Discussion
if they can differentiate between UTXOs it is not fungibile.
they can, so its not. one is NOT "as good as another" because reputation is also transfered due to a known history.
known difference, not fungible.
that's all.
thank you responding to the point under discussion
and NOT just posting a page of AI slop that reiterates the Bitcoin Standard
That's a quote from your note
First, to address the strawman claim: I'm not misrepresenting anything.
You implied certain market actors reject certain utxos or treat the differently, this often happens to honor lgovernment restrictions (like blacklisting bills) but not always, its also by individual choice and again, all such cases are irrelevant. None of that affects fungibility, as I said.
I know Seth's work, and he is wrong. You shouldn't trust one persons work/article. I'd recommend a variety of sources, historical and acclaimed economists are valuable here.
Seth's point about utxos is half right but misses the mark on fungibility.
UTXOs have unique blockchain histories, so some exchanges or users might reject ones linked to, say, illicit wallets.
But fungibility in Bitcoin applies at the level of satoshis, the smallest unit, not UTXOs.
The market generally treats one satoshi as equal to another in value 100 million satoshis make a Bitcoin, always.
If some market actors reject a utxo, that’s an external preference, like refusing a worn $10 bill or a blacklisted dollar or bank account the government warns you about or tells you not to use, or a bank account you choose not to so business with or money that you know was connected to something you don't want to be apart of. None of that changes a satoshi’s inherent interchangeability.
As Investopedia defines it, fungibility is when units are substitutable with equal value in exchange, driven by market acceptance.
A 2024 FasterCapital article backs this, noting money (or crypto like Bitcoin) is fungible when its units are seen as equivalent, regardless of technical tracking like utxos.
Compare this to cash: even if a government tracks serial numbers (like utxos), a $10 bill remains fungible because the market sees it as equal to another $10 bill in trade.
Bitcoin’s satoshis work the same way, fungibility holds unless the entire market rejects specific units, which isn't common, like with dollars for example.
Economists like Mises (1912) and Hayek (1976) emphasize fungibility as market-driven interchangeability, not negated by specific rejections.
Fungibility’s about equal value in trade, not every single person accepting every single unit.