Thank to NFTs explosion happened a few months ago now we all know the difference between fungible and non fungible.
For who have been in a bubble in the past months:
Fungible: units that are indistinguishable from the others, as coins;
Non fungible: units that are distinguishable from the others, as nfts.
Are bitcoins really fungible?
If the answer were yes i wouldn't be making this post XD.
As a matter of fact, each Bitcoin has a clearly viewable history on the blockchain.
It is complicated, but not impossible, to find all the previous owners of the bitcoins that you are handling right now.
Would you give the same value to a Bitcoin that, let's imagine, has been used to pay for drugs?
This is not just an hypothesis, this can really happen and it has happened for sure.
Police breaking into "Cooks" houses and examinating computers till finding Bitcoin addresses, hence all the ins and outs of a wallet.
Of course you would value it less. If you wouldn't, well any centralized society to who you would like to pay for something surely would.
When you pay for your groceries, the cashier will surely check large denomination banknotes, so would any centralized company with cryptos when they will accept them.
How to solve this?
Well with bitcoin which is a junk of a coin, is really hard. The only way i really found to "delete" the past of a coin is through using COINJOIN.
Coinjoin simply means to create a transaction where all the ins and all the outs are identical (Fungible XD) so that noone can really tell which address is sending to which address.
It has some limits. As far as i know only wasabi wallet implements this feature, but with a minimum of 0.1btc, which seen the high value of Btc makes it hard for normal transactions.
What's the solution then?
Not using any crypto who has a public blockchain.
You may not have anything to hide, but the past of your bitcoins may be darker than what you think.
Many so called "Privacy Coins" do exist, i bet you heard of Monero.
WIthin the Monero assed, there is no public information shared.
The blockchain is encrypted and let's say that each transacion is "shuffled" with other potential transactions.
Why is everyone using Bitcoin then?
Mainly because it is a trend, not different than flared pants.
It is even true that noone wants to interrupt this trend because a lot of people is gaining money with this.
If, back then, they could trade on flared pants, you would probably still see them around.
In conclusion, being able to freely manage your money is a part of the financial freedom that everyone wants, but if anyone can potentially find out how much cash you have, you are more in danger now than with banks.
Robberies would no more happen in banks but in citizens house and wouldn't take just grandma's ring, but whole life savings.
Keep an eye open, or maybe both XD