Fungibility: what can we do about this?

[cellard]

Fungibility (or lack of it, not sure about how to use the term tbh) what can be done? I don't like the idea of using some Bitcoins that were once used by some criminals or something. With cash this is not a problem because we don't have a public ledger for cash, all cash is the same, but with Bitcoin, all transactions are recorded for everyone to see. I know confidential transactions are coming which is cool, because its no one's business to know how much money you are moving but you and the other party, but ultimately this does not solve the fungibility problem. So how do you keep the ledger public, while making it impossible to know if your Bitcoins are "good bitcoins" or "bad bitcoins" so to speak, so all Bitcoins are the same? There is already a market for "freshly mined bitcoins with 0 transactions": see this

https://blog.blocktrail.com/2015/07/announcing-blocktrail-mint-fresh-bitcoin-delivered-from-the-mines/

I think everyone deserves the same level of anonymity and fungibility, no matter if you are expert, noob, wealthy or poor. It shouldn't be something "extra". I hope this makes any sense.

[shorena]

It does not change anything, you can buy a 2$ bill for 3.95$[1]. It wont be worth more at the store around the corner.
You can buy a 50 EUR bill for 69.00$[2]. It wont be worth anything unless you actually travel to a country accepting it.

Same as these bills, freshly minted coins are a collectors item and have no effect on the overal fungibility.

[1] http://www.ebay.com/itm/2009-UNCIRCULATED-2-TWO-Dollar-Bill-Mint-Crisp-Note-Sequential-Order-LIMIT-10-/221910246938?hash=item33aae1a61a:g:dcIAAOSwuMFUlGbb
[2] should be 55.09 by todays exchange rate http://www.ebay.com/itm/Euro-Currency-circulated-bills-50-euro-/321899418602?hash=item4af2b353ea:g:o1MAAOSwI-BWJ7pg

[bbreconomy]

Fungibility (or lack of it, not sure about how to use the term tbh) what can be done? I don't like the idea of using some Bitcoins that were once used by some criminals or something. With cash this is not a problem because we don't have a public ledger for cash, all cash is the same, but with Bitcoin, all transactions are recorded for everyone to see. I know confidential transactions are coming which is cool, because its no one's business to know how much money you are moving but you and the other party, but ultimately this does not solve the fungibility problem. So how do you keep the ledger public, while making it impossible to know if your Bitcoins are "good bitcoins" or "bad bitcoins" so to speak, so all Bitcoins are the same? There is already a market for "freshly mined bitcoins with 0 transactions": see this

https://blog.blocktrail.com/2015/07/announcing-blocktrail-mint-fresh-bitcoin-delivered-from-the-mines/

I think everyone deserves the same level of anonymity and fungibility, no matter if you are expert, noob, wealthy or poor. It shouldn't be something "extra". I hope this makes any sense.

The solution is not Confidential Transactions alone. The ultimate solution is the combination of Ring Signatures with confidential transactions and is under development

https://github.com/ShenNoether/MiniNero/raw/master/RingCT0.4_copy.pdf

There is no reason why bitcoin could not duplicate this work in a side chain. The advantages and disadvantages of side chains of course is another discussion. The point is that the changes you request are too drastic to ever be implemented in bitcoin itself.

[gentlemand]

Lack of fungiblilty isn't innate. It's implemented by certain companies and groups. As long as they're shunned they'll rapidly get the message. If they don't then it's easy enough to prove that every single bit of dust they handle has a bit of filth attached to it.

Those paying a premium for 'fresh' coins are doing so on a voluntary basis and that premium won't be repeated elsewhere. Would I pay more for a coin from them? Hell no. As soon as it leaves their wallet and mixes with the filth in mine it's all over anyway.

[XMRpromotions]

Lack of fungiblilty isn't innate. It's implemented by certain companies and groups. As long as they're shunned they'll rapidly get the message. If they don't then it's easy enough to prove that every single bit of dust they handle has a bit of filth attached to it.

Those paying a premium for 'fresh' coins are doing so on a voluntary basis and that premium won't be repeated elsewhere. Would I pay more for a coin from them? Hell no. As soon as it leaves their wallet and mixes with the filth in mine it's all over anyway.

I agree with you that paying a premium for freshly mined coins is not a good solution.

It sounds like your solution is to avoid "certain companies and groups" that do not allow for all bitcoin to be fungible.  I don't see that as an ideal solution because the list of those companies will expand over time because due to regulatory concerns. This will be more true in some countries than others but I think most of us would like to see bitcoin perfectly fungible everywhere!

[binaryFate]

It does not change anything, you can buy a 2$ bill for 3.95$[1]. It wont be worth more at the store around the corner.
You can buy a 50 EUR bill for 69.00$[2]. It wont be worth anything unless you actually travel to a country accepting it.

