Bitcoin Violates the Principle of Fungibility (Op-Ed)
In light of recent events within the bitcoin industry, namely the Evolution Marketplace going up in a burst of flames with customer money, it has become clear that cryptocurrency deviates from traditional money in more ways than initially meet the eye. Bitcoin, among a slate of other cryptocurrencies, violates the principle of fungibility within money - that is, each coin's transaction history differentiates them from every other bitcoin in circulation. With the collapse of the hidden Evolution Marketplace, these coins have now been tainted, and services are wilfully denying their deposit....
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Fungibility, put simply, is the idea that every item in a set is worth exactly the same amount. In bitcoin, fungibility means that all bitcoins have the same value, regardless of who owns them or what their history is – and fungibility is extremely important to the success of a decentralized network. To understand why, we have to analyze how bitcoin's current limited fungibility is creating real problems in the marketplace. For example, it's common for exchanges and merchants to discriminate between bitcoins based on the owner or their history. An example is that exchanges will attempt to....
Fungibility is often held as a crucial characteristic of sound money. But what happens when money has a public record of every transaction, and morally questionable trades can be identified? Is bitcoin headed for a break in fungibility? The debate about whether Bitcoin is fit to be a currency rather than a payment layer between currencies is as alive as it has ever been. Many of these tensions about what Bitcoin is or should be have been aired and discussed during the blocksize debate and are ongoing. One essential element of a money which has not particularly been illustrated is how....
What is the essence of bitcoin fungibility and why is it so important? Fungibility refers to the concept that every unit or subunit remains equivalent and identical to any other unit or subunit. It is the property of a good or commodity whose individual units are capable of mutual substitution. For instance, one bitcoin is considered the same as any other bitcoin when it comes to price and acceptance. Gold bullion has fungibility with identical degrees of fineness or purity. Government paper cash has fungibility provided that the bills have not been marked or serial numbers have not been....
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