How To Make Bitcoin Transactions Anonymous?

By Rushali Shome

You might often have wondered, are Bitcoin transactions really anonymous? Well, as we have discussed in our earlier articles, the complete anonymity of Bitcoin is by and large a myth and the system is not airtight at all. However, if you have privacy needs which you wish to accommodate alongside the use of this top cryptocurrency of the market, this is the article for you. Here we discuss some of the major ways in which you can make your Bitcoin transactions anonymous. Let’s have a look.

Why is Bitcoin Not Inherently Meant to be Anonymous?

Usually, to promote traceability, the Bitcoin blockchain displays the public key of every user. The transactions of a user are usually clustered together. As a result, it becomes fairly easy for an attacker to figure out the origin of transactions. Often these public keys are even associated with identifiable data about the concerned user. This makes anonymity even more difficult to achieve using Bitcoins.

Therefore, to achieve the basic tenets of transparency embedded in the very idea of blockchain technology that underlies the cryptocurrencies like Bitcoin, it is not made in a way that makes anonymity easy to achieve.

Ways to Hide Bitcoin Transactions

Although the basics of Bitcoin does not allow anonymity directly, there are several ways to ensure the privacy you seek. While we have already discussed how to convert Bitcoins to cash anonymously to fulfill your privacy needs earlier, this time we discuss how you can mask the transactions directly while using Bitcoins. Here are some of the ways:

1. Using A Logless VPN to Hide Bitcoin Transactions

When you are establishing a connection to your Bitcoin client, it is advisable to use a Virtual Private Network (VPN) that is logless. This ensures that the server does not keep a log of your activities and your actions and transactions are securely encrypted so that they cannot be viewed or accessed by a third party. Sometimes, these VPNs allow you to use a shared IP address distributed among several anonymous users. This helps to make sure your transactions become even more untraceable. Having said all of this, you must make sure you use a reliable logless VPN service to make sure they themselves do not record your activities. Service providers such as AirVPN, Mullvad, Windscribe are some good options to use a logless VPN service.

2. Bitcoin Mixing to Hide Transactions

Bitcoin transactions are all updated onto a publicly accessible ledger. By tracing the public key information, it becomes fairly simple to figure out where the transaction started from and where it was meant to go. No aspect of the Bitcoin blockchain itself helps to ensure privacy in this respect, which is why Bitcoin Mixers come in handy here. Bitcoin Mixer services attempt to disrupt the links in the chain or the traceability of the transactions. This can be achieved in one of the two ways available:

a) by making temporary addresses
Or
b) by switching coins having other addresses but an equivalent value.

Naturally, using either of the means makes it nearly impossible to track the origin and destination of a Bitcoin transaction. Paid service providers serve as Bitcoin Mixers. Major ones among them include BitMixer and BitBlender.

3. Using a Tor Browser for Hiding Transactions

A Tor Browser, when used while connecting yourself to the Bitcoin client, helps you mask your IP address by a secure and randomised encryption process. Once your IP address is hidden, the chances of tracing you are slight. However, using a Tor Browser does not come in all that handy while using Bitcoin sites that require KYCs, such as CoinBase.

4. Constantly Change Receiving Addresses to Hide Bitcoin Transactions

Most Bitcoin wallets allow the function of changing receiving address multiple times. All major wallets like Trezor or Ledger Nano S definitely do so. If you use this functionality, it will become easier for you to cheat attackers and retain a large part of your privacy and anonymity.

Other tactics include selling Bitcoins for cash anonymously, something we have mentioned above and covered earlier.

Many laymen believe that Bitcoin is absolutely anonymous and it is one of the myths about blockchain and blockchain-based cryptocurrencies that we have busted earlier. Even then, there are clearly ways to cheat that transparency, as we have explained above.

Rushali Shome

Rushali Shome is a history undergraduate with a keen interest in puns, politics and beyond. When not typing away furiously in the “Notes” section of her phone, she can be found trying to catch the eye of servers at restaurants or weddings for a second helping.

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