Aneta Karbowiak has been writing articles about Bitcoin and cryptocurrency since 2018.
When Satoshi Nakamoto wrote the Bitcoin white paper[1], he thought of a permissionless system to exchange electronic cash trustlessly. Today, Bitcoin has become a symbol of freedom, and as Edward Snowden says[2], “Liberty is freedom from permission.” By building a transparent, verifiable ledger, Satoshi introduced trust into the system, though. Trust damages Bitcoin privacy and fungibility, and it ain’t a good thing.
What Is Fungibility?
Fungibility means interchangeability for another good of the same kind and indistinguishability of individual units. Gold is fungible. A unit of gold is indistinguishable from another and is interchangeable for another, therefore, they have the same value. One gram of gold will always equal one gram of gold, regardless if it takes the form of an ingot, bullion coin or nuggets. One dollar will always equal one dollar; no matter if it's been touched by a criminal or if it’s been touched by someone famous. You can’t sell $1 for $2 because no one would buy it. Also, no one is interested in where these dollars were or by how many hands they passed before you got them. What people want, though, is to know that the dollar they get will not suddenly lose value and that they will not have to go searching for a special place to exchange them for something else at a lower price.
If a teacher gets paid for work with a non-fungible asset like a porcelain vase, he needs to go looking for a place to sell or exchange it for something he needs. If a doctor gets paid in grain instead of dollars, he will need to look for someone willing to buy grain from him if he wants to
