[matheusmoreira]

Fungibility means coins are indistinguishable from each other. Bitcoin does not have this property: the origin of each coin can be traced all the way back to its minting.

Governments cannot block transactions but they can stop people from accepting the coins. Money that can't be spent is worthless.

[DubiousPusher]

Yes and in some cases that matters. But for most practical purposes, two coins are interchangeable. As in,if you're sending me bitcoin, I don't really care which coin in the wallet you send me.

I could use your argument to say U.S cash is not fungible because each bill has a serial number. And the government occasionally tracks bills with a given number.

[heckerhut]

Not true even within the bitcoin specification itself. Look at how transaction fees are calculated. Older coins pay less fees than newer coins. They are not fungible. It’s one of bitcoins biggest weaknesses. Even Adam Back agrees with that (Google some older ltb episodes)

[DubiousPusher]

> Older coins pay less fees than newer coins.

And some circulated currency becomes more valuable because of its collectability or changes in its composite metals. But we do not say the system of currency itself has been rendered I fungible. I have ceded the technical point here several times. But for most practical purposes it is fungible because most users of bitcoin do not care which coin they get when they recieve it nor which one they lose when they recieve it.

[heckerhut]

The point everyone is trying to make is that because the bitcoins are technically not fungible they will, over time, also become practically not fungible due to, eg government intervention (AML, CO2, whatever). That is pretty much set in stone.

[DubiousPusher]

I doubt it. I would bet most people will not care.

[skohan]

It's a bit different. Yes it's true that, for instance, if a pallet of USD with sequential serial numbers went missing, the FBI would probably knock on your door if you tried to put some of them in the bank. But as far as I know, if those dollars made it into circulation and you obtained them by legal means, it doesn't become illegal for you to spend them.

[DubiousPusher]

It's not that different though. At times there are dollars which have become not fungible. We don't say this makes the whole system not fungible. Because in most transactions, most of the time, people don't distinguish between the units of exchange.

In some highly technical way, is the medium not fungible? Sure. Just as in prison exchange of cigarettes there might be someone who won't take Parliaments and someone else who wants only Marbs. But most of the time, most people, exchanging most coin, consider them interchangable. And in any financial tool that is what matters. Not theory but how people treat it.

[skohan]

Fungibility is not a binary, it's on a continuum. A dollar bill is almost 100% fungible, with some exceptions as you have mentioned. A dollar token (i.e. the number in your bank account) is basically 100% fungible.

Bitcoins are far less fungible. If you can look at all the transactions which have occurred in the past on a given token, and retroactively decide it is unfit for exchange, this is categorically different than saying you can put a dollar bill through the washer and make it unusable.

[Nevermark]

It's not whether people could start judging every satoshi differently, it is whether they do.

Generally, to a percentage very close to 100%, people are not doing that.