Are Bitcoin Transactions Anonymous?

You’ve no doubt heard those mainstream experts say, “Bitcoin is nothing more than a currency for criminals.”

Bill Gates recently said, “The main feature of cryptocurrencies is their anonymity. I don’t think this is a good thing. The ability to find money laundering and tax evasion and terrorist funding is a good thing. Right now cryptocurrencies are used for buying fentanyl and other drugs so it is a rare technology that has caused deaths in a fairly direct way.”

Jim Rickards, bestselling author and Economist, is quoted as saying. “It’s a utility token for criminals, terrorists, money launderers, tax evaders — they’ll always find some use for it.”

With these experts so convicted that cryptocurrencies or Bitcoin are for criminals, the uninformed public naturally shy away from them. After all, why own a currency used by evil people?

It gives everyone the idea that Bitcoin transactions are completely anonymous, only to be used by drug lords, hacks and the netizens of the dark webs.

That is untrue, however.

PSEUDONYMOUS, NOT ANONYMOUS

Bitcoin transactions are not anonymous.

They are pseudonymous. In other words, it is like you using a bank account under another name. That is the only thing keeping anyone from knowing how much you own.

For example, if your name is John, pseudonymity means that you open a bank account under the name Alice.

But the crazy thing is, everything about Alice’s account (or John’s) can be seen, studied and audited by ANYONE.

THE PUBLIC BLOCKCHAIN

In fact, every transaction on the Bitcoin blockchain can be observed by any third party.

Here’s an example…

Go to blockchain.info  and you can see the transactions happening live.

Click on one address…

Look, here you can see the amount that a Bitcoin address has.

Not just that, you can see the whole history of all the transactions to and fro this address!

COVERING YOUR TRACKS? NOT ON THE BITCOIN BLOCKCHAIN!

Good idea for covering your tracks?

Not the best on an immutable and public blockchain!

This means that if you were deemed to have used Bitcoin to transact in drugs or criminal activity, you can be caught even 10-20 years later for one transaction you made.

All the authorities need to know is which public address you own.

Following the above example, basically, all the authorities need to know is that John opened a bank account under the name Alice. And then everything is exposed.

Once that is established, technically everything you ever did can be tracked from the very birth of Bitcoin and its blockchain.

More than that, once the authorities find out one transaction that leads to a criminal transaction, they can technically follow the trail on the public blockchain to find a whole network of public addresses linked to this.

A whole network of criminals can be found if just one public address is associated with the illicit activity.

What is keeping these criminals on the dark web from being arrested is just the simple associating a name/identity to a public address.

Would a top level criminal sophisticated enough to use cryptos be stupid enough to do this? I think not.

In fact, cash is even easier to launder or use for illicit trade. And it has been used for illicit trade for far longer than Bitcoin has.

But have you ever heard these experts complain about cash being a tool for criminals? Maybe some.

But the point is that Bitcoin transactions are far easier to track down than cash transactions ever will be.

So the idea that Bitcoin is being used for illicit activity, or that it is anonymous is rather outdated.

PRIVACY COINS

In fact, in an article by Independent, criminals have wised up and are using privacy coins like Monero instead of Bitcoin to do their illegal transactions.

These privacy coins have the ability to mask transactions by various methods which we will touch in another article.

So, if you’re getting into Bitcoin thinking you’re buying a currency for anonymous people or criminals on the dark web, think again.

I think you should be more worried about someone finding out every single transaction you’ve ever made with Bitcoin!

Which is the preferred method for anonymous transfer of value? Leave your answer in the comments below!

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