Nostr Web Client

I think how this graphic is describing it, Bitcoin is fungible. A satoshi is equivalent to another satoshi just as a dollar is equivalent to another dollar and an ounce of gold to another ounce of gold. This is unlike property where one apartment building is not equivalent to another.

Dollars can have serial numbers and electronic payments can be tracked, does that make dollars non-fungible? No.

Hanshan 11mo ago

first

utxos are what are exchange on the BTC chain. not sats directly. its true that sats are fungible, but utxos are not.

second

dollars arent passed around on a public ledger anyone can audit. if they were, they wouldn't be fungible either.

Reply to this note

Please Login to reply.

Discussion

Brett Phillips 11mo ago

Thanks for the thought provoking response.

Does a coinjoin change that?

Why does a public dollar ledger change fungibility?

Hanshan 11mo ago

Happy to chat about it.

CJs add entropy back into the system. Passing through one ore more CJs add uncertainty into the history of a certain utxo.

So then those utxos are fungible *with the set of other utxos that were CJed*

(assuming identical value and the same type of onchain footprint)

So yeah, CJs help. But there are details.

The public ledger thing is about externalities.

Of course there's nothing built into the Bitcoin network that censors utxos based on different criteria. That would never be accepted.

But because the ledger is public and auditable, utxos communicate REPUTATION as well as VALUE.

If we had a public dollar ledger it would be the same way. Your bank might look at your deposit and refuse to take funds if they came from known criminals for example.

Its not because of the serial number on the bills (although thats the mechanism they use to track it). Its because of the money's REPUTATION it is rejected.

In other words despite there being no network level censorship,

because of factors *external* to the network

it is de facto nonfungible.