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Bitcoin is more ubiquitous, but Monero is more fungible- An explanation.

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by COINS NEWS 33 Views

We all know currencies need to be fungible. That is a basic property of all money. We need to be able to break the money into smaller and smaller units for trade, the value across similarly sized units needs to be the same, etc. Bitcoin, for example, is more fungible than than gold bars. If you want to trade a gold bar, you need something worth approximately the same value as that gold bar since it's not feasible to break apart the bar for a smaller transaction. With Bitcoin, you could break it down into individual Satoshis for the trade.

But Bitcoin has fungibility limits. Fungibility is not a binary property of money; certain goods can be more or less fungible than others. Bitcoin lack fungibility across individual coins. This is not a significant issue today, but it may become an issue in the future depending on government regulations. Each Satoshi spent can be traced back to the coinbase it was generated (block reward). This means stolen Bitcoin or Bitcoin used on Silk Road will forever be marked, hurting it's fungibility.

In fairness, tools like CoinJoin seek to address this problem, but the solutions only add complexity to the issue, they don't actually eliminate the problem. Monero does.

Monero was designed with privacy as a fundamental feature. All Monero transactions are confidential and private. This means that the sender, recipient, and transaction amount are hidden from public view. In contrast, Bitcoin transactions are pseudonymous, while they are not directly tied to personal identities, transaction details are recorded on a public ledger, making them more traceable.

Monero uses ring signatures by default. This is basically a built-in CoinJoin solution. When a transaction is initiated, it is mixed with multiple other transactions. Additionally, the amount sent is never visible on the blockchain. This obviously enhances privacy and fungibility vs Bitcoin's very public amount.

Monero employs stealth addresses automatically, which generate one-time addresses for each transaction. Monero also has decoy outputs, further obscuring where the funds end up. In Bitcoin, it is good security to generate a new address each time, but this does not happen automatically.

While Bitcoin is amazing and groundbreaking, one cannot deny that Monero keeps so much of the good of Bitcoin, but the main goal of transaction was privacy. This privacy-focused features of Monero make it significantly more fungible than Bitcoin, which is crucial for any cryptocurrency seeking to be actually used as a medium of exchange. We need currency where one unit is as good as any other, regardless of its transaction history, which is not the case with Bitcoin but is the case with Monero.

Be smart. Stack both.

submitted by /u/002_timmy
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