For two days, 9th and 10th October 2016, developers, entrepreneurs and miners from around the globe were meeting in the Italian city of Milan. This was another of the Bitcoin scaling conferences.
Like those that have come before it, this meeting was supposed to help the bitcoin community move closer to a consensus on how to make the Bitcoin network support more usage. Nevertheless, privacy and fungibility of the cryptocurrency took center stage.
Bitcoin privacy means the ability of users to spend their coins without a third-party being able to track the transactions. And fungibility is the characteristic of a currency where one of its units, in this case, bitcoin, can easily replace another. In other words, one bitcoin shouldn’t have differing qualities from another bitcoin.
Amidst the widespread payment blockade on online gambling, Bitcoin has emerged as the most convenient alternative to online gamblers. But with time it is turning out that Bitcoin isn’t perfect. And indeed, two contributing factors to its imperfectness are privacy and fungibility.
Over time, startups have arisen to build Bitcoin transaction analyzing tools, as well as to help regulators and third party players identify transaction pattern. Armed with these capabilities, authorities can determine who spend what bitcoins and where.
And if you spend your bitcoins on activities that the state doesn’t approve such as gambling, you risk being penalized. Even more, this might result in bitcoins that have been through some specific transactions being rejected as dirty, thus taking the quality of fungibility from Bitcoin.
Some of the solutions proposed to solve the Bitcoin privacy and fungibility problems at the Milan Conference include Lightning, Coinjoin, and TumbleBit. Others are Ring-Signatures and MimbleWimble.
You can watch the presentations on these solutions here