← back

Fungibility of Bitcoin

S
Stark

Most people picture a bitcoin wallet as a bank account with a number in it. The protocol doesn't work that way. Bitcoin tracks unspent transaction outputs discrete chunks of value, each one the residue of some earlier transaction. Spending is not decrementing a counter; it is consuming specific chunks and creating new ones. Every chunk has a genealogy that runs backward, transaction by transaction, to the block in which those satoshis were originally mined.

That genealogy is public, permanent, and free to inspect. Nothing decays. A coin that touched a ransomware wallet in 2019 still touched it, and will still have touched it in 2079, and anyone with a laptop can confirm this in a few seconds.