Subnostr

Is Bitcoin truly fungible? This is the only bit I'm not entirely sure about, because all transactions are obviously on a public ledger, so for instance if I had 1 BTC that I withdrew from SR and 1 BTC I bought KYC'd from Coinbase say, I wouldn't call those two coins interchangeable.

If I try to spend the first coin, feds are gonna be watching every movement from that wallet.

If I spend the second, since it's KYC it links my tx's back to me.

There are obviously solutions for this (e.g. tumbling, coinjoin, LN) so it's not necessarily a problem with Bitcoin itself, but it is with on-chain transactions.

Maybe I'm just nitpicking a bit but it's something that's been stuck in the back of my head for a while.

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Discussion

Cyph3rp9nk 2y ago

Totally agree with you. I would assert that bitcoin in the current state has poor fungibility, even if you do coinjoin you know that those coins have participated in a coinjoin so even coinjoin is not even good for fungibility with the exception that all transactions were coinjoin.

Pablo Xannybar 2y ago

Glad I'm not the only one.

Exactly - a lot of CEX's now refuse to accept any coinjoin BTC, which isn't a problem for most plebs but it absolutely affects fungibility and matters for wider adoption.

Hopefully as non-custodial lightning wallets continue to improve, it can more easily become the norm for actually spending BTC as it already is in ES, and if we're all using LN the sats are pretty much fungible since once they've been zapped through a few different wallets it becomes close to impossible to link them back to the original on-chain deposits.