Quote from: Hermel on May 08, 2013, 09:39:26 PM

Quote from: retep on May 08, 2013, 09:10:08 PM

or a Bitcoin will never be as fungible as a dollar bill.

A dollar bill is not as fungible as you think. All bills are numbered. There are blacklists of bills (e.g stolen from a bank heist). When you are detected giving such a blacklisted bill to the bank, you will be asked a few questions, but the bill won't loose its value. Same could happen for blacklisted Bitcoins: as Mike and others have described, they could get white-listed again if you are willing to identify yourself and can make plausible that you are not connected to the reason for their blacklisting (e.g. by showing a receipt that says where you got them from).

Yeah, coins are closer, but there are even efforts to have every individual coin serialized.

Right now the serial numbers on dollar bills aren't too much of a worry but there are a lot of efforts underway to incorporate bill scanners into ATM's and even cash registers (with RFID) combined with massive databases to track the movement of every last bill. It might not be many more years where even if you could pay cash, if you did so at most places a RFID scanner in the till would cause an alarm had your bill come from a blacklisted transaction.

Bitcoin doesn't have to go this route if we don't want it too. Provably anonymous trust free mixing is possible among many other solutions: https://bitcointalk.org/index.php?topic=172047.msg1790026#msg1790026 It's actually possible for every single transaction you make to participate in a trust-free mix, and doing so is actually a bit cheaper because making multiple payments in one transaction costs less in transaction fees than doing one payment per transaction.