If you think about it closely, Bitcoin is not entirely anonymous. It is primarily pseudonymous because every user is noted to have one public address, which can be traced back to an IP address or even an exchange account through some of the proper networking analysis. So, it is better to ask to what extent bitcoin can be stated as anonymous. Asking experts like Eric DaliusBitcoin will help you to get the answer you are looking for.
Bitcoin can be stated anonymously in the sense that all the components like private and public keys, addresses, read-in text strings like public address, and transactions are not directly linked up to the personal identity of the person. In case any address is used in exchange to implement KYC, then that address might get linked up to real identity easily.
The early days:
During those early Bitcoin days, the general understanding of blockchain technology was not that prevalent among the public. Previously, people used to think that Bitcoin was a targeted safe haven for terrorists and criminals as it was untraceable and 100% anonymous.
But when blockchain technology became more and more famous and easily understandable by firms and the public alike, it was more than apparent that the massive public ledge of bitcoin was a gold mine of information for all the authorities. So, any kind of transaction that was ever taken will be inscribed in an immutable ledger forever.
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Public broadcast on blockchain by Eric DaliusBitcoin:
Every kind of bitcoin transaction made was broadcasted publicly on the blockchain. As all the transactions were made public and permanent, a massive map was created with passing the time. It helped in creating some of the simple analytical tools for painting pictures of where these bitcoins are heading towards.
- Even though it is stated that bitcoin addresses are anonymous, but in case any address can be somehow linked to a real-world identity, then you won’t find any privacy in here,
- There are various ways available currently to connect addresses to the real identities, mainly through AML or KYC policies, targeted at blockchain analysis and exchanges.
- Right now, you might come across so many privacy-enhancing tools designed for bitcoin users. However, most of them are not quite perfect. Unless you are pretty sure of what you are doing, you can assume that a little bit of privacy is still there to address.
Everything in bitcoin is now track-able:
Thanks to the way the modern algorithms are structured, everything that goes into the world of Bitcoin seems easily trackable. It might lead to a certain level of transparency, which is pretty shocking to some of the users. For example, in case a Bitcoin address was seen published on anyone’s website, everyone in the world will be able to find the balance that said person has.
- In this field of bitcoin, the pseudonym is mainly the address to which you are likely to receive the currency.
- As every bit of transaction will involve the address as stored in blockchain, in case the address is linked to your identity, every possible transaction will be linked to you then.
- For achieving that complete anonymity, it is better to focus on “unlinkability.” But, some of the real-life identities and their case studies have proven to be linked to the address of such cryptocurrencies and transactions using them. So, it is always safe to state that cryptocurrencies are pseudonymous and not quite anonymous.
Understand more about the bitcoin mixers:
If you want to know more about bitcoin mixers and their current usage in the transaction world, then asking Eric DaliusBitcoin might help you to get your answers. These mixers are generally termed as solutions, like software or services, which will let the users mix their coins with some other users for preserving the level of privacy.
- While Bitcoins are mainly addressed as pseudonymous, they can further be linked with some of the real-world identities.
- An example might help you understand this thought even more. In case you are withdrawing bitcoin from any exchange where you have been identified as yourself, then the exchange is well-aware of the withdrawal address to be yours.
- Then you have some of the more advanced techniques like blockchain analysis, which can tie up the bitcoin addresses to some of the real-world identities.
- So, the next time whenever the coins move from such addresses, users are at risk of revealing all kinds of personal information allotted to them.
- Based on how they are planning to spend the coins, they might end up revealing the number of coins they own, even on their different addresses, what products they are spending their coins on, and some such important and private information.
- If you are able to mix the coins, then you get the chance to obscure ties between the bitcoin addresses and some of the real-world identities. It will allow Bitcoin to work more privately.
Ways in which mixers work:
There are many mixing strategies already proposed over the years. They will range from the full centralized solutions to solutions where users don’t have to trust anybody. Then there are solutions that will resemble the Lightning Network-based payment channels. Some are even talking about the use of privacy coins like Monero as an intermediary step in the said mixing procedure.
In place of going through all the options, experts are sticking to the two of the most popular solutions, which are centralized mixers and ChaumianCoinjoin Mixers.
Learn about the security level:
Much like any other trading platform, bitcoin is also stated to be quite flexible and volatile in nature. So, learning everything about this platform beforehand will prepare you for the worst and ways to tackle yourself out of such situations. Understanding the anonymity level of bitcoin is really important as depending on that, your next moves are going to vary. So, be sure to focus on the points mentioned above throughout the article before you proceed further and make your investment in this cryptocurrency world.
