting his BTC for payment or trade?

Which scenarios would you trade with BOB and not discriminate against doing a trade?

BOB wants to trade you his BTC is the same person who just:

A. Robbed an old lady of her BTC by ransacking her house then beating the crap out of her.

B. Sold Kiddie porn for BTC

C. Ordered and executed a terrorist attack on a city killing a few hundred people and was paid in BTC to do so

D. Evading taxes with BTC

E. Was paid in BTC for prositution

F. Sold illegal drugs for BTC


Now if you really think about it, people can and will discriminate if they know or suspect something has happened with those BTC.

Would you accept BTC for trade or payment knowing that one of those things happened?

Which ones would you discriminated against more than others?

This brings in different shades of discrimination. As not every person would necessarily pick all of them to discriminate against. Some might even pick all of them to discriminated against. Some possibly would not care.

Then the problem would not be "That money is bad" but it would be you not wanting you to deal with criminals, which is up to the law enforcement to catch. Or the individual to care.

Do you see anyone having problem buying or accepting the Bitcoins sold by the FBI? No. Do you see exchanges using some sort of blacklist database considering BTC as bad? No.

Do you see some sort of centralized authority that track and detect all BTC used in criminal activity? No. And wait, its not even possible to detect/enforce, since bitcoin does not have a centralized authority.

So unless you have actionable example of your super project that isint even possible in the first place (Its effectively impossible to detect which BTC has been used for anything you mentioned or not, its impossible to enforce, etc) then we can safely say that we're at no risk.

There just is no way for a company to dedicate billions of USD trying to track and tag every single transaction ongoing when there's not even a way to consistently connect the BTC to a crime or even an identity.

TLDR; Its fungibility, even though its not even relevant with BTC, is assured because there is not way to say whether the BTC was obtained legally or illegally. Especially when you take into account how easily it is to mix BTC.

[BoscoMurray]

Do you see anyone having problem buying or accepting the Bitcoins sold by the FBI? No. Do you see exchanges using some sort of blacklist database considering BTC as bad? No.

Do you see some sort of centralized authority that track and detect all BTC used in criminal activity? No. And wait, its not even possible to detect/enforce, since bitcoin does not have a centralized authority.

So unless you have actionable example of your super project that isint even possible in the first place (Its effectively impossible to detect which BTC has been used for anything you mentioned or not, its impossible to enforce, etc) then we can safely say that we're at no risk.

There just is no way for a company to dedicate billions of USD trying to track and tag every single transaction ongoing when there's not even a way to consistently connect the BTC to a crime or even an identity.

TLDR; Its fungibility, even though its not even relevant with BTC, is assured because there is not way to say whether the BTC was obtained legally or illegally. Especially when you take into account how easily it is to mix BTC.

Bitcoins sold by the US gov would drop off any such blacklist and be considered clean again.

http://www.blacklistedbitcoins.com/
Fair enough, individual bitcoins or satoshis cannot be blacklisted, but addresses can. I also doubt the cost of creating such blacklisting services would be anywhere near millions of dollars, never mind billions. So it's not true fungibility problems, but it creates perceived fungibility problems.

I think the only solution to this issue is private, untraceable transactions by default. Transparent transactions should be optional somehow, maybe on a side chain.

[smoothie]

I'm reposting this here as I believe it is relevant:


I love bitcoin and what it was created to be. But in light of the ability for regulatory authorities to ban or blacklist specific coins that have a certain address history association personally I see bitcoin as losing its fungibility in that respect.

Sure "Bitcoin is not the problem" is one way of looking at it, but other side of the argument is that "why not just fix that issue by disallowing transactions to be tracked by default and just have privacy features on by default?"

We know the answer: Too much opposition to changing the core protocol allow that to happen.

So the argument has those two sides...

SIDE A: Bitcoin is broken via fungibility because one can discriminate some coins to be accepted vs others based on block chain analysis.

SIDE B: Bitcoin is not broken and the financial system and businesses who choose to discriminate certain coins from being spent/exchanged in 3rd party businesses are broken (and the problem).

