How Private is Bitcoin? A lot more private than your banking information.
Especially with banks giving Equifax customers data to leak and never really apologizing. There was no alternative for banking customers other than to accept the bank will give all their information to Equifax to “score” everyone, with no option to opt out.
Until bitcoin that is.
Anyone with access to the internet can have a bank account now. No bank would let you have a bank account without ID, verification of your age, your address, date of birth and family details.
This is required in the event you ever owe the bank money in the future and they need to track you down. There is no real benefit to giving this information to the banks for their customers.
Even though our internet money is magical, there are still tons of people tracking you on the internet. New bitcoin users with limited computer experience, can find the basics for staying anonymous with bitcoin (and their identity in general) online.
1. Get a VPN
Blockchain transactions can show a users IP address when transferring funds. VPN services like ProtonVPN and Private Internet Access have been popular with many users to encrypt your browsing online from outsiders.
The actual data you are transmitting through chat, email, banking and websites, is not viewable by the ISP once you have the VPN connected on your device.
We use ProtonMail for email and are fairly sure their free option would be the only one we would use. Private Internet Access is our favourite because of their transparency reports showing governments can’t get users data
The extra secure method to mask your internet data is through TOR, for those countries with extremely draconian internet laws (looking at you China).
2. Multiple Bitcoin Wallets and Addresses
Bitcoin addresses are free, so it is good practice to use a new one with every bitcoin payment you receive. Anytime you send or receive bitcoin, the sender or receiver can see how much bitcoin is in the wallet you are using.
Free bitcoin wallets are quite common now. Most people want to limit the amount of wallets they use and hold bitcoin in between their laptop, mobile and hardware wallets for different amounts of bitcoin on cold and hot wallets.
3. Different Internet Browsers, Operating Systems, Search
Google, Facebook, Apple, Amazon and Microsoft are competing to acquire as much data about people as possible. It is best to use 2-3 internet browsers (in private mode), duckduckgo for search, firefox or brave for browsing, along with Linux for an operating system that wont track your activity like big tech does.
Most consumers don’t care about the tracking these companies do but the data they hold on users has probably been hacked just like Equifax was recently. The best hackers privately sell sensitive information on people, these large leaks of data in the news aren’t giving a full picture of how large this business is for thieves. The employees of these companies (especially banks) have been known to sell the customer information as well, making privacy more valuable than most people understand today.
4. Private Email outside the Google/Microsoft “free” Options
Gmail and hotmail email addresses have been the targets of many attacks, we don’t believe that their employees wouldn’t read or sell people email communication.
No WhatsApp, Skype or SMS messages with details like account numbers or personal information.
Even if Facebook made WhatsApp end to end encrypted, it does not mean that Instagram and Facebook employees can’t read your messages or listen to your calls in their apps. All of them have recently been caught listening to users conversations or reading users messages in their products, people who value their privacy have suggested as much for years.
Signal on the other hand has endorsements from most of the cryptography world as a safe and secure communication app. Set your messages to disappear after a certain amount of time rather than creating decade long conversations on your devices with everyone. The encrypted calls and file sharing make the app a must have for anyone ever sending sensitive data.
6. Acquire some Bitcoin Anonymously
Different trade offs for different anonymous exchanges exist whenever purchasing bitcoin around the world but the options will only increase over the next ten years.
There are MANY ways to get bitcoin in your area with cash. The most common is to ask a merchant that accepts bitcoin in your area if they would sell you some bitcoin. Merchants don’t usually want to hold all their bitcoin because cash pays the employees and bills.
If you run a business and want to accept bitcoin without fees or 3rd parties gauging you, take the open source solution BTCPay offers and has bitcoin maximalists approval.
Go to a bitcoin or (sigh) blockchain event and see if someone wants to sell any for cash.
7. Anonymize your Bitcoin
Coin Join and Wasabi wallet specifically have their fans, the method takes users coins and mixes them in unison so all users within the agreed “mix” have bitcoin that is parts of other bitcoin with different origins and history on the public blockchain.
8. Custodial wallets (the ones in exchanges) are not YOURS
Don’t move your “ill gotten gains” to a custodial wallet (on an exchange) requesting a cash out unless you are 100% sure the wallets you received your funds from, won’t look suspicious on the blockchain. Exchanges do check where your bitcoin came from because the blockchain is public, it should just be assumed they will check.
Companies like chainalysis track IP’s, transactions using the bitcoin blockchain to sell the data to bitcoin exchanges, financial institutions and governments around the world. The most common we hear is US exchanges like Genesis and CoinBase with bitcoin sent directly from gambling sites to the exchanges wallet. There will be questions asked if you send bitcoin directly to a custodial wallet in the US from an online gambling site.
There is always the risk of an exchange seeing any “questionable” activity seizing a persons bitcoin, much like a bank that has a customer wiring excessive amounts to Nigeria or Asia. They don’t know what you are doing, therefore it is probably illegal, which is a fault of the banking system not with the users of the money.
These are the BASIC steps to anonymize your bitcoin transactions and personal information on devices. Much like the often argued “scalability of bitcoin payments,” anonymizing solutions will continue to roll out over the next 10 years.
At the same time 2nd layers and side chains like lightning network and liquid will eventually have competition for “fast payments” which may actually decrease most bitcoin holders desire to move back into a national currency with their digital gold ever.