Extremely bad analogy, because fiat money is made fungible by law. You are forced to accept whatever notes. It is legal tender.
Such laws are only possible in a centralized system that can enforce them.

The same flawed (or plain false) arguments and examples are systematically brought up ad nauseam in fungibility related discussions. It's quite worrying, it seems everybody wants to have a definite opinion, but they pull it out of their ass instead of educating themselves at least a litlle bit on the topic before talking.
Not saying everybody should have the same opinion, simply that whatever opinion they have should be supported at least a tiny bit.

[shorena]

It does not change anything, you can buy a 2$ bill for 3.95$[1]. It wont be worth more at the store around the corner.
You can buy a 50 EUR bill for 69.00$[2]. It wont be worth anything unless you actually travel to a country accepting it.

Extremely bad analogy, because fiat money is made fungible by law. You are forced to accept whatever notes. It is legal tender.
Such laws are only possible in a centralized system that can enforce them.

Alright, lets go the bitcoin route.

The same flawed (or plain false) arguments and examples are systematically brought up ad nauseam in fungibility related discussions. It's quite worrying, it seems everybody wants to have a definite opinion, but they pull it out of their ass instead of educating themselves at least a litlle bit on the topic before talking.
Not saying everybody should have the same opinion, simply that whatever opinion they have should be supported at least a tiny bit.

Is there a single service that accepts bitcoin, but only certain bitcoin though? I wouldnt even know where to start implementing that, as there is no "from" address in the transaction you would need to backtrack to find the address the inputs have been received on previously. On top of that. How would you handle such a transaction? Return to sender? How would you handle a TX that spends 10 "bad" and 10 "good" bitcoin? How do you avoid that "washed bad" bitcoin? If you are blocking by a set of addresses I could just send them to a newly generated address. Would you backtrack the entire tree chain of transactions?

Just because someone is willing to pay a premium for "fresh" bitcoin does not make these more valueable elsewhere, despite my bad analogy this is still a valid point.

[binaryFate]

It does not change anything, you can buy a 2$ bill for 3.95$[1]. It wont be worth more at the store around the corner.
You can buy a 50 EUR bill for 69.00$[2]. It wont be worth anything unless you actually travel to a country accepting it.

Extremely bad analogy, because fiat money is made fungible by law. You are forced to accept whatever notes. It is legal tender.
Such laws are only possible in a centralized system that can enforce them.

Alright, lets go the bitcoin route.

The same flawed (or plain false) arguments and examples are systematically brought up ad nauseam in fungibility related discussions. It's quite worrying, it seems everybody wants to have a definite opinion, but they pull it out of their ass instead of educating themselves at least a litlle bit on the topic before talking.
Not saying everybody should have the same opinion, simply that whatever opinion they have should be supported at least a tiny bit.

Is there a single service that accepts bitcoin, but only certain bitcoin though? I wouldnt even know where to start implementing that, as there is no "from" address in the transaction you would need to backtrack to find the address the inputs have been received on previously. On top of that. How would you handle such a transaction? Return to sender? How would you handle a TX that spends 10 "bad" and 10 "good" bitcoin? How do you avoid that "washed bad" bitcoin? If you are blocking by a set of addresses I could just send them to a newly generated address. Would you backtrack the entire tree chain of transactions?

Just because someone is willing to pay a premium for "fresh" bitcoin does not make these more valueable elsewhere, despite my bad analogy this is still a valid point.

I founded and developed http://luckyb.it, which sent back +1.8M bets straight to their respective senders.
The fact that you "wouldnt even know" is fairly meaningless...
You seem to have little clues on the technicalities of Bitcoin. Unlike fiat where fungibility is achieved (or not) legally, with Bitcoin it's all about the technicalities.

[shorena]

-snip-
I founded and developed http://luckyb.it, which sent back +1.8M bets straight to their respective senders.

Well you are certainly allowed to do that, but its bad you probably know that.

The fact that you "wouldnt even know" is fairly meaningless...
You seem to have little clues on the technicalities of Bitcoin. Unlike fiat where fungibility is achieved (or not) legally, with Bitcoin it's all about the technicalities.

Yeah, have fun on that level.

[gentlemand]

It sounds like your solution is to avoid "certain companies and groups" that do not allow for all bitcoin to be fungible.  I don't see that as an ideal solution because the list of those companies will expand over time because due to regulatory concerns.

I think in a lot of cases when people scream about fungibility what they're actually coming up against is the abuse of terms and conditions from companies like Coinbase. They have some very heavy people breathing down their necks and they're fully within their rights to try and cover their arses against things that are outlawed in their jurisdiction. They're really no different from a bank in that aspect but that should be clear to everyone who uses it.

[medUSA]

Fungibility (or lack of it, not sure about how to use the term tbh) what can be done? I don't like the idea of using some Bitcoins that were once used by some criminals or something.

