I was recently told that each bitcoin has a serial number and can be uniquely identified. Is this correct?
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.
No, that's completly wrong.
- You can split a bitcoin into 1e8 * 0.00000001 bitcoins. So it's impossible that every bitcoin has a serial number.
- 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.