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Skeptic’s lens: Bitcoin’s fungibility issue

Larry Cermak
Apart from being a censorship-resistant store of value, Bitcoin’s main use case is trading. What most people, including the media, don’t understand is that's not inherently a bad thing. The post Skeptic's lens: Volatility is a feature, not a bug? appeared first on The Block.

One of the key attributes of money is fungibility. Money is fungible if individual units are essentially interchangeable, each of its parts indistinguishable from any other. But as blockchain analysis companies continue to improve, Bitcoin’s fungibility is being threatened.

Bitcoin is pseudo-anonymous — all transactions are recorded on a public ledger. Blockchain analysis companies (Chainalysis, CipherTrace, Elliptic etc.) have gotten very good at de-anonymizing the transactions. They practice the data sharing model where they collect the transactional data from all the businesses they work with. This also means that the more clients they service, the better, or rather the more precise the product gets.

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