Bitcoin is indeed capable of supporting secure privacy of various digital transactions using cryptocurrency.
However, the Bitcoin public ledger readily provides anyone going through it with detailed info about both the nature and context of each transaction that has taken place.
This means that, without incorporating the necessary security measures, anyone, including cybercriminals, is capable of tracing the coins back to your address.
The matter has raised much concern since the invention of Bitcoins and the crypto space as well as users are now fully aware that the coins aren’t anonymous.
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The reason as to why Bitcoins are often referred to as anonymous could be because it is possible to send and receive the coins without giving any personal credentials. Users should understand that achieving the right amount of anonymity with Bitcoins can pose to be quite complicated, while full anonymity is quite impossible.
Bitcoin is Pseudonymous
Bitcoins can be termed as pseudonymous, which means that users are capable of sending and receiving coins without having to provide personal information like with a credit card transaction. The pseudonym is the address to which a user gets bitcoin, and every transaction connected to that address is recorded and kept in the blockchain. It is therefore recommended that users use a new address for every transaction to avoid the activities being linked back to a common owner.
While this method is a good move for enhancing the anonymity of Bitcoin, it is sadly not enough to promote full anonymity and therefore require one to take other measures:
Ways of improving Bitcoin anonymity during transactions
- Using mixing services
Transactions that deal with Bitcoins are recorded on a public ledger on the blockchain network. Anyone can get access to the ledger and trace any public address that can lead to the location of the coins, which exposes them to theft. A Bitcoin mixer is therefore used as a procedure of anonymizing the Bitcoins and making them untraceable. The mixing services break the link between the addresses and the coins hence creating confusion among prying eyes with bad intentions.
- Using a log-less VPN
A log-less VPN is a virtual private network that doesn’t keep a record of the history of your activities on their client servers. Instead, they encrypt all of your internet traffic and directs it through multiple servers of your choice, thus hiding your IP address. Specific log-less VPNs tend to maintain a shared IP address for various users thereby making it difficult to trace a particular person’s location and identity.
- Use a new address for every transaction
The blockchain network is public and transparent, and anyone who knows about your address can trace your spending activities and check your account balance. You are therefore advised to use a new address for every transaction possible to make them untraceable back to you.
- Use Tor-Onion browser for your digital activities
The Tor browser is one of the most trusted and secure network lines for use with Bitcoins. It is free from any surveillance and automatically encrypts your internet traffic.
- Always buy and sell Bitcoin in cash
Face-to-face transactions are much preferred while using money when purchasing or selling coins.
Bitcoin may provide more anonymity as compared to other electronic payment systems, but it still requires you to take extra precautions to ensure that you stay off the records and keep your coins safe.