In 2020, can we still use Bitcoin anonymously? Can Bitcoin transactions still be private? Yes and No. No, it’s not anonymous but yes, there are ways you can guarantee that you use Bitcoin without compromising your privacy. In this post, we discuss why Bitcoin is not anonymous and the different tips on how to keep your identity private while using it.
When Bitcoin was launched in the onset of the century, one of the biggest misconceptions about it and other cryptocurrencies is that making a transaction is it is perfectly anonymous. This completely flawed idea probably came from the fact that when transacting using Bitcoin like sending or receiving funds, one is not required to provide personal information.
To a certain degree, using bitcoin is anonymous. However, there is still a way to trace and link a world-identity to a bitcoin transaction, especially in the advancement of technology in 2019.
Bitcoin is pseudonymous
The reason why we hear so much about bitcoin being “pseudo-anonymous” is exactly because of that. It is true that no personal information is being accessed when making a bitcoin transaction; however, it is linked to one person’s pseudonym – in this case, we call it the Bitcoin address.
Transacting using Bitcoin addresses is one layer of privacy for Bitcoin users, but if someone can link the address to the identity of a person, the transaction can ultimately be linked to that person.
The Blockchain is publicly available
Bitcoin transactions are processed and recorded through a global ledger called the Blockchain. Since the Blockchain is an open-source network, all information recorded in it – including the transactions made by all Bitcoin users together with information like Bitcoin addresses, amount sent, and the time the transaction was completed – can be subjected to public review.
This is when real-world identities can be linked to a specific address and transaction. While the data that can be obtained from Blockchain is not personally identifiable, there are ways for people to link a bitcoin address to a specific name. For example, if you withdraw your bitcoin through a Bitcoin exchange where you have provided your personal information like name, address, phone number, and bank details to, the bitcoin transactions made using the exchange can be linked to your identity.
All of this begs the question: How do you use Bitcoin anonymously?
How to use Bitcoin anonymously?
There are a few ways you can buy and sell bitcoin without compromising your anonymity. Some of these methods require technical skills, but there are others that can be done by anyone regardless of how adept they are of the technical aspects of Bitcoin, the Blockchain, or cryptocurrencies in general.
Using Tor-Onion Router to stay anonymous
One method to protect your anonymity while using Bitcoin is through the use of a Tor browser to connect to the Bitcoin network. Tor is an open-source browser system run by a volunteer community who believes in the principle of anonymity and data privacy.
What a Tor browser does it encrypts and reroutes your internet traffic to a completely random node on the Tor network before it reaches the final destination. This way, you can mask your IP address when you access the Bitcoin network and adds a new layer of privacy to your Bitcoin transactions. It’s free and works faster than other browsers like Chrome or Firefox.
It is very important for Bitcoin users to use new addresses for every transaction they make. By making use of more than one Bitcoin address, it would become very hard for someone to link two or more Bitcoin transaction to you. There are different services available to you that allows you to generate a different Bitcoin address for each transaction.
Buy and Sell Bitcoins in Cash through LocalBitcoins
Another fool-proof way of transacting using Bitcoin is to buy or sell it face-to-face using cash. One company that offers this service is LocalBitcoins. Of course, since LocalBitcoins also exists in the online world, there should also be some privacy steps you need to take in order for you to guarantee your own anonymity. Here are our tips for you to ensure that you use LocalBitcoins with utmost privacy:
- Always access LocalBitcoins using a VPN or a Tor Browser.
- Make a habit of registering to any service relating to bitcoin, especially in LocalBitcoins, using a fake name generator and a guerrilla email. (Do not use your real name and email!)
- Find someone you can trust (and can be verified) who you can sell/buy on LBC for cash trade. Check out their feedbacks and reputation scores and use your good judgment before trusting anyone in the platform.
- Use a burner phone or a public phone to coordinate the meeting with the person you want to trade with.
- Choose a public place and set the trade meeting there. It is important that this place have access to public wi-fi as well.
- Wait for 2-3 confirmations before you conclude the meeting.
- If possible, commute to the meeting place so your private vehicle would not be traced back to your personal identity.
By following these tips, you will have a few layers of security on your trade, and you will be able to protect your identity from possible risks.
Use a Bitcoin Mixer
As earlier mentioned, Bitcoin transactions are recorded in the Blockchain, and it is publicly accessible. Anyone who can trace a transaction can definitely link the origin and/or the destination of the Bitcoin. What Bitcoin mixers do is they cut off the trail of transactions between one user to another.
To put it simply, Bitcoin mixer pools the coins of different users into one basket and randomly send new, fresh, and untraceable coins back to the users. With this method, the mixer breaks the link between Bitcoin addresses by either creating temporary addresses or by swapping coins with other addresses of the same value.
One of the most trusted Bitcoin Mixers is MyCryptoMixer. It offers a secure way of mixing coins without the risk of fraud through its contract agreement. It also has developed a new and unique system of time freezing the coins in order to mimic the behavior of cryptocurrencies, making it harder for tracers to follow the Bitcoin trail.
What are the advantages of using Bitcoin Mixers?
Anonymize your Bitcoin Transaction. Bitcoin mixers work to keep your Bitcoin transactions anonymous so any previous activities cannot be traced back to you over the Blockchain.
It is protecting you from third-party trackers. Since Bitcoin mixers randomize the receipt and sending of Bitcoin, it becomes virtually impossible for a third-party who may have interest in tracking down information like your buying behavior and how much funds do you have from tracing your transactions back your address.
Keeping anonymous while transacting with the use of Bitcoin could be complicated for some. However, with the right understanding of how to protect your identity, you can guarantee that your Bitcoin transactions can’t be traced back to your real-world persona. There are several ways to remain anonymous in the Bitcoin network, and the most optimal way to guarantee full anonymity of cryptocurrencies is not just to use one method but to use all that is applicable.
Mixing your coins is one way to keep your identity private, but doing so in a protected browser like Tor and buying and selling Bitcoins using LocalBitcoins can add more layers of privacy to your transactions.