Cryptocurrency Transactions Are Not Anonymous
When a new user hears the word cryptocurrency, the first thing that comes to mind is anonymity. In fact, in the early days there was the assumption that cryptocurrencies like Bitcoin were untraceable and anonymous, they were a safe haven for criminals. The idea was that crypto allowed users to conduct private transactions that banks, governments and law enforcement organizations could not track. While cryptocurrency offers privacy, personal information such as an investor’s name, address, and phone number can still be traced.
The first white paper of 2008 introducing blockchain technology through bitcoin promoted the concept of invisibility or anonymity. The idea was based on the fact that there are only two parties involved in the activity, as cryptocurrency allows direct peer-to-peer transactions over the internet.
However, every blockchain transaction is documented using the crypto wallet addresses of the sender and receiver. All transactions coming in and out of this wallet are recorded on the blockchain, which is open to the public. Also, because central authorities required KYC for exchanges, a wallet address can eventually be traced. As a result, cryptocurrency transactions are often known as pseudo-anonymous transactions.
If privacy is an issue, investors will be relieved to find that Bitcoin is one of the most secure payment solutions available. This allows them to conduct business without fear of hackers gaining access to their information or revealing their identity.
However, an experienced hacker or government agency can still access the blockchain’s data and learn more about a person’s identity. Surprisingly, this is rarely done directly by hacking the blockchain, but rather through more indirect methods such as password phishing.
This means that protecting one’s identity when using cryptocurrency comes down to applying standard internet security measures, such as creating a unique password, being careful about the networks one uses, and avoiding clicking on questionable links in emails. .
In short, cryptocurrencies are not completely anonymous. All transactions have an audit trail and can be linked to the maker. While some central banks are unsure of the usefulness of cryptocurrencies as a product, there are many websites that accept cryptocurrencies as legitimate payments. So they are not anonymous or illegal.
