Reasons for the lack of anonymity
- It is necessary to register each transaction publicly.
All users can see the cash flow of cryptocurrency as it passes from address to address. On one hand, users cannot identify this information as transaction numbers are random figures. On the other hand, if at least one transaction can be identified and its owner calculated it is probable that owners of other transactions will also be calculated. Information about owners can be obtained using network analysis from a surveillance tool or with the help of a search engine in order to find their address. Protection against identification and the increasing complexity of hackers' attacks anticipate the need to attribute a new number to each new transaction.
- Transactions via exchangers can lead to the calculation of the Bitcoin account.
For example, if a certain Ivanov decides to use the services of exchangers, then do his shopping on the site intended to trap users, it is possible that another person who wants to calculate Ivanov's address by sending two transactions will be able to prove that they have been generated by a single person from a single address.
- There is a danger that the address could be calculated by government commissioners.
For example, this information can be used to accuse a user of concealment of profits and tax evasion. The history of all transactions of the Bitcoin system must be public for security reasons. However, there are methods of minimising the amount of personal information being leaked on the network.
For example, mining using an address guaranteed to protect the user. Users must understand that such an absence of anonymity in the system is the basis for minimising the scope for "dirty" transactions, criminal activity and the Bitcoin system crashing. If the account contains anonymous and non-anonymous financial revenue, the user must make it "clean".
How can one remain anonymous?
There exist several classic methods of preserving anonymity:
- Use the services of an external mixing service, a resource which mixes up all cash transactions, then resends randomly money invested to different address with delays etc. The transaction sum is credited to the user account without commission. In theory, gathering of bitcoins in a large pool of transactions permits the transaction chain to be hidden.
- Use different addresses for incoming and outgoing transactions.
- Try to avoid transactions with important sums which can lead to a unique identification of the owner, as well as storing these sums in a single area.
- Look for bitcoins using the correct methods or in a pool, as in this case, they appear in a wallet of a mining expert.
Legality of Anonymity
Anonymity is an unconditional right of a user to keep transactions secret. Nevertheless, anonymity which is a part of a system of money laundering or other criminal activities is illegal within the Bitcoin community.