waxwing on Nostr: People often point out that physical cash is genuinely fungible in a way that bitcoin ...

People often point out that physical cash is genuinely fungible in a way that bitcoin isn't.

Then other people (including me) gripe at that and say: it isn't *perfectly* fungible, it has serial numbers, and there are even (rare) examples historically of notes with certain characteristics (Greek vs German Euros) somehow losing fungibility.

But if I stretch my memory a bit I can think of much more obvious examples of why 'physical cash is fungible' is highly dubious, like being in India 30+ years ago and having to rapidly learn that certain types of notes with physical blemishes (small tears etc.) could often be nearly unspendable. Similar experiences in Russia, China a couple decades ago and I bet other people have many other examples.

The point is that true fungibility with physical representations isn't achievable, *both* because of entropy-damage *and* because of verification problems (the latter is obviously more important with, say, gold, but it's also dubious for cash).

Another interesting angle: is there a strong tension between fungibility and censorship resistance? It's much easier to make it perfectly fungible by creating centralized control, even if it's very private (see: chaumian mint), but you might sacrifice censorship resistance. Cash and bitcoin, in different ways, can both have that latter property, strongly.