Maintaining anonymity when making transactions with cryptocurrencies such as Bitcoin, doesn’t only concern hackers or people who want to do something illegal. Reaching the highest levels of anonymity is something we should all pursue, especially if we want to keep our money away from prying eyes.
Preserving our privacy and anonymity only takes a few precautions, and that is what we’ll see in this article.
Maintaining anonymity in Bitcoin
Even though Bitcoin isn’t an anonymous payment network, with some effort on our part, and taking the necessary precautions into account, we can ensure our privacy.
How to make an anonymous payment with Bitcoin?
- To make an anonymous transaction, one of the first things we must do is create a new Bitcoin address that we will only use for that operation. This can easily be done from our wallet and it makes it harder for someone to trace those address and link them to us.
- You can have various wallets for different things. For example, one for saving and one for purchases, this will eliminate the possibility of connecting your transactions and knowing how you’re using your bitcoins.
- We can increase our transactions’ privacy by hiding our IP by using TOR. That way, nobody will know where the transaction was made, which can be easily done with wallets such as Multibit HD.
- We can increase the security offered by the TOR network by accessing it through a virtual private network (VPN).
- Transaction mixers are another very useful service for eliminating transactions’ traceability. But they are still offered by third parties, so we should trust them.
- These tips can be combined to make things even harder. This consists of using your bitcoins to buy an anonymous cryptocurrency such as Monero, and then converting it back to bitcoins.
The Bitcoin anonymity could be broken
Even though transactions are transmitted randomly through the Bitcoin network, if someone is able to collect information from various nodes and cross all the data, they could find a transaction’s origin.
Someone could connect our identity to a Bitcoin address, if we aren’t cautious enough and reveal these connections in public places. For example, some people accept donations and show their information, use the same address to withdraw bitcoins from an exchange, shop, or simply make a make a transaction that reveals our identity to the other party.
Blockchains are transparent and anyone can see the transactions that have been made, the wallet addresses and the amount of bitcoins they contain. If we ever make any of our Bitcoin addresses public, and show our personal information, someone could link all our addresses and connect them to us.
Is Bitcoin traceable?
Yes. Transactions made with bitcoins are traceable and if we don’t use a method that anonymizes our activity, bitcoins can be traced back to our wallets, which could eventually reveal our identity.
All the transactions are forever written in blockchain, so we need to follow this article’s advice and, above all, be careful not to link our identity directly to our addresses.
I work as a software developer and for several years I started to get interested in the blockchain technology and Bitcoin cryptocurrency. I have decided to create this blog as a guide in which anyone can start acquiring knowledge about cryptocurrencies.
You can find me at Linkedin and Twitter