Bitcoins are becoming a widely popular convertible virtual currency. The reason behind its popularity is it is supposed to be 100% anonymous. Even though it is advertised to be completely anonymous, some users say it isn’t. With the website stating the anonymity and users saying it isn’t, is it anonymous? Truth be told, Bitcoin is completely anonymous, but on the other hand, it is entirely traceable. How is it that a website can be both traceable and untraceable at the same time and what does it mean for bitcoin users?
It is All in the Network
Some users like to define Bitcoin’s network as “pseudo-anonymous.” It is true that Bitcoin users can obtain a bitcoin address without revealing any of their personal identification information. In fact, one bitcoin user is capable of holding multiple bitcoin addresses, with the theory of not being linked to any of their address or their own identity. On the flip-side, every last thing a user does on Bitcoin is, in fact, trackable. How is that possible? The algorithm is structured in a way that each Bitcoin-based transaction gets logged on bitcoins ‘blockchain’. What does this mean? This means, when a user puts a bitcoin address on their website, the user’s bitcoin balance is now available to the world. What can this mean for Bitcoin users? What Bitcoin users need to understand is that privacy isn’t enforced by Bitcoins protocol design.
The same use of a bitcoin address for payments results in every user that makes the payments to detect all the others who’ve sent that address money. It may sound like the user receiving payment is in the clear, but truth be told, that user isn’t out of the clear.
What is scary to some is that with a little bit of data mining, the right – or wrong – person could get quite a bit of information. Some people aren’t aware that a permanent history is left behind from transactions, even if it is something that is supposed to help at the end, which then leaves traces of identity information.
To avoid the privacy issues with Bitcoin, it is recommended that users create multiple wallets and deletes each previously used walled. Also, do remember that Bitcoin is still relevantly new to the scene, so, never use it for putting more money that is affordable in the user’s wallet. With new updates on Bitcoin, hacking and privacy issues, one can never be too careful. Remember, because it isn’t truly anonymous, doesn’t mean Bitcoin shouldn’t be used. When used properly, Bitcoin can be a new and exciting way to use money worldwide.