Can we use Bitcoin in an untraceable and anonymous manner?
Yes, you can follow specific privacy methods for your Bitcoin transactions. This article will list the different ways to do so.
Bitcoin (BTC) itself is designed to be like a public ledger. All the transactions ever made since the first one are permanently recorded in the blockchain, which behaves like a unique database that allows anyone to view and search.
Bitcoin is pseudonymous, and this means it is not fully anonymous.
The word pseudonymous means that while the owner identity of the Bitcoin transaction is not recorded in the blockchain, we can still infer all the available information from the blockchain itself, such as the date & time of the transaction, the amount of BTC transacted and both the sender and receivers wallet address.
Can we prove the person’s identity by just using the Bitcoin wallet address?
Yes and no.
No, because it does not contain any information about the person by simply analysing the wallet address. However, it is also a yes, because commercial tools can tell if the wallet address is from a particular crypto exchange. From there, it will be possible to contact the exchange and get the information about the user, provided you have the authority or means to obtain it.
Here are the seven (7) ways you can do to make your Bitcoin transaction anonymous.
- How to Make Bitcoin (BTC) Transactions Untraceable and Anonymous
How to Make Bitcoin (BTC) Transactions Untraceable and Anonymous
Here are the seven (7) ways to do so.
1) Avoid Using A Crypto Exchange Wallet
Firstly, DO NOT use wallets from cryptocurrency exchanges.
Cryptocurrency exchanges offer convenience for users the ability to buy, sell and store cryptos on their platform. No matter which cryptocurrency you are buying, the exchange will provide a ready-made wallet to store your cryptos.
However, most crypto exchanges perform stringent checks on their users. This usually involves having users provide some form of ID verification, such as providing a copy of their identity card or proof of residence. Most exchanges also require some form of “live” verification, e.g. a recorded video of you holding your passport.
As long as you are using their wallets, you will be easily traceable because the exchanges are the ones managing your wallet in the backend, and you had previously provided your ID particulars to them during registration. Moreover, commercial blockchain and forensics tools can quickly pinpoint which particular exchange you are coming from when someone searches using your exchange wallet address.
2) Use Multiple Wallets
Now, the aim is to use various software and hardware wallets to store Bitcoin and make transactions. This is to diversify your Bitcoin funds (not having all of them in one single wallet so no one can deduce how much you have) and have different wallet addresses (to make it complicated to trace and remove the association from each other).
It would be best to use different software wallets now and then. However, if you can, you should also use a combination of hardware wallets.
3) Use New Wallet Address each time
Most software and hardware wallets will allow you the option to generate a brand new deposit address for each transaction. This is an excellent feature as it protects your privacy from those who like to query the public blockchain. However, others will not easily link all your different addresses together this way. If you prefer, use a separate wallet altogether each time.
So use a new wallet address for each of your transactions.
If you are using the Electrum desktop wallet, go to <View> and select <Show Addresses>, it will display all the addresses in your wallet. You can choose any one of them. You can also generate a brand new address by going to <View> and <Show Console> and type;
4) Use of P2P Marketplaces for buying & selling
If you prefer to transact with a stranger using cash, maybe personally in an outdoor environment, then LocalBitcoins is a place for you.
It is a peer-to-peer (P2P) online marketplace platform where buyers and sellers gather together. Sellers will indicate their volume available (amount of BTC they have), their fixed Bitcoin rate and their preferred location to deal. Buyers will browse through the listings to find sellers there. Payment methods can range from using cash personally through face-to-face, bank transfers, or even gift cards.
The platform behaves as an escrow service protecting both the buyers and sellers.
Alternatives to LocalBitcoins are;
5) Use a Coin Mixing Service
There are coin mixing services on the web that charges a fee for helping you to anonymise your Bitcoin transaction. The common one is the CoinJoin mixing method, which combines multiple BTC payments from multiple spenders into a single transaction.
Assuming that you need to send BTC to your friend, you send it to the mixing service, and they will assist in sending it to your friend. You send them the BTC amount plus the mixer fees, and they will give you some mixing options for you to choose from.
- You can split the BTC amount into two (2) or more different transactions.
- You can decide if you want a time delay, e.g. one day apart from each transaction.
One of the more prominent coin mixing services is CoinJoin Bitcoin Mixer.
If you use a software wallet called Wasabi wallet, it has the CoinJoin feature built into its wallet’s features.
6) Use of reliable VPN services
A reliable Virtual Private Network (VPN) service like ProtonVPN, NordVPN and ExpressVPN can allow you to connect to VPN servers from many different countries while maintaining a zero-log policy. This means they do not keep any connection logs and do not track you. This protects your privacy. When connected to a VPN, your IP address will change accordingly to that country. This is useful when you visit websites; these sites will think that you are really from that country because of your IP address.
Depending on the service you are using, connecting yourself to a good and reliable VPN service when buying Bitcoins and making transactions is important since your actual IP address will be masked, and even the VPN service provider will not know your web activities.
Using VPN is a good privacy practice, not only for making Bitcoin transactions but also for daily web surfing activities.
7) Explore Telegram Crypto Channels
Telegram is a favourite platform for cryptocurrency enthusiasts. Not only is it a privacy chat messenger, but its Group feature can also accommodate a maximum of 200,000 members and unlimited subscribers for its Channel feature.
There are numerous crypto-related Telegram Groups, and many advertise their buying and selling of cryptos, especially Bitcoin, inside the channels. First, open the Telegram app and click the magnifying glass button. Then, start typing keywords like “crypto Canada” or something similar. Adding your country at the back of the main keyword would be good because Telegram will auto-suggest the cryptocurrency groups based on your location.
Beware when dealing with unknown Telegram users, as there are also many reported scams. For example, some had transferred their cash deposits to the other party but did not receive their crypto equivalent in their wallet.
Go for this option only when you know what you are doing and are very familiar with Bitcoin transactions.