@figmentofmyass. However, how does a commodity designation by the government automatically makes bitcoin a fungible cryptocoin if for example a government ban on a suspected darknet address can make those utxo dirty and cause it to be valued less?
it doesn't.
consider the difference between a graded commodity and a stamped collectible. that's the distinction being made.
as a general rule, bitcoins are interchangeable.fraudulently stamped, tainted or conflict gold is a perceived problem in the gold markets too. that doesn't make gold any less of a commodity.
so i think you're looking at this from the wrong direction. the important thing isn't whether outputs can be flagged as dirty---
it's that outputs are considered clean unless proven otherwise. just like tainted gold can be melted down and re-stamped, bitcoins can be tumbled and injected back into circulation too.
