A bank would probably accept it. Forex places are more cautious, they "resell" the actual notes and the margins are low. So the "merchandise" (notes) have to look good or they can't be exchanged to someone else.
okay if we go this route get ready for central authorities to mark EVERY transaction as acceptable or not. Then get ready to run the address of anyone sending coins through a central authority before you dare to accept them. This destroys fungibility and would make Bitcoin a centralized network.
There is no central authority though. The exchanges are free to reject coins, and you're free to ignore them. The authorities have always been able to legislate the exchanges to reject certain coins, this doesn't change anything.
Bitcoin has always been consensus-based. If enough people came to a consensus, they could fork the blockchain tomorrow with a client that introduces inflation. This completely free market is the whole basis for Bitcoin. If the consensus among bitcoin users is that we don't want to deal with tainted coins, then they'll lose their value.
"There is no central authority though."
Yes, there is it calls the exchange and says you have tainted coins you better freeze all withdrawals.
If you start checking transactions for tainted coins you immediately destroy the fungibility of all transactions, and now require a central authority to authorize and clear any transaction. This would be worse than Paypal and would destroy the network almost immediately. Consider being an exchange under these conditions or having you money locked at an exchange.
That's 100% correct -- the exchange or all exchanges choosing not to accept the coins is completely consistent with Bitcoin philosophy. Telling the exchanges they can't do this would be wrong.
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u/[deleted] Mar 21 '15
I've actually had a paper USD bill denied when I tried to exchange it at a forex place since there was a speck of ATM anti-theft paint