Ensuring Bitcoin Fungibility in 2017 (And Beyond)
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....
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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....
The fungibility of the legacy sound money has come under fire as Western nations seek to delegitimize gold mined in Russia.
An innovation called TumbleBit that improves the privacy and fungibility of bitcoin transactions was presented at the Bitcoin Scaling conference in Milan, reports NASDAQ. TumbleBit builds on the CoinSwap intermediary solution with added layers of cryptography to improve both the privacy and fungibility of bitcoin transactions. The fact that the transaction history of each bitcoin is traceable puts all bitcoins’ fungibility at risk. “Tainted” bitcoins can be valued less than other bitcoins, possibly undermining bitcoin’s value proposition as money. A key problem for fungibility and privacy....
A slimming down of the bitcoin protocol called Mimblewimble generates a blinding factor that can prove ownership of bitcoins, making private keys unnecessary, and offering a solution to the need to balance bitcoin privacy against fungibility while also improving scalability, according to a white paper that appeared mysteriously on a bitcoin research site authored by a person using a pseudonym, according to Nasdaq. Privacy and fungibility are at odds in bitcoin because anyone can trace transactions over the blockchain, and as the number of transactions increases, the verification cost can....