What Is the Difference between Fungibility in Bitcoin and Privacy Coins?

Fungibility means that individual units of an asset are interchangeable and indistinguishable. Bitcoin is considered pseudonymous, and the transaction history of each coin is public, which can lead to "tainting" if a coin was previously involved in illicit activity.

Privacy coins are designed to be truly fungible because their transaction history is obscured. This means no single unit of a privacy coin can be distinguished from another based on its past.