Charlie Lee, the creator of Litecoin, elucidated on Fungibility, during the thirteenth episode of Magical Crypto Friends. Here, even Samson Mow, the CSO of Blockstream, opined on the same topic by adding the concept of tainted coins.
Prior to speaking about Fungibility, the creator of one of the world’s largest cryptocurrencies emphasized on the importance of privacy and fungibility and added that they are the next battleground for the currency. Moreover, Litecoin is currently looking into Confidential Transactions, in order to ensure that the coin is fungible, according to the announcement made by Charlie Lee earlier this month on Twitter.
During the discussion, Lee explained Fungibility as,
“So, fungibility basically means that each unit of the coin or money whatever it is is indistinguishable and cannot be discriminated against. Right, so if you, for example, I like give you go to a store and need to pay like $5 for a cup of coffee and you pick up a $20 bill from there from wallet you don’t really care which one you take out it they’re exactly the same to the recipient.”
However on the contrary, this is not the same case with Bitcoin and Litecoin, implied Charlie. He added that a person’s account is shut down if Bitcoin or Litecoin is being sent from a darknet marketplace or a gambling site or any place that is not approved by regulations. He said,
“So, the coins that you spend are not fungible so a lot of times even myself when I’m spending coins I have to like decide which output to you use right if I just buy the coins for an exchange I may not know may not want someone to know how many coins I have or link to my other coins and I choose an output that came from somewhere else”
He went on to say,
“And that’s just not a very good way not very good money when you have to do that so something like confidential transactional will help right it will make amounts blind it so you don’t know how much you’re spending how much people won’t be able to see how many coins you’re actually spending that helps a lot with privacy but it’s not it’s not a perfect solution like you need some route privacy also so you can’t track coins.”
This was followed with Samson Mow speaking about Fungibility and tainted coins. He said,
“The whole idea of taint also comes into play. So the idea that some coins are dirty some are clean because some might have been used for you know on Silk Road or whatever so they’re dirty coins and some coins are cleaner. So you might want like straight off the coin base from from a mining or maybe one hop away from mining mining pools wallet or something like that but having this kind of differentiation between different coins at least theoretically is bad for the ecosystem because then your money is not sound money it’s not really good.”