I was recently told that each bitcoin has a serial number and can be uniquely identified. Is this correct?

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    People tend to think of bitcoins like they do fiat currency bank notes, but that isn't accurate. Suppose bitcoin is a bit like a 1kg block of cheese; if you want to pay for something costing half a bitcoin, you cut your cheese in half creating two half kg lumps, and give one to the other person. Or you can give them two 250g blocks you have kicking around. Or five 100g lumps. Or a 350, a 50 and a 100. Every time you make a payment that doesn't add up exactly to some combination of lumps of cheese in your pocket you cut a bit off some lump and give the bit. Gradually thus every bitcoin will.. – Caius Jard Mar 16 '18 at 6:50
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    ..break down into tiny fragments (called dust). This is a problem because transaction fees are higher for counting dust than whole bitcoin amounts. There's a consolidation process that can build all the fragments back into a block.. while any bitcoin fragment may be uniquely identifiable at a time it exists, when consolidated its unique identity is lost – Caius Jard Mar 16 '18 at 6:55

No, each bitcoin is not uniquely identifiable (there is no ‘serial number’). In fact, on a technical level, a ‘bitcoin’ does not actually exist as most people imagine it to.

What I mean by that is that all ‘bitcoins’ actually exist as ‘unspent transaction outputs’ (UTXO). Each UTXO is a record of where the bitcoins reside: it will specify a bitcoin address, and an amount of bitcoin.

For example, suppose you have 2 addresses, each with one bitcoin in it:

Address A: 1 bitcoin

Address B: 1 bitcoin

Each of these addresses will have a UTXO associated with it. Next, you send a transaction, that spends both of those UTXOs to a single address (Address C, we’ll ignore txs fees for simplicity). So now you have:

Address C: 2 bitcoins

Next, send a transaction that spends the address C UTXO, with an output of 1 BTC to each address D and E. So now you have:

Address D: 1 bitcoin

Address E: 1 bitcoin

So now the question is: what can we say about the bitcoins (UTXOs) for address D and address E?

We can trace the history through the blockchain, and know that the address D and E UTXOs have a common history with the address A and B UTXOs, but we cannot say that ”the bitcoin in address D is the one that was in address A”. This allows bitcoins to be fungible, preserving privacy and usability.

Hopefully through this you can see how the bitcoins are not track-able digital objects being passed around, instead they are UTXOs that can be combined and split endlessly, as the user so desires.

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No, that's completly wrong.

  1. You can split a bitcoin into 1e8 * 0.00000001 bitcoins. So it's impossible that every bitcoin has a serial number.
  2. Bitcoins are not physical. There are no 'coins'. There is only a transaction history (the blockchain) and if you aggregate all transactions of an address, that's your saldo.

But if you are interested in Ethereum: ERC721-tokens are uniquely identifiable.

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  • But UTXO has a unique id, people use to talk about them calling them 'coins' – Osias Jota Mar 15 '18 at 22:18

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