Is It Possible To De-Anonymize Bitcoin and Trace Transactions?
Since the very inception of Bitcoin, anonymity has been a key feature that had been advertised widely across the financial markets. These new coins were ideal for those seeking a secure, fast and anonymous way of completing online transactions without the need for a third party to confirm the payment. For this reason, Bitcoins quickly became synonymous with criminal activity online, but was it all down to the coin alone or rather how it was used?
This article is brought to you by freelance writer Damien Troy
How Is It Anonymous?
You may be surprised to know that, despite details suggesting that Bitcoin was an anonymous form of payment, this isn’t actually completely true. In fact, Bitcoin is actually pseudo-anonymous. By design, Bitcoin transactions needed nothing more than the public keys of the involved wallets. Users could complete a number of transactions without any need for names, addresses, bank details or even emails. This pseudo-anonymity has made it possible for traders, investors and casual cryptocurrency users to utilise these coins without the need for revealing their identity in any capacity.
Anonymity has proven important in a range of different industries where Bitcoin is flourishing. From the rise of Bitcoin within online gambling, to the process of trading of these coins for fiat currencies and vice versa, anonymity and protection of personal details can provide a safe space in which users can not only protect their own identity, but their assets too. In a world where cyber security has become such a hot topic, this kind of pseudo-anonymity and security is a vital feature to most.
Could Bitcoin Be De-Anonymised?
As much as it claims to be so, the bitcoin network is not impenetrable. In fact, it could be easier than we think to get into the Bitcoin network and work through the system to find out where a transaction may have originated, thus destroying anonymity. If transactions were traced back through networks, it could be possible to trace the general location and in some cases, the exact IP address of any Bitcoin user without security measures in place.
If personal information is linked to Bitcoin addresses in any way, it’s possible that hackers could trace through transactions to reach this information with relative ease. There are measures that you can take to ensure privacy and anonymity regardless but for the sake of taking it away, it could be as simple as requiring personal information for the likes of trading, transactions and even just owning a wallet.
Is There Any Way To Improve Transparency Of Bitcoin?
There are a number of ways to improve the anonymity of your bitcoin use around the web, some of which require a deeper understanding of how the network works than others.
Disguise Your IP Address
As mentioned before, those who do not disguise their IP address could be at risk of having their personal location found out. Thankfully, there are plenty of simple ways to disguise this address while completing transactions or operating on the Bitcoin network and one of these is TOR.
Join A VPN
TOR is not a foolproof solution on its own and so it’s best to have a second layer of protection in the form of a VPN. This will redirect your connection through a server to further throw any websites or entities looking for access to your information off the scent. It obscures your IP address and in some cases, can even allow you to choose the “location” from which you appear to be operating.
Use Coin Mixers
Mixers are another service that you could utilise to protect your coins from being traced. These programmes essentially shakes up bitcoins that are unrelated in every way, and distributes them back out in a mixed up, random order.
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