As technology becomes more sophisticated, so are cybercriminals. Bitcoin users will need to catch up and find more effective ways to anonymize their transactions.
Blockchain is a groundbreaking technology that enables a world where every transaction made on the distributed ledger is accountable, immutable, verifiable and transparent. Satoshi Nakamoto, the creator of the Bitcoin Whitepaper and the inventor of technology, envisioned a future where our wealth assets and information will no longer be controlled by any centralised entity (e.g. government bodies, financial institutions and technology corporations). Although every Bitcoin transaction executed is publicly viewable through free available blockchain explorers, it is pseudonymous by design as every transaction can only be traced up to the wallet address, and not the owner of the wallet.
These days, however, most Bitcoin transactions occur on either centralised cryptocurrency exchanges or crypto wallet apps, which are subject to government regulation and legal compliance in order to keep their business going. Hence, most Bitcoin users have to undergo a mandatory Know-Your-Customer (KYC) process which means surrendering your personal information to these solution providers. As a result, it is now possible to track Bitcoin transactions to real-world identities. If your Bitcoin address is ever linked to your identity, chances are that every transaction will be linked to you, with the help of blockchain analysis tools.
This is the reason that Bitcoin, along with other cryptocurrencies, do not provide full anonymity for its users. Bitcoin could not offer privacy, as blockchain analytics are getting more sophisticated with each passing day. Government bodies and cybercriminals can determine the individuals behind the Bitcoin address, and they are able to identify your entire transaction history with sufficient time and effort.
Today, it was recommended by cryptocurrency experts that Bitcoin users should use a new address for each transaction to prevent transactions being linked to a common owner. Unfortunately, this method is tedious and impractical for most users. Hence, many people have sought out alternative privacy-oriented methods to make their transaction untraceable, and to achieve full anonymity.
Using a VPN and TOR network
There are currently a couple of ways Bitcoin users can use to anonymize their transactions. Since all Bitcoin transactions occur online, it was believed that using a Virtual Private Network (VPN), and an anonymous web browser (TOR network) could hide your traces successfully. This approach simply requires you to make use of VPN, and access your Bitcoin address through TOR network as they hide your IP address and encrypt your online activity. This will prevent bad actors or government entities from identifying you as the owner of your Bitcoin address.
Unfortunately, a hack attempt made earlier this year has everyone questioning the effectiveness of the TOR network, as hackers managed to intercept the TOR network by attaching malicious servers to steal cryptocurrency payments, by replacing Bitcoin addresses with their own addresses. TOR had attempted to rectify the security breach by removing malicious servers from its network, but the full extent of the malicious operation remains unknown as of the time of writing.
Apart from VPN and TOR networks, privacy wallets such as Electrum wallet have also faced similar predicaments. Thus, privacy-focused Bitcoin users may have to look for the next alternative method that is by far the safest approach out of the existing Bitcoin privacy solutions — Bitcoin mixer.
This is where Bitcoin mixers come into play
Bitcoin tumbler, or Bitcoin mixer is a third-party coin mixing solution that users can access online to obfuscate their Bitcoin transactions easily and quickly. Reputable Bitcoin mixers like MyCryptoMixer have claimed to provide the most user-friendly and quickest mixing process that can be completed in 5 minutes.
The Bitcoin mixing solution is a product that caters to any Bitcoin user who wants to achieve full anonymity of their transactions by removing the connection between sender and receiver. By using a Bitcoin mixer, the user will have their Bitcoin funds “mixed” with Bitcoins from other users through a randomised and encrypted process, and receive a fresh set of Bitcoins on a different Bitcoin address provided by the user.
This Bitcoin mixing process can also be done with many transactions in the same mix, so as to further reduce the odds of anyone identifying your Bitcoin transactions back to you. But since the service is offered by centralised third-party providers, it is important to pick trusted and reliable Bitcoin mixers so as to prevent getting yourself into unnecessary risks and threats.
Protect your identity with a Bitcoin mixer in 2020
As we are moving into an even more digitally connected than before due to the ongoing pandemic, more people are going to realise the potential in using Bitcoin and will embrace the decentralised digital currency for their wealth preservation. But as more wealth is accumulated in the space, cybercriminals activities are going to increase more than ever as well.
This is why it is highly recommended that every Bitcoin user should consider keeping their transaction anonymous, untraceable and hidden as much as possible. Through Bitcoin privacy tools like Bitcoin mixing, it is still possible today that you can minimise, and possibly eliminate the traces of your Bitcoin transactions.
If you'd like to find out more on how to mix Bitcoin, do check out our previous article which we have discussed on how to take advantage of Bitcoin mixers to anonymize your transactions, and hide your personal information online.