Two sides and probably both right in their own respect.

Although the arguments and sides exist it doesn't change the fact that businesses/govt/individuals can discriminate from accepting certain coins based on block chain analysis of their respective histories.

We have to remember that bitcoin does exist in this current world no matter how much we disagree with TPTB or the broken legacy monetary system. As long as that type of system exists there will be some issues concerning discriminating against accepting certain coins from certain addresses.

THOUGHT SCENARIO EXERCISE DEALING WITH COIN DISCRIMINATION
This thought experiment is to merely be just that an experiment and is not intended to give people ideas on what to do or not do in certain scenarios

You are an average joe looking to trade cash for bitcoins or some object like (gold coin) for bitcoins. Assuming you know each of the possible scenarios are true below.

BOB has bitcoins he wants to trade/exchange with you.

Which scenarios below would you consider not trading with BOB and discriminating against accepting his BTC for payment or trade?

Which scenarios would you trade with BOB and not discriminate against doing a trade?

BOB wants to trade you his BTC is the same person who just:

A. Robbed an old lady of her BTC by ransacking her house then beating the crap out of her.

B. Sold Kiddie porn for BTC

C. Ordered and executed a terrorist attack on a city killing a few hundred people and was paid in BTC to do so

D. Evading taxes with BTC

E. Was paid in BTC for prositution

F. Sold illegal drugs for BTC


Now if you really think about it, people can and will discriminate if they know or suspect something has happened with those BTC.

Would you accept BTC for trade or payment knowing that one of those things happened?

Which ones would you discriminated against more than others?

This brings in different shades of discrimination. As not every person would necessarily pick all of them to discriminate against. Some might even pick all of them to discriminated against. Some possibly would not care.

BTW I noticed you did not even address my thought example above.



How would you determine who you would trade with if you knew those things were true? Which scenarios would you trade with that person if you know that the scenario is true and BOB is guilty of doing that?

Then the problem would not be "That money is bad" but it would be you not wanting you to deal with criminals, which is up to the law enforcement to catch. Or the individual to care.

Do you see anyone having problem buying or accepting the Bitcoins sold by the FBI? No.

You forget that TPTB (the authority) can pretty much do what they want. When they possess the coins from criminals it is all of a sudden made "clean".

Do you see exchanges using some sort of blacklist database considering BTC as bad? No.

YES. BTC-e and the evolution stolen coins.

MTGOX did this with bitcoinica stolen coins.

Bitpay is doing this on their own recently announced black list as I linked to in this thread once already.

Do you see some sort of centralized authority that track and detect all BTC used in criminal activity? No. And wait, its not even possible to detect/enforce, since bitcoin does not have a centralized authority.

So unless you have actionable example of your super project that isint even possible in the first place (Its effectively impossible to detect which BTC has been used for anything you mentioned or not, its impossible to enforce, etc) then we can safely say that we're at no risk.

There just is no way for a company to dedicate billions of USD trying to track and tag every single transaction ongoing when there's not even a way to consistently connect the BTC to a crime or even an identity.

TLDR; Its fungibility, even though its not even relevant with BTC, is assured because there is not way to say whether the BTC was obtained legally or illegally. Especially when you take into account how easily it is to mix BTC.

Just because you can't see something, doesn't mean it isn't there.

I'm pretty sure it won't cost billions to track and tag transactions that they want to.

How is there no way to consistently connect BTC to a crime when many people who operated on silk road got caught and thrown in jail? <---- this topic is irrelevant as we are not really talking about people getting caught in their crime but coins associated with a crime not being accepted for payment/trade.

Do you think Ross Ulbright could have benefitted from default privacy options in bitcoin?

Mixing BTC doesn't remove the transactional history. Thus coins can be traced back to their source on the block chain.

[VirosaGITS]

Do you see anyone having problem buying or accepting the Bitcoins sold by the FBI? No. Do you see exchanges using some sort of blacklist database considering BTC as bad? No.

