In an ideal world, a single BTC is always worth exactly one BTC, regardless of where it’s been. However, blockchain transparency sometimes leads to ‘tainted’ coins if they’re traced to illicit activity. Exchanges or analytics firms may then flag or blacklist specific UTXOs, hurting fungibility.

Some argue that mixing or privacy tools help preserve Bitcoin’s fungibility by obscuring transaction history. Others believe the best fix is cultural or regulatory acceptance that all BTC is the same. Regardless, fungibility remains a cornerstone of any currency. If coins carry a reputation, you undermine the uniformity that makes them freely tradable in all markets.