Blockchain transaction anonymity is necessary evil in the name of confidentiality of information and transaction security.
When Bitcoin (BTC) was first created, the creator Satoshi Nakamoto had aimed to create not just a digital currency that is wholly decentralised and independent of financial protocols implemented by centralised financial institutions. Satoshi hoped to achieve a currency that is focused on “ anonymity, identity, reputation, and spoofing”. Today, the distributed ledgers seen in the Bitcoin network are transparent, immutable and secure, attracting heaps of crypto-advocates and investors to obtain the new asset class for a variety of reasons. However, the part about anonymity was lacking in the transaction process, since hackers and blockchain analysis like Chainalysis and Cipher Trace could track every Bitcoin transaction with the help of a blockchain explorer and an intricate investigative process, owing to the transparency of the blockchain which allows anyone to access the entire transaction record with just a Bitcoin address. Additionally, decentralised applications built on the Bitcoin network were increasingly prone to bugs, address reuse and taint analysis injected by hackers of blockchain analysis firms to infiltrate the data. Therefore, dealing with the pioneering and top cryptocurrency requires additional privacy measures in order to conceal your personal information and transaction activity from the prying eyes of both regulatory bodies and bad actors who may threaten your safety and Bitcoin asset.
Luckily for Bitcoin users today, implementing that additional layer of peace of mind into your Bitcoin transaction routine may not be rocket science after all. With the rise in Bitcoin’s popularity over the past decade, several privacy tools catering to everyday cryptocurrency advocates and investors are available to enable users to have complete anonymity while dealing with Bitcoin. Softwares like Virtual Private Network (VPNs) and Anonymous Browsers like TOR allow users to hide their identity and location before transacting on exchanges or marketplaces accepting Bitcoins. But such options require a certain degree of prior knowledge on how to operate these tools. But, fret not, as there are two equally effective privacy options that could offer users complete anonymity and privacy, giving them an added layer of security during every transaction with Bitcoins.
Storing your Bitcoin Securely and Privately
Most Bitcoin holders would have at least a wallet to store their cryptocurrency assets. More often than not, these wallets are used in conjunction with the user’s exchange wallet, transferring Bitcoins to and from either wallets whenever required. Since all transactions on the Bitcoin blockchain are public, anyone with either wallet’s address would be able to view, track and determine the wallet’s user trading activity. Thus, transaction details for the storage wallet should be kept discreet from the public eye. Unfortunately, most Bitcoin wallets do not have anonymous features by default. In order for users to prevent anyone from knowing their entire Bitcoin balance, we need to have an anonymous Bitcoin wallet to break the linkage and conceal the details on the storage wallet. An anonymous Bitcoin such as Electrum Wallet is designed to keep the user’s Bitcoin transactions private and hidden from the blockchain network. These wallets come with a feature that changes the Bitcoin address each time the user sends or receives any amount of Bitcoins through them, making them completely untraceable from any form of blockchain analysis. But a point to note about using a privacy wallet is that over time, a transaction pattern may emerge from the use of such third-party Bitcoin wallet, risking the user from revealing his or her personal information and identity.
Removing traces of your Bitcoin Transactions
Fortunately, there is another useful crypto privacy tool that could be used in tandem with privacy wallets, or as a standalone privacy fix for Bitcoin transactions. Known as the Bitcoin mixer, it is an online platform which allows the user to achieve full anonymity through a coin mixing process. The Bitcoin mixing service works by breaking the connection between the sender address and the receiver’s address. Thus, using a Bitcoin mixer could essentially enable the sender to conceal their transaction from the public. When you mix your Bitcoins, you reduce the chances of your Bitcoins being stolen by hackers. Trusted Bitcoin mixers such as MyCryptoMixer and Blender.io are especially foolproof, and produce a letter of guarantee for users. Combining the use of the Bitcoin mixer and a good privacy wallet will greatly strengthen your privacy and anonymity, assuring your transactions in Bitcoin.
Protecting the Identity of Users
New users of privacy wallets and Bitcoin mixers may be concerned if their personal information and the activity involved would be compromised. Similar to privacy wallets, users of a Bitcoin mixer do not require any setup of an account in order to use their services. For instance, trusted and secure Bitcoin mixers could assure their users that the activity log pertaining to his or her activity on the platform would be permanently removed within 24 hours. In the event that hackers or blockchain analysis firms attempt to seek the Bitcoin mixers to disclose any details of any transaction, they would be unable to obtain any information by any means through the Bitcoin mixer.
Apart from that, there are users who deploy the use of both a privacy wallet and bitcoin mixer for everyday transactions, including online shopping, donations which accept Bitcoin. These tools are widely used since they allow the user to safeguard any details about the user's sensitive personal information such as income or wallet address. The anonymity which a Bitcoin mixer and privacy wallet offers can be regarded as a layer of protection against government authorities, private organisations as well as hacking. After all hacking relies on personal information leak, and with Bitcoin being primarily targeted these days as the preferred hacking reward, using solutions like a Bitcoin mixer could be proven to be a viable means to deter unwanted entities from holding your identity ransom.
Secure Your Bitcoins for Unpredictable Situations
Ensuring that your Bitcoin transactions are essential for the security of your Bitcoin assets. Whenever there is a transaction that occurs on the Bitcoin blockchain, everyone would be notified on the public ledger. Keeping your address private and engaging a Bitcoin mixing service keep your transactions untraceable. Bitcoin mixer acts as a filter between you and your transaction activities so that you may continually purchase goods and services with Bitcoins while remaining anonymous and undetectable from governments and other entities who may otherwise be interested in your Bitcoin transactions.
Regardless of hacks derived from organised online syndicates or an insider’s job, cryptocurrency exchanges are susceptible to hacks. In 2019 alone, there were 5 high-profile cases of cryptocurrency exchanges being compromised. Throughout the timeline since the creation of Bitcoins, hackers have acquired the skills to perform highly orchestrated and innovative (yet, unfortunate) attacks on anyone within their radar. To prevent becoming a victim of such hacks, keep yourself protected through the Bitcoin mixing process and reduce your trails with the help of a privacy-based wallet.
Fully automated Privacy Protection
Neither a trusted privacy wallet nor Bitcoin mixing service depend on a manual process. These privacy-focused solutions are designed with an intricate set of algorithms to ensure that every possible trace of your Bitcoin transactions are eradicated. In comparison, although some P2P Bitcoin marketplace do not require any Know-Your-Customer (KYC) verifications of users, trading with an actual person could pose a high privacy risk and data could be leaked if warranted by relevant authorities. Pursuing crypto privacy through a manual process may also be prone to human error and is less efficient. Using a Bitcoin mixer could not only save you the time and hassle, but also lesser probability of revealing your identity in any way possible, guaranteeing you absolute privacy around the clock.
Necessary Steps to Ensure Your Anonymity with Bitcoin
It is undeniable that while Bitcoin is a great alternative to traditional Fiat currencies, it is still in the early stages with its own flaws such as the lack of privacy features embedded in its network. Until a comprehensive solution is deployed onto the Bitcoin blockchain, users who are dealing with the most popular cryptocurrency in the market should ensure that sufficient due diligence and measures are taken to keep your transaction private and secure with additional and easy-to-use privacy tools such as Bitcoin mixers and Privacy wallets.