There is no fungibility issue for me. I don't research the "history" of the bitcoin I receive, where they have been and who used them. As long as I receive my coins from a legit source (I wouldn't get in trouble for it), I don't need to know and I don't care. The bitcoin that we all circulate today, there are silkroad and scam money mixed inside, where do you draw the line?

[onemorexmr]

Fungibility (or lack of it, not sure about how to use the term tbh) what can be done? I don't like the idea of using some Bitcoins that were once used by some criminals or something.

There is no fungibility issue for me. I don't research the "history" of the bitcoin I receive, where they have been and who used them. As long as I receive my coins from a legit source (I wouldn't get in trouble for it), I don't need to know and I don't care. The bitcoin that we all circulate today, there are silkroad and scam money mixed inside, where do you draw the line?

i dont care of the history of my coins too.
but whats scares me is, that services (eg like coinbase with gambling money) care about it.

tbh i dont use coinbase. but i can imagine more services (forced?) to do sth like this

[shorena]

-snip-
tbh i dont use coinbase. but i can imagine more services (forced?) to do sth like this

But they cant, all they can block is direct transfers from certain addresses. All you need is a local wallet. If they start block fresh addresses because of the coin history they are no longer useable. Which does more harm to them than to you.

[gentlemand]

but whats scares me is, that services (eg like coinbase with gambling money) care about it.

They have no choice. If they let thousands of customers directly send coins to traceable dark market and gambling sites then they'll be shut down. Your bank would do the exact same thing with your dollars. They're a private operation who are held accountable for what they enable.

[onemorexmr]

-snip-
tbh i dont use coinbase. but i can imagine more services (forced?) to do sth like this

But they cant, all they can block is direct transfers from certain addresses. All you need is a local wallet. If they start block fresh addresses because of the coin history they are no longer useable. Which does more harm to them than to you.

i want to use bitcoin like money without such hazzle (eg moving them to my local wallet first, probably use a mixer sometime in the future).
if we want adoption: how to explain such things to average people?

IMHO this needs to be solved at bitcoins protocol level. gladly gmaxwell is working on it ;-)

but my feeling is that a sidechain is not enough: i'd like to see any bitcoin transaction anonymous (optionally transparent to selected people, like with an altcoin i like but wont mention here).

[medUSA]

i want to use bitcoin like money without such hazzle (eg moving them to my local wallet first, probably use a mixer sometime in the future).
if we want adoption: how to explain such things to average people?

There isn't much hazzle if you use your own wallet/client (I use blockchain.info and electrum), I buy from exchanges and seldom sell bitcoin. There is no hazzle and fungibility issue. A huge problem will arise if merchants and exchanges starts to refuse "dirty bitcoin" deposits. I hope that day wouldn't come.

[pandher]

Your bank would do the exact same thing with your dollars.

Why use Bitcoin then?

[P-Funk]

Your anxiety about the lineage of your bitcoins is subtracting from its fungibility. If you'd like bitcoin to be fungible, don't worry about it.

[omarabid]

It does not change anything, you can buy a 2$ bill for 3.95$[1]. It wont be worth more at the store around the corner.
You can buy a 50 EUR bill for 69.00$[2]. It wont be worth anything unless you actually travel to a country accepting it.

Extremely bad analogy, because fiat money is made fungible by law. You are forced to accept whatever notes. It is legal tender.
Such laws are only possible in a centralized system that can enforce them.

I was not aware of that. Do you have any source for this information?

[philipma1957]

Fungibility (or lack of it, not sure about how to use the term tbh) what can be done? I don't like the idea of using some Bitcoins that were once used by some criminals or something. With cash this is not a problem because we don't have a public ledger for cash, all cash is the same, but with Bitcoin, all transactions are recorded for everyone to see. I know confidential transactions are coming which is cool, because its no one's business to know how much money you are moving but you and the other party, but ultimately this does not solve the fungibility problem. So how do you keep the ledger public, while making it impossible to know if your Bitcoins are "good bitcoins" or "bad bitcoins" so to speak, so all Bitcoins are the same? There is already a market for "freshly mined bitcoins with 0 transactions": see this

https://blog.blocktrail.com/2015/07/announcing-blocktrail-mint-fresh-bitcoin-delivered-from-the-mines/

I think everyone deserves the same level of anonymity and fungibility, no matter if you are expert, noob, wealthy or poor. It shouldn't be something "extra". I hope this makes any sense.

 See what I bolded>  That may be what you want to be true and what you believe, but depending on where you live it is not true.

In the USA  the federal government charges income tax on btc profits so ultimately  it has the right to look if you are subject to USA federal income tax.

Now if you are not subject to  USA federal income tax laws and many people in the world are not I feel your pain. But anyone sending to you from the usa needs to make proper disclosure.