How to stay anonymous when using bitcoins

The idea of anonymity has been tossed around quite a bit during discussions of Bitcoin. Bitcoins can be bought and sold between parties without divulging any significant personal information. This fact has led users to believe that transactions are, in fact, anonymous. Unfortunately, this is not entirely true. The parameters upon which Bitcoin was founded and developed presents a significant problem for those users who are seeking to remain anonymous during their transactions. Bitcoin was set up as an independent, international currency that was beyond the manipulation or control of any government’s reach. Because it is an independently bought and backed currency, there are other conditions that are required in order to prevent the corruption of the entire system as a whole.

One of those main components is the absolute need for transparency in all Bitcoin transactions. Once the transaction is completed, all Bitcoin transactions are listed in an open ledger, so that true transparency can exist. During this recording of the transactions, names are not given. The only pertinent information that is affixed to the transaction is the location to which the Bitcoins were delivered, or the location from which the Bitcoins were delivered from. This appears to some that they can conduct business in secret. Even though the transaction is listed for all to see, nobody will ever know who paid, or who got paid. In theory this is true. However, theories are known to have some exceptions. The internet is constantly searching for links. Backlinks, keywords, SEO, and all of the other internet marketing jargon come into play when this topic comes up. Unfortunately, when it comes to Bitcoin, these links become part of the problem.

If a person or entity participates in multiple transactions, those transactions will all show that they were delivered to or from the same address. Once that happens, those transactions are linked. It doesn’t take much detective work for a user’s personal information to become linked to one of those transactions through other means. Once that user is linked to a transaction at that address, that user is permanently linked as an individual to that address as well. That means that user is now linked to all other transactions that took place at that address.

The complexity of the online search engine is magnificent and useful, but it also can be detrimental to those wishing to trade Bitcoins privately. The best way to prevent this from happening is to constantly change addresses, use only one address only once. Buy bitcoins in person with cash, and protect your IP from showing. This is a bit of work, but it stops the immediate link possibility that can expose one’s personal information. This method is the cleanest way to stay anonymous when buying or selling Bitcoins.

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