What If One Bitcoin Isn’t Like the Others? Fungibility Debated At Scaling Conference

By October 8, 2016Bitcoin Business

What If One Bitcoin Isn't Like the Others? Fungibility Debated At Scaling Conference

While bitcoin’s limited transaction capacity is no secret, day one of the ongoing Scaling Bitcoin conference in Milan served to assert that there is perhaps another stage of development that needs to take place before the network is ready for increased volume. Rather than focus on elements that have been given the most attention (most notably, the long-contentious block size ), day one opened with discussions focused on the economic concept of fungibility , or the idea that no one bitcoin should be able to be deemed less valuable or less legitimate as a result of its past use or ownership. That bitcoin’s best value proposition is its ability to enable blockchain-secured data to be exchanged like cash was an argument put forth in the day’s first discussion, led by newly appointed Blockstream CEO Adam Back and Blockstream founder Matt Corallo. "If you look at it from this perspective, for fungibility, bitcoin is worse than PayPal," he said. Against other forms of digital money, Back inferred, fungibility is perhaps the greatest strength of bitcoin as a digital currency. Yet, he asserted that for-profit companies are threatening this attribute of the network by exploiting its current technological limitations. Back remarked: "Some of the exchanges and wallets are using tracing services, and [if there is a connection to illicit activity] up to four hops deep away from you, they will freeze your account." Back contests that a lack of fungibility, if allowed to continue, could ultimately "leak" into the system, affecting bitcoin’s "permissionlessness", or the ability of any parties to join and use the technology without censorship. "It is critical and you need fungibility for bitcoin to function. If you receive coins and you can’t spend them, you start to doubt whether you can receive money," Back said. Other sessions on […]

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