When investing in bitcoin in 2022, you have to undergo a rigorous KYC vesting, which is a significant breach of anonymity and privacy in bitcoin. Therefore, you may ask yourself how you can stay private using bitcoin. Furthermore, is it even possible? This article will discuss the major pitfalls of anonymity in the blockchain. Correspondingly, we will also discuss the capacity to remain anonymous in the blockchain.

Is it possible to be fully private with bitcoin?

To understand privacy in bitcoin, one must first understand the underlying system. Primarily how is bitcoin anonymous? Thus, we have to discuss the underlying technology in an abstract manner. Secondly, we have to discuss the traceability of bitcoin. Lastly, we have to discuss how exchanges and KYC authentication puts the anonymity and privacy of bitcoins and crypto at risk.

Bitcoin: How is it private? How is it tracked?

The technology behind bitcoin was considerable to an old swiss bank account by many. This was because the onboarding from fiat money was not tracked. Furthermore, this digital money allowed anyone to create a unique identifier called a wallet. It's important to note that the movement of money (transactions) lives indefinitely on the blockchain. Thus it is possible to remain private, but not fully untraceable.

Bitcoin loses the anonymity factor when interacting directly with centralized exchanges. Essentially, this occurred due to the fact that exchanges had to legally implement it. But what did this mean for the wider crypto ecosystem? Unfortunately, as people comply with these regulations, more and more privacy concerns grow. But it does not end there as companies begin to onboard cryptocurrency, in some cases, KYC is unavoidable. For instance, companies like travala require your KYC to "travel", however as you pay for it in crypto, they can presume who owns the funds.

Logging of IP addresses

Unlike a swiss bank account, when transferring bitcoins, Full Nodes have access to transactions' relays. Thus they can log the IP addresses of anyone sending a transaction or operating a node. Though it may be difficult to trace back the IP due to the nature of peer-to-peer networks, it's not impossible. There are several famous tools to help you mask your IP address. We recommend using a tool such as VPN or Tor if you wish to keep your privacy intact.

Bitcoin: How can crypto be anonymous?

Bitcoin works with an unprecedented level of transparency that most people are not used to dealing with. All Bitcoin transactions are public, traceable, and permanently stored in the Bitcoin network.

bitcoin.org

Acquiring Bitcoin Anonymously

In order to get in or out of crypto anonymously, it is imperative not to perform KYC verifications. If you wish to purchase BTC without the requirement of KYC verification, you must purchase it through peer-to-peer means. This may be difficult to do depending on the legality and jurisdictions in your location. However, this can take on many forms, it does not have to come in the form of an online service. In fact, trading cash for bitcoin with neighbours and friends is considered to be peer-to-peer. Thus, trading bitcoins, or acquiring bitcoins through this manner makes it relatively private. There are a few non-custodial peer-to-peer exchanges available, such as localcryptos.

Another means of acquiring bitcoins anonymously is to freshly mine them. Mined bitcoins are newly created and can be created to any wallet on the blockchain. Thus as you mine cryptocurrency, you acquire small amounts fully anonymously. However this is a one way transaction, and depending on where you're living may actually be much costlier than using peer-to-peer means.Private bitcoin is no easy feat, and once you've acquired them, the next step is to handle them with care.

Handling Anonymous Bitcoins

As aforementioned, it is imperative to keep your IP address well-masked if you wish to interact with the blockchain anonymously. This is due to the fact that IP addresses log all your digital information including your location. Secondly, it is important to keep mixing up your receiving addresses and not keep them in the eye of the public. This makes it harder to track the full amount of funds that you own, and keeps the bitcoins segregated. Essentially, as funds are on different wallets, the use-case and ownership become questionable.

Finally, if you wish to add an extra level of privacy you can use a Bitcoin Mixer. These allow you to transfer crypto using a third party service provider to make it less traceable. If you're interested in finding out more about how bitcoin mixers work, their risks, and their benefits, be sure to check out our article on them.

Conclusion

In conclusion, remaining fully untraceable with bitcoin is not possible, however you can limit the amount of knowledge and ease-of tracking. Furthermore, bitcoins can always be acquired relatively anonymously and using crypto anonymously is possible.

Finally make sure to DYOR and Resh Out!