Bitcoin Violates the Principle of Fungibility

[JohnQPublic]

Bitcoin Violates the Principle of Fungibility

"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 into wallets held by exchange businesses.


Bitcoin fungibility has been called into question and it is becoming glaringly obvious that this poses a threat to the stability and long-term usage of such currency. Exchanges want nothing to do with these stolen funds, and therefore, lessen their value in relation to otherwise identical cryptocurrency units..."

[madfranks]

Really, the problem of fungibility isn't anything that can't be easily overcome. If a known bitcoin address contains stolen funds, it's only a problem if you try to send the coins directly from the bad address to an exchange. All a thief has to do is make one, two, or a dozen new addresses, send the stolen coins through those addresses, then to the exchange. At that point how can anyone prove the intermediate addresses are the thief's? How many of us have ever unknowingly used cash that at one point had been used in illegal activity?

[palani]

Economists have known that money in general is not fungible for quite a spell. Read of the tests they perform on unsuspecting consumers using either cash or coupon incentives.

http://cbdr.cmu.edu/seminar/abeler.pdf

[Neuro]

Really, the problem of fungibility isn't anything that can't be easily overcome. If a known bitcoin address contains stolen funds, it's only a problem if you try to send the coins directly from the bad address to an exchange. All a thief has to do is make one, two, or a dozen new addresses, send the stolen coins through those addresses, then to the exchange. At that point how can anyone prove the intermediate addresses are the thief's? How many of us have ever unknowingly used cash that at one point had been used in illegal activity?

I doubt it is a huge problem also, but from my understanding some exchanges/ventures refuse to have something to do with coins that in their chain of command has been in these accounts no matter when they were, so in that case it doesn't matter if you put it through a hundred different wallets...

[Sparky]

Instead of Bitcoin, why don't we all just imagine how many assets we have. Then, when we need to make a transaction, which just imagine a different amount after the transaction.

[Neuro]

Instead of Bitcoin, why don't we all just imagine how many assets we have. Then, when we need to make a transaction, which just imagine a different amount after the transaction.

36?