Anonymity, a term strongly associated with cryptocurrencies and blockchain technology. However, not many know that Bitcoin, and most other cryptocurrencies, in fact, are not anonymous.
Following the same idea, blockchain technology offers a secure, fast, and cheap method of payment. Sure, cryptos are a lot more secure and more privacy-oriented than their fiat counterparts, but the simple fact that all transactions are recorded on a public ledger (blockchain) for anyone to see somewhat excludes the idea of anonymity.
Even though the ledger does not include names or email addresses, it does include the digital wallet addresses of the sender and the receiver alongside with various details about the transactions such as amounts, dates, timestamps, etc. Regardless of the fact that IP addresses are not considered Personally Identifiable Information (PII), an IP address is fairly easy to trace. It’s not extremely hard for a skilled individual to actually trace that IP address to a wallet address. This means that potential hackers could find how much Bitcoin you own or where are you sending the funds to.
Before we go even further, it’s important to touch upon the subject of the so-called “privacy coins.” Surely, most people know by now that Bitcoin is not the only cryptocurrency out there. Even more to the point, there are various altcoins that have been specifically developed to offer enhanced privacy and anonymity. Some good examples of privacy coins include Monero, Zcash, and Dash, to name a few.
However, there are some drawbacks, the main one being that privacy coins are usually associated with illegal activities.
Considering the fact that Bitcoin is still the most valuable and most widely accepted cryptocurrency, we have created a guide with various tips to make your payments with Bitcoin anonymous.
With that out of the way, we have created a list of the best methods to make Bitcoin transactions as anonymous as possible. However, it’s impossible for anyone to guarantee that these methods will work with a 100% efficiency.
Use the Tor Browser
Tor browser is a specialized web browser that conceals its users’ identities and their online activity by separating identification and routing. Users’ internet traffic is encrypted and routed to random computer nodes on the Tor network before it reaches its final destination. Without going into details, it anonymizes web traffic using the Tor network, thus, protecting anyone’s identity.
Using a Tor Browser to connect with the Bitcoin network is probably one of the most accessible ways to anonymize your Bitcoin transactions. However, you should keep in mind that, if you use KYC-enabled Bitcoin sites, it becomes useless. If you are using a Windows PC, then you can try to run your Tor client and connect to the Bitcoin network by using the 127.0.0.1 localhost address via the standard Tor port 9050.
Use a Premium VPN
Another good way to ensure that your privacy stays untouched while transferring Bitcoin is by using a VPN, particularly a logless VPN. VPNs encrypt all your Internet traffic and route it through multiple servers of your choice at different locations before arriving at the final location.
Therefore, using a VPN to connect to your Bitcoin client is another good way of ensuring the privacy of your Bitcoin transactions.
Get new address for each new transaction
Most Bitcoin wallets are in fact hardware wallets. It may come as a surprise, but most of these wallets can generate any number of receiving addresses. Wallets such as Ledge Nano S, MyCelium, Trezor, as well as others, can easily generate new receiving addresses, which should help you ensure your anonymity when using Bitcoin on a regular basis.
Mix your coins
This is one of the most important steps you can make towards anonymizing your Bitcoin transactions. Coin mixing, also often called coin tumbling or coin laundering, is the process of mixing coins from multiple parties.
The idea behind this technique is to “break” the connection between the sender and the receiver of the coins, making transactions practically impossible to trace. Mixing coins can be a complex technique which may require you to do some research before actually being able to commit to it.
In general, there are a couple of steps you will want to keep in mind if you want to mix coins. Use the previously mentioned Tor Browser in order to access the mixing service. You might want to consider creating two anonymous wallets using a burner email address. One to act as an intermediary wallet, and the other for the final destination of your Bitcoins. You can use mixing services such as BitMix.Biz, BitBlender, and CoinMixer.
Other useful tips
Of course, buying and paying with Bitcoin is also part of the whole process, therefore, we have a few tips for this particular type of job. In order to buy Bitcoin, you will require a wallet. The main thing to remember here is that you should always keep your private keys safe. It’s usually a good idea to stay away from hot or cloud wallets and opt for hardware wallets.
Even though getting your hands on Bitcoin using crypto exchanges is the most common way of doing things, it’s not the most anonymous method. Other options include buying Bitcoins directly from a private seller. For this type of method, note that LocalBitcoins and Bisq allow you to connect with people who are selling Bitcoin.
Last but not least, you can buy Bitcoins directly from a Bitcoin ATM. There are usually no ID requirements, as you simply have to insert cash and provide the ATM with your wallet address.
We hope that our guide shared useful information. We wish you the best of luck when it comes to performing anonymous transactions using Bitcoin.