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What does Fungibility Mean? How does it apply to crypto?
Honestly it sounds pretty gross.
Fungi is the plural form of fungus.
Is it something’s ability to be like fungus? Not exactly.
Let me explain:
Honestly it sounds pretty gross.
Fungi is the plural form of fungus.
Is it something’s ability to be like fungus? Not exactly.
Let me explain:
Merriam-Webster defines it as:
1. being something (such as money or a commodity) of such a nature that one part or quantity may be replaced by another equal part or quantity in paying a debt or settling an account
2. capable of mutual substitution
Still unclear? Story time:
1. being something (such as money or a commodity) of such a nature that one part or quantity may be replaced by another equal part or quantity in paying a debt or settling an account
2. capable of mutual substitution
Still unclear? Story time:
Your neighbor from across the street stops by and asks to borrow some sugar.
He’s baking a cake for his wife’s birthday and ran out.
There is a 5-pound bag of sugar in your pantry and you happily offer him the whole thing to make sure his wife’s birthday cake is successful.
He’s baking a cake for his wife’s birthday and ran out.
There is a 5-pound bag of sugar in your pantry and you happily offer him the whole thing to make sure his wife’s birthday cake is successful.
Two days later, he returns to your house – carrying with him a new 5-pound bag of sugar he purchased from the grocery.
He thanks you again for your generosity and hands over the sugar.
You hardly notice that the sugar returned was a different brand – but don’t really care.
He thanks you again for your generosity and hands over the sugar.
You hardly notice that the sugar returned was a different brand – but don’t really care.
A few days later, a different neighbor stops by and asks if he can borrow your lawn mower.
His mower is broken and doesn’t want to be in trouble with his neighbors.
You have a nice, brand-new riding lawn mower stashed away in your garage and you happily offer it to him.
His mower is broken and doesn’t want to be in trouble with his neighbors.
You have a nice, brand-new riding lawn mower stashed away in your garage and you happily offer it to him.
Two days later, he returns to your house – carrying with him a beat-up, push lawn mower.
He thanks you again for your generosity and hands over the lawn mower you’ve never seen before.
You, an intellectual of course, do not accept his return offer.
He thanks you again for your generosity and hands over the lawn mower you’ve never seen before.
You, an intellectual of course, do not accept his return offer.
You demand he brings back the mower you let him borrow.
He says, “I borrowed a lawn mower, and I returned a lawn mower. I don’t see the issue here?”
You reply, “You don’t understand what fungibility means!”
He says, “I borrowed a lawn mower, and I returned a lawn mower. I don’t see the issue here?”
You reply, “You don’t understand what fungibility means!”
Although this is an extreme example, it highlights the difference in fungibility between sugar and lawn mowers.
You cannot just one-for-one swap non-fungible things.
Okay, that is common sense… but how does this apply to cryptocurrency?
You cannot just one-for-one swap non-fungible things.
Okay, that is common sense… but how does this apply to cryptocurrency?
A non-fungible token (NFT) is on one end of the spectrum.
You can own a 1 of 1 token.
A unique piece from a set like @cryptopunksbot , @autoglyphs , or @TheHashmasks where there are others like your piece, but not exactly the same.
Or a specific # in a set (#4 or 8 minted).
You can own a 1 of 1 token.
A unique piece from a set like @cryptopunksbot , @autoglyphs , or @TheHashmasks where there are others like your piece, but not exactly the same.
Or a specific # in a set (#4 or 8 minted).
This makes them extremely valuable – as you can see when @seedphrase or @pranksyNFT goes shopping.
After reading all of this, you might think, “Okay so cryptoart is non-fungible and the coins themselves are fungible.”
Well, not exactly.
After reading all of this, you might think, “Okay so cryptoart is non-fungible and the coins themselves are fungible.”
Well, not exactly.
Coins that exist on a public, transparent ledger cannot achieve true fungibility (BTC, ETH, etc.)
For example: 850,000 bitcoins were “stolen” back in 2014 during the Mt. Gox scandal.
There are dedicated pages ( https://www.cryptoground.com/mtgox-cold-wallet-monitor/) to monitor the movement of these coins.
For example: 850,000 bitcoins were “stolen” back in 2014 during the Mt. Gox scandal.
There are dedicated pages ( https://www.cryptoground.com/mtgox-cold-wallet-monitor/) to monitor the movement of these coins.
Reputable exchanges like Coinbase, Binance, Kraken, etc. have these coins “blacklisted” – and will not allow the holder to convert them to cash on their exchange.
Ask yourself, would you pay the same for a “Mt. Gox” bitcoin as you would a bitcoin purchased from say, Coinbase?
Ask yourself, would you pay the same for a “Mt. Gox” bitcoin as you would a bitcoin purchased from say, Coinbase?
If the answer is no, then you know that bitcoin isn’t truly fungible.
“But that is a good thing, right? They were stolen in the first place!”
To that I’d argue:
“But that is a good thing, right? They were stolen in the first place!”
To that I’d argue:
In the age of mass surveillance/censorship, this is a very slippery slope.
Chainalysis ( https://www.chainalysis.com/chainalysis-kyt/) analyzes each bitcoin and wallet address to provide a risk assessment based on things like: coin mixing, number of users, which exchange it came from, and more.
Chainalysis ( https://www.chainalysis.com/chainalysis-kyt/) analyzes each bitcoin and wallet address to provide a risk assessment based on things like: coin mixing, number of users, which exchange it came from, and more.
Each coin has a score - do you know yours? Do you run a background check before transacting?
If you sell your car on Craigslist in exchange for some bitcoin, but unknown to you, that bitcoin was acquired from a Dark Net Market – it may be “blacklisted” from all other exchanges!
If you sell your car on Craigslist in exchange for some bitcoin, but unknown to you, that bitcoin was acquired from a Dark Net Market – it may be “blacklisted” from all other exchanges!
Now - You can't exchange your bitcoin for cash or other crypto and your only option is to try and pass it off to another unsuspecting victim!
If you send it to a centralized exchange, they can lock your funds.
DEX's like @bisq_network can help, but screw the next guy.
If you send it to a centralized exchange, they can lock your funds.
DEX's like @bisq_network can help, but screw the next guy.
There is no fungibility without privacy.
Enter @monero (XMR). A private ledger - by default – opens up a new level of fungibility unmatched in the crypto space.
Each Monero is worth the exact same as the next Monero.
1 XMR = 1 XMR ; they are interchangeable, like sugar.
Enter @monero (XMR). A private ledger - by default – opens up a new level of fungibility unmatched in the crypto space.
Each Monero is worth the exact same as the next Monero.
1 XMR = 1 XMR ; they are interchangeable, like sugar.
“But the government will ban Monero!” is the same argument they made in the early days of bitcoin.
Until the government realized that they see every transaction made throughout its history on the blockchain and backed off.
Until the government realized that they see every transaction made throughout its history on the blockchain and backed off.
What this means for the value of each of the assets mentioned is for you to decide.
BTC and ETH have outperformed XMR price-wise for some time now.
I own all 3 but will say this:
@Naval says, “Read the books they want to ban.”
I say, “Invest in the crypto they want to ban.”
BTC and ETH have outperformed XMR price-wise for some time now.
I own all 3 but will say this:
@Naval says, “Read the books they want to ban.”
I say, “Invest in the crypto they want to ban.”
Good resources to learn more: @fluffypony @JEhrenhofer @binaryFate @MoneroTalk @vikrantnyc The book: Mastering Monero ( https://masteringmonero.com )
