“Is Bitcoin anonymous? You might already know transactional methods if you’re familiar with Dark Web sites. When you take services from (the digital underworld, containing sites like the famous Hidden Wiki or the now-defunct Silk Road marketplace sites), you pay for everything using cryptocurrencies, mainly Bitcoin. People are dealing with many misconceptions and question how anonymous Bitcoin is or is reliable.
Suppose someone wishes to buy or sell something on a darknet marketplace (note: everything we’re talking about is theoretical, we don’t endorse any illegal activity). In that case, they will use some cryptocurrency to purchase that item.
Although Bitcoin is mostly used currency in the Darknet world, buyers will have Monero as the second best option.
However, people still think of Bitcoin 100% anonymity payment system. This misconception led to many past arrests, as criminals discovered that BTC isn’t anonymous.
So what’s the truth behind Bitcoin’s anonymity? Is it anonymous or not?
Let’s get the answer with a simple example.
You may already know Bitcoin is backed by a giant public ledger board called the ‘blockchain.’ Everything happening in the Bitcoin ecosystem gets recorded here, and it is 100% public for anyone who wants to see it.
So if I ever send you some bitcoins, this fact will be publicly visible to everyone on the platform. Don’t believe it? Let us show by simply clicking below.
Once you land on this page, you will see a transaction. One sender and two recipients. The sender on the left side sent Bitcoins to two other recipients, visible on the right.
Who are these people? We don’t know, and probably you don’t know either. It was just a random transaction we found. Therefore, we have no idea who started it and for what purpose.
It could be one person who paid his debts to two others. Maybe an individual bought something from someone. Also, possible someone donated to the Hidden Wiki. Or something else. No clue here.
So don’t know who sent this money to whom, nor don’t know the reason behind it. But we can find out how this transaction happened.
Getting it now? No, let’s delve into this complex situation and understand the possibilities. The above transaction IS anonymous to me because we have no idea about the participants. But if we know that the source address belongs to Bob, we would know that Bob has paid money to two recipients.
Furthermore, we can track the coins down. If later someone spends his newly earned money on a Tor website, we’ll get to know that he spent money which at some point belonged to Bob. Unlike cash in the real world, here, you can track the transaction journey all the way you want.
Again the question is about whether Bitcoin is anonymous or not. Yes, it is, to some extent. UNTIL you make some mistake, a mistake which can lead us to learn the connection between you and your wallet address. From that point, your anonymity has gone.
For example, if you register on a KYC-enabled exchange, you must present your real-life ID card to them. Boom! Your anonymity goes here. The exchange will know the connection between you and your BTC address, and they will be able to track your coins whenever and wherever you send them. Significantly, in some seriousness, they can even share this information with the police.
Similarly, if you receive some bitcoins on a KYC-enabled exchange and an anonymous person sends you some Bitcoins in exchange, the transaction will successfully deanonymize itself. As one, the recipients will not be anonymous anymore.
What could you do at this point?
Well, this is a question we cannot give you a straight answer right away.
First, let’s clarify that hiding the origin of Bitcoin transactions is NOT a crime itself (in most countries). However, if a jury proves that you deliberately hide your traces to keep your illegal activities hidden, they can immediately charge you for being involved in money laundering. In the past, it has happened many times.
Now, you might be wondering to know,
Why would you like to hide the trail of your transactions?
There are several reasons why individuals might want to enhance their privacy and hide the trail of their transactions:
Financial Privacy: Many people consider financial transactions as highly personal matters and value to keep their financial activities private. By hiding transaction trails, individuals can prevent others from accessing their financial information without consent.
Security & Protection: If your transaction information is publicly available, you might become susceptible to targeted attacks, such as hacking or identity theft. So you can reduce exposure to such risks by hiding transaction trails and protecting their personal and financial security.
Preventing Profiling & Discrimination: The companies or governments can use to analyze your online habits. Therefore, hiding transaction trails can help individuals control their personal information and prevents unwanted inquiry.
Business Competitiveness: In a business context, companies may want to protect their financial activities from competitors to maintain a competitive benefit. By hiding transaction trails, businesses can prevent their rivals from accessing valuable information about their operations, strategies, or partnerships.
After enhancing privacy measures, you can have benefits, but you also must know hiding transaction trails can raise concerns regarding illegal activities, such as money laundering or illicit transactions. Striking a balance between privacy and preventing illicit activities is a complex challenge that requires responsible use and adherence to legal and regulatory frameworks.
Moreover, if you are paranoid about privacy, there are tools out there that can help you. There are a lot of Bitcoin Mixers out there which will do just this: you send your bitcoins there, and they will send you new ones, so the connection between the origin and destination will be broken.
We hope you have now come to know that Bitcoin offers some privacy features, it is not entirely anonymous by default, and users should take precautions if they wish to maintain a higher level of privacy and anonymity. Further, we don’t condone any illegal activity. So we will not share URLs with you on the deep web or the clearnet. But we read somewhere, for example, on the Hidden Wiki, you may find many Bitcoin Mixer links. Also, remember trying to hide your Bitcoin traces can provide a certain level of anonymity and protect individuals from unwanted scrutiny. As well as it’ll be seen as a crime by itself, especially if a police officer can charge you with other crimes. But it’s up to you if you want to try out services like these.