Is Bitcoin Anonymous?

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Is Bitcoin Anonymous?

Many people outside of the space believe Bitcoin is anonymous. It’s often described as so because you can send and receive without your name being on the Bitcoin transaction.

Even worse, the Bitcoin narrative cultivated by the media is of a currency for criminals and terrorists. An anonymous, untraceable means of laundering money, that makes it perfect for criminals to wash money.

However, Bitcoin is probably the worst currency for criminals because every transaction is on an open ledger and is traceable, if you have the time and resources to do so.

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The official Bitcoin website, explains it best:

‘Bitcoin is designed to allow its users to send and receive payments with an acceptable level of privacy as well as any other form of money. However, Bitcoin is not anonymous and cannot offer the same level of privacy as cash.’

So if Bitcoin isn’t anonymous what is it?

Bitcoin Transactions Are Pseudonymous

A Bitcoin transaction on the blockchain is comprised of three parts: an input, an amount and an output.

An input is the record of the address of BTC you want to send from which you received it.

An amount is the amount of BTC you want to send from that address.

An output is the public key (Bitcoin address) that will receive the BTC.

These alone make up the data connected to any BTC on the blockchain, and they’re identified by a string of letters and numbers only. There are no names, addresses or any human identity connected with them.

But this doesn’t make Bitcoin anonymous, however. Transactions and Bitcoin addresses alone can’t be used to identify anyone because a person doesn’t have to use any ID to create a Bitcoin address.

There will always be a name connected with the address that sends the transaction to an exchange where they want to convert into government money. And all other previous transactions can be linked to that transaction connected to the name.

Bitcoin Transactions Leave Breadcrumbs

To send Bitcoin you need a public address to send it to, which is the string of letters and numbers. We know they don’t expose your name, but because they’re on an open and immutable ledger they can all be tracked.

If you buy something with Bitcoin and the third party has your account details, their information can be used to identify all of your activity with that address and any other address connected with it.

For example, if you transfer bitcoins to an online store, or a cryptocurrency exchange, they will have your personal details, and that can be connected back to your pseudonymous Bitcoin address.

And even if you send it to Bob, and he sends it to Alice, and they share it all around their friends, almost every transaction is traceable, eventually.

Contrary to the mainstream narrative, therefore, Bitcoin isn’t good for criminals. Instead it is the perfect currency for police to investigate someone who might have been doing something illegal and trying to get away with it by using BTC.

But Why Do Criminals Demand Bitcoin?

So, if Bitcoin isn’t a great way to evade the police or taxman, why do some criminals demand Bitcoin?

Well, they either don’t know that Bitcoin isn’t anonymous, or they prefer the pseudonymous start to their crime and they want paying in BTC. This way they will probably deal with the consequences further down the line.

There are some Bitcoin laundering tools that have been created by developers. ‘Mixers’ are software programs that allow people to break up the breadcrumbs that each Bitcoin transaction has left behind.

To use these, a person will send their Bitcoin into a mixer, and they will receive the same amount of Bitcoin back but in smaller transactions of different sizes, and more importantly with different addresses and transaction history.

These mixers aren’t perfect, however. They have serious limitations, such as not working very well with large amounts of Bitcoin, and even the ‘mixing’ transactions have been known to be traceable.

Everyone Has a Right To Privacy

Not everyone who wants anonymous Bitcoin transactions are criminals. In fact, most aren’t, they just value their privacy.

The narrative of ‘done nothing wrong, have nothing to hide’ is a weak one, and only believed by sheeple.

People want privacy because buying Bitcoin can put one in danger. If everyone knows that you have Bitcoin and the price goes to the moon, you’re putting yourself at physical and online risk.

Remember, most uninitiated criminals think Bitcoin is anonymous, so if they know you have Bitcoin, they might try and rob you, thinking they can get away with it.

Or if you’re online and people know you have some, they might try and hack your device. So, buying Bitcoin anonymously is the way forward for many.

Not All Bitcoin Platforms Demand KYC Checks

For anyone who wants to buy or sell Bitcoin without revealing their identity, there are many ways to do so.

If you sign up with one of the main exchanges, you will have to give some government ID to be able to use the platform. That’s fair enough, but some platforms don’t require it.

Paxful is a peer-to-peer Bitcoin marketplace which brings together buyers and sellers. They have their own KYC process, but users don’t have to complete it.

Not all buyers and sellers on Paxful will work with people who haven’t verified their accounts, but there are some that will.

For this, you are likely to pay a bit of a premium, but if privacy and anonymity is your thing, it will be worth paying a bit extra.

You can also buy Bitcoin anonymously from Bitcoin ATMs. There are thousands of specialized Bitcoin ATMs in pretty much every big city in the western world and beyond.

If this is your desired method, simply locate an ATM, and buy BTC from there. Be careful not to give an old private address, however, because this might be connected with your name. Instead, tell the ATM you don’t have one, and it will create a new for you and send the Bitcoin there.

Bitcoin Isn’t Anonymous, But That’s Perfectly OK

As many criminals have already found out, Bitcoin isn’t anonymous. Instead, it’s pseudonymous.

This doesn’t mean everyone can see and know how many bitcoins you own, but it does mean your Bitcoin address will be connected to your name somewhere down the transaction chain.

There are ways around this, and some people use mixers to “launder” their bitcoins, but criminals are starting to realize cash is still king when it comes to evading law. That’s why governments are eradicating it.

Bitcoin gives enough privacy if you’re not open about everything on social media. And if you haven’t done anything wrong the government isn’t going to waste its resources to try and know how much Bitcoin you own.


Please be advised that the contents of these posts are not to be construed as investment advice. While some of our contributors may be price analysts, their opinions and analyses are personal views and are shared with the intention of promoting discourse and understanding.

Always conduct your own research and consult with a professional financial advisor before making any investment decisions. The Bitcoin market can be volatile, and past performance is not indicative of future results. Invest at your own risk.

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