That’s not what’s meant by fungibility[1]:
In economics, fungibility is the property of a good or a commodity whose individual units are essentially interchangeable
In economics, fungibility is the property of a good or a commodity whose individual units are essentially interchangeable
Am I thinking about liquidity?
In terms of currency, fungibility essentially means that money of the same denomination is indistinguishable.
So if I had a $5 bill that I got from a marijuana dispensary, and another $5 bill that came from the Treasury, at the register both of them would be equally treated as $5.
In the case of Bitcoin, fungibility is a bit harder to have since any merchant can parse the block history and find where a Bitcoin came from.
Tangentially, this also relates to the notion of privacy, since if you gave me a Bitcoin, I could also find the address of your wallet, and see outgoing or processed transactions -- like, this is pretty bad if you used the same wallet to buy drugs.