The federal focus on crypto-related crime, combined with the increasing sophistication of law enforcement tools for tracking illicit cryptocurrency guide payments, means that these transactions are not anonymous. On the one hand, cryptocurrency is completely anonymous. On the other hand, it is completely transparent and trackable.
Bitcoin
is not anonymous; it is pseudonymous.The address of your bitcoin wallet is basically an alias that is used to carry out transactions on the bitcoin network. Realistically, every bitcoin can be traced and traced from its initial wallet to the one it is currently in. However, the blockchain only stores the public addresses of crypto wallets, not real-world identities. This makes bitcoin pseudonymous rather than anonymous.
Any transaction made on the Bitcoin blockchain is transparent to the public. This means that anyone who knows which address belongs to you can link any transaction to you. This public transparency is one of the sources of the lack of privacy in Bitcoin. Since all transactions are permanent and public, a massive map is being created as time goes by that allows analytical tools to draw a picture of where bitcoins are going.
The paradox of cryptocurrencies is that their associated data creates a trail that can suddenly make your entire financial history public information. In the original Bitcoin whitepaper, it was recommended that users use a new address for each transaction, to avoid being tied to a common owner. In the original Bitcoin white paper, inventor Satoshi Nakamoto suspected that wallet addresses could be used to link transactions with a common owner and, in fact, recommended that users use a new address for each transaction in order to provide acceptable levels of privacy. One of the biggest myths surrounding Bitcoin and other cryptocurrencies is that criminals use them mainly to finance illicit activities.
The addresses to which the money is sent, the date, 26% of the time and the value of each transaction are recorded, the only thing that is not the case are the identities of the people behind those addresses. Cryptocurrencies, and especially Bitcoin, are reputed to be a completely anonymous form of payment, free from tracking and interference. All of this means that all transactions that occur between opening and closing the tab are not on the blockchain. In the transaction shown below, some of the bitcoins came from the address 12tbgstqd1how9cpykwtm4vuyw3qddwmob and others came from the address 19T1HYYQE254NXITAGLRAR4GPJAZCKSXJY.
Unfortunately, because many don't fully understand cryptocurrencies, misinformation about how it works and who uses it is easily spread. The narrative that Bitcoin and other cryptocurrencies are predominantly used for criminal activities is simply not true. However, as organizations and the public better understood blockchain technology, it became apparent that the bitcoin public transaction ledger was, in fact, a goldmine of information for authorities. Once you overlook the scary headlines and develop an understanding of the fundamental principles behind Bitcoin and other cryptocurrencies, you'll see how beneficial technology is and how it can radically transform the financial sector.
While bitcoins can be minted, moved, and stored without the oversight of any central authority such as the government, every bitcoin transaction is recorded in a permanent, publicly available ledger known as a blockchain. All markets, where you exchange your government-backed currency for cryptocurrency, require some form of proof of identity, whether it's a passport, driver's license, or government-issued ID. .
