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

[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.