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| layout | entry | terms | summary | |
|---|---|---|---|---|
| moneropedia | Fungibility |
|
property of a currency whereby two units can be substituted in place of one another |
The Basics
Fungibility means that two units of a currency can be mutually substituted and the substituted currency is equal to another unit of the same size. For example, two $10 bills can be exchanged and they are functionally identical to any other $10 bills in circulation. This is also true of gold, where any 1 oz. gold bar is identical to another. Monero is also considered fungible as any 1 XMR is functionally identical to any other 1 XMR.
Fungibility is an advantage that Monero has over Bitcoin, due to the private nature of the Monero @blockchain and the public nature of the Bitcoin blockchain. With Bitcoin, any 1 BTC can be tracked by anyone back to it's creation @coinbase-transaction. Therefore, if a coin has been used for an illegal purpose in the past, this history will be contained in the @blockchain in perpetuity. Some users have speculated that this lack of fungibility may mean that certain businesses will be obligated to avoid accepting BTC that have been previously used for illegal purposes, though that has not happened to date.
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