1 The identity, fungibility, and anonymity of money Alastair Berg 1 This version 7 November 2019 Abstract: The fungibility of money is a characteristic which contributes to the quality of money. Fungibleness is itself related to the technical ability to associate a unit of currency with its past instances of exchange. This history is analogous to the identity of money. The identity of an individual unit of exchange is increasingly important as cash becomes less common, and banks require more information about the provenance of money. Private currencies, including Bitcoin and Libra, are themselves subject to tracking. The prior financial—and potentially political—activities of a user determine the fungibility of the currency they hold. Different money technologies provide varied levels of privacy, while cryptocurrencies offer users the potential to choose the level of information they share. Keywords: bitcoin, cryptocurrency, economics of identity, Facebook, privacy 1. Introduction Identity is a crucial component of any economic exchange (Berg et al., 2017; 2018). The participants in an exchange have identities, the good and services being exchanged have identities, and the medium of exchange they use to affect a transaction has an identity (or identities). This paper looks at the identity of money in its various technological guises, examining fiat cash and privately created currencies, including cryptocurrencies with privacy features. That money might have an ‘identity’—where identity relates to the history of an individual unit of a currency—suggests a degree of heterogeneity within asset classes used for the purposes of exchange. In this respect, I discuss contemporary frictions related to the use of money, and how they impact on the fungibility, or homogeneity (in the manner of Menger, 1892), of different media of exchange. The question of identity, and hence fungibility, of money is an important one as it is a characteristic which contributes to the quality of money (see Bagus, 2009). I also claim that the identity, and hence the level of fungibility associated with the type of money used in exchange, is closely related to the anonymity it provides; a highly fungible form of currency provides a high level of privacy to the user, and vice versa. Indeed, that a commodity will be adopted as a widely-accepted medium of exchange owes much to its relative fungibleness. However human behavioural practices, as well as regulatory impositions, sees the fungibility—substitution of individual units—of money becoming increasingly imperfect. While the relative anonymity of cash suggests it is largely interchangeable with other units of the same nominal value, money of all types which interact with regulated industries are increasingly examined for their use in criminal and other undesirable activity. This increased examination and regulatory imposition results in circumstances where money believed ‘tainted’ by criminal enterprise is not accepted by the receiver—regardless of any actual criminality or malfeasance. More recent innovations in money technologies, such as the cryptocurrency bitcoin, have characteristics of fungibility and hence anonymity, but units are not completely interchangeable, nor do they allow for completely anonymous transactions. In addition, newly announced private currencies such as 1 Alastair Berg is with the RMIT Blockchain Innovation Hub, RMIT University, Melbourne. Correspondence: alastair.berg@rmit.edu.au.