Fungibility means each unit of a currency is identical and interchangeable. For example, each $1 bill is worth the same regardless of its history. It's crucial for a medium of exchange to ensure all units are treated equally without discrimination.

Bitcoin's fungibility is limited by its transparent blockchain. It allows transaction history tracking, which can lead to discrimination of certain coins.

Monero, with its privacy-focused design, ensures true fungibility by hiding transaction details. XMR coins are indistinguishable.