Introduction to Bitcoin’s Anonymity
Bitcoin was created to facilitate a financial system which doesn’t require centralized intermediaries and to serve as a medium through which funds could be sent or received anonymously.
By effectuating transactions on a peer-to-peer basis your real-world identity isn’t revealed when you send or receive funds. But most people do not know that Bitcoin transactions are not completely anonymous and they can be traced if enough effort is dedicated.
However, there are a few measures you can adopt in order to secure your privacy and keep your anonymity. The first step would be to get yourself an anonymous Bitcoin wallet.
Samourai Wallet (Mobile Wallet)
Samourai is a recently launched anonymous wallets, being still in its alpha version. Only users that have Android systems can use the wallet for the time being. The Samourai wallet features an attractive design, having a simple interface which enables users to complete a number of operations by texting via SMS.
The wallet generates a unique address which hides your spending habits. Samourai also hinders unintentional address re-use by notifying you when you send Bitcoin to the same address more than once. The wallet also has support for Tor and VPN use, and it also obfuscates blockchain data.
Samourai’s stealth mode hides the wallet from your home screen, launcher, app list, and recent apps, and only by calling a secret PIN code you can make the wallet appear on your phone.
Rahakott Wallet (Web Wallet)
Rahakott is a web multi-currency wallet which keeps transactions anonymous. Since its inceptions (which was not that long ago), over 20 million dollars’ worth of BTCs have been processed by the app.
No phone number or email is required to create a Rahakott wallet, and it ensures that the same address is not reused, as it is an HD wallet.
It supports 4 languages (English, Chinese, Japanese, Russian) and 6 cryptocurrencies (BTC, BCH, LTC, ETH, DASH, ZEC), and it also features SegWit integration. Other security features include OTP, password, or 2-FA authentication as well as an integrated mixer for cryptocurrencies which obfuscated transactions tracking.
The wallet also supports Tor use to cloak your IP address.
Electrum on Tails OS
Electrum is a crypto wallet launched in 2011, regarded as being a reliable storage options for cryptocurrencies. In order to enhance your transaction’s anonymity, it is recommended that you use this wallet on a Tails OS, as the system routes all traffic through Tor. To set up an Electrum wallet no personal information is required from the user.
Electrum creates a new address each time you make a transaction until a default gap limit of 20 is reached. Once this limit is reached, you can still create new addresses but only by manually introducing a script into the command panel. However, addresses generated over the gap limit do not have automatic seed recovery. In order to recover them, the gap limit must be increased or generate new addresses until you find the used ones again.
Hardware wallets can also be paired with the Electrum software, as it supports third-party plug-ins in addition to multi-signature services.
BitLox (Hardware Wallet)
BitLox is a hardware wallet designed for Bitcoin storage, but with extra emphasis on privacy and anonymity. The hardware lest you create up to 100 wallets, and for each wallet, you can also generate millions of addresses. As you have such a large number of addresses you will never end up re-using the same addresses.
BitLox also features hidden wallets with indistinguishable data, and NIST certified true random number generator for securing transaction signatures. You also have an emergency PIN which can be introduced to erase user data contained by the device.
BitLox’ Extreme Privacy Set includes a military-grade USB vault, having pre-installed the Tails OS on it, and it is also compatible with the Tor network.
Dark Wallet (Online Wallet)
Dark Wallet was designed specifically to make your Bitcoin use as private as possible. According to their website, the wallet is in its first public beta, but on their GitHub page, it is stated that it’s in alpha. Their GitHub repository also hasn’t had a commit in over a year, which could be a sign that project has been abandoned.
The wallet can only be used as Google Chrome plug-in, and it supports features such as multisig and escrow. Dark Wallet makes use of stealth payments paired with CoinJoin compression to ensure transaction anonymity.
Dark Wallet facilitates the generation of a new public address each time you send or receive funds.
There have been several reports made by users that the wallet is riddled with bugs and that transaction times are much more prolonged that it is normal for a Bitcoin transfer.
However, Dark Wallet features little info on their website and their GitHub page does not present any recent activity, which might be a reason for concern for some. Also, the developers mentioned this: “it’s not safe at all to use the wallet.”
Ledger Nano S (Hardware Wallet)
Ledger Nano S is a popular hardware wallet which enables cold storage of crypto funds. Upon setup, a 12-phrase recovery password will be generated, which serves as a secondary access option if you forget your PIN code, or if the device gets broken or lost. The device is also secured by a PIN number which you have to use every time you access the device or send crypto.
The Ledger wallet has a wide list of supported coins in addition to Bitcoin, including Ethereum, Ripple, and ZCash.
With this, we conclude our article featuring the best wallets which will keep your Bitcoin transactions anonymous.