Two satoshis are exactly alike much like two atoms of gold are indistinguishable and can be perfectly substituted.
This again is incorrect.
We discussed a few posts back that two satoshis coming out of the same transaction (even if different outputs) are indistinguishable (though only if no social convention develops which would distinguish between outputs of the same transaction, as I explained).
But two satoshis
from two different transactions are absolutely distinguishable. The have different histories and therefore can be trivially distinguished. It therefore becomes non-fungible (i.e. non-interchangable)
if people choose to attach some significance to that difference. The technology or physical properties do not determine fungibility here, people do.
I believe that is where we differ. From where I stand fungibility is an inherent property of the monetary system. Subjective valuation and user preference due to a
privacy/traceability issue is entirely dependent on "people".
The units themselves are never discriminated against, only their history can be. For example, I could argue that the "taint" is interchangeable given the fungibility of each units ie. I can trivially replace any spent satoshi from a "tainted" output by another one with no distinction made between the two.
This is what fungibility is. We may need to agree to disagree but I insist that any issue you bring up is one of privacy and traceability, not fungibility which is inherent to Bitcoin.
I can taint gold and make it somewhat traceable using radioactivity. That doesn't make gold non-fungible but only traceable to a certain extent.
It certainly would be non-fungible if some important property were recognized to apply to the radioactive gold (for example if it were stolen). People would routinely check gold with a geiger counter before accepting it and you would not be able to substitute your radioactive gold for non-radioactive gold.
Do you understand then how subjective your definition of fungibility is? From your POV any medium of exchange that is suspect to traceability by
any means is non fungible.
TLDR; When people speak of Bitcoin's fungibility "issue" they really are referring to a privacy/traceability one.
You would have essentially zero privacy and anonymity but the coins themselves would still be inherently fungible.
I guess except if some sort of social convention discriminates against this particular medium of exchange... right?