Fungibility

Fungibility refers to the property of an asset or currency that makes each unit interchangeable and indistinguishable from another. In other words, if two units of an asset or currency are interchangeable, they are said to be fungible.

For example, a $20 bill is fungible because any $20 bill can be used interchangeably with any other $20 bill. Similarly, a Bitcoin is fungible because each Bitcoin is interchangeable with any other Bitcoin.

Fungibility is an important concept in finance and economics because it affects the liquidity and marketability of an asset or currency. A highly fungible asset is generally more liquid and easier to trade than a less fungible one.

In the context of cryptocurrencies, fungibility is particularly important because it affects the usability of a cryptocurrency as a medium of exchange. If a cryptocurrency is not fungible, certain units of the currency may be considered "tainted" or "dirty" and therefore less valuable than other units. This can create problems for the currency's marketability and usability as a medium of exchange.

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