Do you see some sort of centralized authority that track and detect all BTC used in criminal activity? No. And wait, its not even possible to detect/enforce, since bitcoin does not have a centralized authority.

So unless you have actionable example of your super project that isint even possible in the first place (Its effectively impossible to detect which BTC has been used for anything you mentioned or not, its impossible to enforce, etc) then we can safely say that we're at no risk.

There just is no way for a company to dedicate billions of USD trying to track and tag every single transaction ongoing when there's not even a way to consistently connect the BTC to a crime or even an identity.

TLDR; Its fungibility, even though its not even relevant with BTC, is assured because there is not way to say whether the BTC was obtained legally or illegally. Especially when you take into account how easily it is to mix BTC.

Bitcoins sold by the US gov would drop off any such blacklist and be considered clean again.

http://www.blacklistedbitcoins.com/
Fair enough, individual bitcoins or satoshis cannot be blacklisted, but addresses can. I also doubt the cost of creating such blacklisting services would be anywhere near millions of dollars, never mind billions. So it's not true fungibility problems, but it creates perceived fungibility problems.

I think the only solution to this issue is private, untraceable transactions by default. Transparent transactions should be optional somehow, maybe on a side chain.

The problem is that, if the coins are *actually* dirty, they will certainly be moved and sent through loop. Split and spent, mixed. Its not just blacklisting an address, its keeping tracks of where they were, are and going.

Let say i have 10k of BTC that was at one point dirty, there is no way to know if i'm the second holder, third, fourth, etc.

I send them to an exchange and we already know there is no problem doing this. At which point, did i just make all the exchange's coin dirty? No.

Because there is no way to know who sent in and who receive out, you would have to black list all the coins which is not going to happen, at which point you're forced to accept all the coins.

So yes you would need some super spy agency like NSA that ignore country boundaries and forcefully keep tract exactly how BTC transaction are internally (in the exchange) handle to "keep" track.

Its not something you can do by looking at the blockchain.

[cjmoles]

I don't know....I may be out of line, but it seems like the question of fungibility with bitcoin could provide some possible solutions to some of its problems.  How many people have been scammed and had no recourse for which to get retribution?  Would a scammer be less likely to scam if he knew his scammed coin would be blacklisted?  Very interesting conversation, indeed.

[VirosaGITS]

I don't know....I may be out of line, but it seems like the question of fungibility with bitcoin could provide some possible solutions to some of its problems.  How many people have been scammed and had no recourse for which to get retribution?  Would a scammer be less likely to scam if he knew his scammed coin would be blacklisted?  Very interesting conversation, indeed.

There is no central authority, so the only way to make this happen is if its accepted by consensus. Seeing how hard it is to get consensus even on important things, and how abusable a blacklist being enforced could be in the wrong hand...

It simply will not happen.

[cjmoles]

I don't know....I may be out of line, but it seems like the question of fungibility with bitcoin could provide some possible solutions to some of its problems.  How many people have been scammed and had no recourse for which to get retribution?  Would a scammer be less likely to scam if he knew his scammed coin would be blacklisted?  Very interesting conversation, indeed.

There is no central authority, so the only way to make this happen is if its accepted by consensus. Seeing how hard it is to get consensus even on important things, and how abusable a blacklist being enforced could be in the wrong hand...

It simply will not happen.

True...it would be nice if we could figure out a way to regulate ourselves as a community.  Wishful thinking probably...but it's worth some thought.

[RodeoX]

If anybody here feels their coins are tainted, then by all means sell them to me cheap. The next day they will be all mixed up shiny and new. You can then buy them back from me at full value. Your conscience and money will be as pure as math itself.
    

[RyanX]

A coin is just coin, it will retain its value even if it was used in doggy business before. Most US dollar bills have been used illegally. Most of them have the taint of cocaine.

[BirtRenaldsFan]

It doesn't matter to me if it does or if it doesn't. I enjoy occupying Bitcoin, and so should you.