In a recent talk about Zerocash at the MIT Bitcoin Expo, Madars Virza was able to explain how bitcoin is not great at protecting user privacy and why the bitcoin community should be worried about this issue.Although Virza brought up a variety of different problems related to bitcoin privacy, one of his more interesting points had to do with bitcoin’s lack of fungibility.Because bitcoins can potentially be tracked through the blockchain, some bitcoins may be deemed less desirable than others.This is detrimental to bitcoin’s overall value as a currency, and the existence of Chainalysis — a company that helps financial institutions “determine which entity a [bitcoin] transaction originates from” — may be a sign that this issue could become more than a theory.Why fungibility is important for a currency Fungibility is one of the defining characteristics of a proper currency.All currency units must be mutually interchangeable to ensure that payments are easy to understand and process for all parties in any transaction.

For example, diamonds have a few properties that could potentially make it a decent form of money, but the issue is that the size, color, cut, or grade of the diamond could alter its value.In other words, the party receiving the diamonds in a transaction would be forced to judge the value of each diamond on an individual basis rather than simply weighing the entire batch.ethereum power supply[Read More: Kristov Atlas: Chainalysis’s Allegation Against Blockchain is ‘Patently Absurd’] In the case of bitcoin, fungibility can become an issue due to the open nature of the payment system’s transaction ledger.bitcoin public ledgerIn theory, all bitcoins should be considered equal; however, problems could occur if someone decides that they don’t want to receive bitcoins that have been used in illegal or controversial transactions.bitcoin 47 correction

Chainalysis as an illustration of the fungibility issue Chainalysis is a company in Switzerland that assists financial institutions with regulatory compliance.On their homepage, they claim one of their offered services is to help those institutions figure out “whether [bitcoin transactions] originate from someone they would want to do business with.” The fact that Chainalysis is able to observe the bitcoin blockchain and assist financial institutions in blocking out unsavory characters could be a threat to bitcoin’s fungibility as a currency.litecoin instantWhat would happen if a government decided to have financial institutions report bitcoin transactions that involve coins with a certain level of taint?box bitcoin faucetSuddenly, tainted coins would be less useful — and, therefore, less valuable — than coins that had a clean history.bitcoin expo 2014

.@HoboJerk @kyletorpey @InsideBitcoins coinalysis seem kind of like a coinvalidation rerun with similar fungibility risk & implications.— Adam Back (@adam3us) March 13, 2015 Creating a better currency with Zerocash Cryptographer Adam Back, the creator of the proof-of-work system used by bitcoin, gave a talk in Israel last year that focused on the relationship between privacy and fungibility.During the opening portion of his presentation, Back was able to explain how cryptographic digital cash systems can provide fungibility by default: “Before bitcoin there were a number of cryptographic electronic cash systems, and they introduced the concept of cryptographically enforced fungibility.The way you go about doing that is by making it so you can’t tell one note from another.So, you don’t have to rely on law; it’s just mathematically impossible to tell which note came from the previous transaction because they’re randomized or anonymized in some way.This is another example of the bitcoin adopted mantra of ‘trust mathematics over law.’ So, because you can’t tell one note from another there’s no need to have a legal ruling to say that they should be all treated equal.

They should all be treated equal by default because you can’t tell the difference between them.” That last sentence is a key point.Even if you believe that no one will ever care enough about a particular bitcoin’s history to refuse it as payment for goods or services, the current bitcoin privacy model — or lack thereof — keeps that door open.Although there are still one or two issues to work out when it comes to Zerocash, it seems that the decentralized, anonymous cash system — when combined with Tor — could offer an improvement for bitcoin in the fungibility department.And as Back would later note in his talk, “Fungibility provides privacy as a side effect.” You can follow @kyletorpey on Twitter.Congress submits bill making it illegal to hold cash, Bitcoin, or other assets outside of a bank without informing them in writing By The Daily Economist Just as the War on Drugs was never actually about slowing down or stopping the import and use of illegal narcotics, so too was the spurious War on Terror not about stopping [] [ Comments ] [See why this is trending] Trend graph:

La banque d'affaires américaine, JP Morgan, a déposé un brevet pour lancer sa propre monnaie virtuelle.De son côté, Apple a bloqué plusieurs applications utilisant le bitcoin.Les banques hier, les géants des nouvelles technologies aujourd'hui dénoncent les méfaits de la nouvelle monnaie virtuelle, le bitcoin.La semaine dernière, la Banque de France déconseille l'utilisation de cette devise née sur Internet en janvier 2009, et son homologue chinoise l'interdit.D'autres vont beaucoup plus loin.JP Morgan a déposé, fin novembre, un brevet pour lancer son propre système de paiement informatique.Et Apple vient de bloquer des services d'accès à la monnaie virtuelle.Explications.Avec la montée en puissance du bitcoin, les banques et les géants de la toile ont beaucoup à perdre.Les premières, parce que les transactions financières s'effectuent de gré à gré, autrement dit sans passer par l'intermédiaire des banques.Ces dernières ne contrôlent pas leur diffusion.Ces monnaies sont émises par les utilisateurs qui peuvent donc se constituer eux-mêmes des portefeuilles.

«Comme pour n'importe quel moyen de paiement, il y a des risques mais il y a également des opportunités», se défend Pierre Noizat sur Figaro TV.Pour celui qui vient de lancer Paymium, une entreprise qui utilise le réseau bitcoin, «si le monde veut rentrer dans l'économie numérique, il faut s'adapter aux changements technologiques plutôt que de crier au loup».Pour les géants des nouvelles technologies, leurs utilisateurs n'entreraient plus leurs coordonnées bancaires directement dans leurs bases de données et seraient donc moins enclins à acheter d'autres applications.C'est pourquoi, afin de se mettre en accord avec la législation de tous les pays du monde, Apple a demandé à plusieurs développeurs de supprimer leurs applications utilisant les bitcoins s'ils souhaitent la conserver sur l'App Store.«Bitcoin n'est pas légal dans toutes les juridictions où l'application est disponible», explique la marque à la pomme qui se réfère à la règle 22.1 du guide de l'App Store.

Une pratique que Pierre Noizat juge «anticoncurrentielle».«Contrairement à Google qui a compris la force du logiciel libre, Apple n'arrive pas à sortir de sa logique de logiciel propriétaire, comme iTunes qui, si Apple acceptait le bitcoin, serait menacé», explique Pierre Noizat.Mais à l'instar des banques centrales où les positions de la France et de la Chine ne sont pas partagées par tous et notamment par les États-Unis, les avis sont également divisés au sein des groupes des nouvelles technologies.Ainsi, Google accueille favorablement de nombreuses applications capables de générer des bitcoins et de les échanger.«Bitcoin est un tour de force technologique, affirme son PDG Éric Schmidt qui apporte toutefois une nuance.Mais je ne sais pas si au final cela sera légal».Idem du côté des banques américaines.Si le bitcoin ne plaît pas à JP Morgan, Merrill Lynch vient de pondre un rapport qui fait du bitcoin la monnaie du futur.«Le bitcoin peut devenir un moyen de paiement majeur pour le e-commerce et un concurrent aux monnaies classiques, déclare l'établissement financier.