Anurag Gautam | Mar 22, 2019 14:04
Even though ten long years have passed since Bitcoin made an appearance on the fintech scene, a lot of confusion about its true nature remains within crypto newbies as well as those who have have been around the crypto corner for a while. A major myth that persists about the pioneering cryptocurrency is that of its supposed untraceability. Is Bitcoin really untraceable?
The Truth About Bitcoin’s Untraceability
"Bitcoin, contradictory to popular belief, is not anonymous in nature. What it is, instead, is pseudonymous. This means that Bitcoin represents transactors by means of a pseudonymous element: which, in this case, is the public key, of a certain user. Any user operates his or her Bitcoin wallet using a public key and a private key, where the latter is used to unlock the wallet itself and authorize transfers."
Now, while the private key remains hidden with the user, the public key can be easily visible on the Bitcoin ledger, which, by virtue of being a public blockchain, is available in the public domain.
This does not automatically mean that one’s identity can be unveiled immediately from the public key one uses. That can only be done if clear information about one’s name, contact details, address, bank details etc. are connected to the public key.
To a naked eye, a public key is nothing but a string of alphanumeric characters. If no further information is attached to it, one will only see the transaction that has occurred via that public key, without accessing details.
However, if you have registered that public key at an online wallet or a cryptocurrency exchange that collected data about you, there is a strong possibility that the public key itself can be traced back to you.
Therefore, it really depends on how smartly concealed your pseudonymous identity is. If it manages to deflect attackers from getting too close to your sensitive data, it means you are still quite untraceable. If not, you run a risk of being unceremoniously tracked down and even have your funds attacked.
How To Make It Harder To Trace Your Bitcoin Transactions?
Bitcoin, as we understand from our discussion above, clearly does not come with an incognito mode by default. While one of our articles, linked above deals with the issue in depth, we can offer you a solution to ensure a greater degree of untraceability in Bitcoin transactions.
It is advisable that you use different wallet addresses and keep changing up your public key. "Also, avoid using wallets that you register on an exchange that also collects KYC/AML data about you. If you actively attempt to dissociate your public key with your actual identity, it will be unlikely that your Bitcoin transactions will be traced back to you."
Written By: Anurag Gautam
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