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Is Bitcoin anonymous?


Is Bitcoin (BTC) really an anonymous cryptocurrency as many people believe? No! Let's take a look at it in detail in this content.

"Bitcoin (BTC) is an anonymous currency that allows you to pay on the dark web". This is one of the favorite phrases of people who criticize BTC for being anonymous. Yes, even Bitcoin (BTC), the king of cryptocurrencies, is not without its critics. It is accused of promoting the activity of terrorists and money launderers. For cause, it would be anonymous. But is it? Not really, and that's what we're going to show you.


Why do people say that Bitcoin (BTC) is anonymous?

If many people believe that BTC is an anonymous digital currency, it is first of all because it can be mined by anyone at any time. Without providing their home address (or company headquarters), IP address or other personal information, anyone can mine BTC. In short, it's as if all miners were working behind a dark room covered by a black and very opaque veil.

Furthermore, a BTC wallet can be downloaded without providing (once again) any personal information about the user. It is even possible to transfer tokens to other wallets securely, without revealing one's identity. As a result, the Bitcoins (BTC) that are mined are truly anonymous.

So, in theory, Bitcoin (BTC) is an anonymous cryptocurrency. But that's only in theory! In reality, the reality is quite different, because of the presence of the financial market regulators, or in more classic terms "financial regulators". They set standards for digital assets, and Bitcoin (BTC) is no exception.


No, Bitcoin (BTC) is not anonymous

The truth is that Bitcoin (BTC) is far from anonymous. In fact, if it were, it would not be possible to trace transactions. Here's how it works.

With the BTC blockchain, all transactions are recorded. Obviously, in the data that is saved, neither the name nor the first name of the miner appears. What appears in the blockchain is rather a sequence of numbers that correspond to the public address of his wallet. So, if the miner uses the same address each time for these transactions, they will be listed and it will be possible to trace the address back to its owner.

But how can a string of numbers lead to the owner? It's easy. It is enough to know that tokens do not appear by magic in a wallet. They necessarily enter it because another miner has sent them, via an exchange (a cryptocurrency exchange). Now, all exchanges are required to identify their customers according to the Know Your Consumer (KYC) principles.

If you have a wallet, it means that your information is retained by your exchange. If requested by an authority, the exchange could provide your information or send them your IP address which approximates your location. So, no, Bitcoin (BTC) is not as anonymous as people think, and there are many examples of this.


Slik Road, the most remarkable example

The year is 2008, the golden age of Bitcoin (BTC). It has just appeared and few people have heard of it. For those few who do know about it, the description served up is always the same: "It is a currency that requires no trusted third party and is not regulated by states or other authorities. It is efficient and allows cross-border exchanges". Because it is not controlled, the crypto is beginning to seduce.

A few years later, an e-commerce site was launched. However, it is not a site like the others. First, it is available on the dark web. Secondly, it offers for sale only products that are not very catholic. Its name is Silk Road, an invention of Dread Pirate Roberts (DPR). DPR decided that transactions would only be made with Bitcoin (BTC).

Unfortunately for DPR, a few years later, he would be nabbed by the FBI in 2013 who were able to trace him back to BTC transactions. FBI agents infiltrate the buyers of products on the platform. At the same time, they discovered an unmasked IP address that led them directly to servers based in Iceland. Using this address, they trace the transactions on the BTC blockchain back to DPR.

The end of the story is this: the FBI arrests DPR and gets their hands on a stash of over 26,000 BTC that will later be auctioned off. Now, the moral of the story is this: never assume that Bitcoin (BTC) transactions can't be traced. That said, it is still possible to remain anonymous with the king of cryptocurrencies.


How do you maintain anonymity with Bitcoin (BTC)?

There are a variety of techniques for anonymizing BTC. One of the most effective ones is to use blender services. The goal is to mix the BTC of several users. This way, it is difficult, if not impossible, to identify the exact source of the tokens.

Although blending is a proven method, it has a flaw. For the user, it is essential to trust a third party with the funds. Another problem is that your transactions can be mixed with those of people doing less legal activities. In the end, you could find yourself involved in stories you don't know the head or tail of.

So is Bitcoin (BTC) anonymous? No and no! The first "no" means that it is only its design that allows it to be cloaked in anonymity. The second "no" is more obvious, because it means that transactions are not really conducted in secret. They can be traced through the Bitcoin blockchain (BTC). 

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