Fungibility

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In economics, an asset or good that is fungible is one where two separate units of the same asset would be exchanged at exactly the same rate. Fungible assets (or goods) therefore are assets where two equal segments of the asset have exactly equal value. For example, an ounce of gold is equal in value to any other ounce of gold.  

Some argue that most cryptocurrencies are, in fact, not fungible. On the surface, one Bitcoin has exactly the same value as any other Bitcoin. Today, except for some variance from one exchange to another Crypto coins (or fractions thereof) are traded as fungible assets. Most cryptocurrency traders do not consider the transaction history of each coin when making a purchase.   

The transparent nature of blockchain means each coin (or fraction thereof) has a specific tracible and verifiable transaction history which is openly visible to all on the open source blockchain. Theoretically, that transaction history could affect the value of an individual Bitcoin (or fraction thereof). What if the Bitcoin was stolen? What if it had previously been used in drug trafficking or even terrorism? Individuals and governing bodies could differentiate one coin from another, and accordingly, designate a different value to each.

Privacy coins such as Monero, do not suffer from this predicament.

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