Bitcoin Forum

The IRS has stated that recently they can track down people who are making a profit of Bitcoin without claiming it on their tax return. I wonder if the Core Engineers will start to look at ways to keep Bitcoin anonymous from prying eyes of the IRS and other Governments?

What are your thoughts?

Thanks,

Bitcoin is anonymous, only that it is getting compromised because the IRS and everything that is compromised with the legality of the taxes, are always trying to hunt some money.

How would you feel if you are a bank, or something, and you see that thousands of people are making profit with a "digital coin" What would you try to do?

Bitcoin has been created to be anonymous, they are only following the tracks of those who are making a HUGE amount of money, not the ones who are just making $100 or $200 a month (because it is nothing)

Why do you think that they were trying to follow those who were holding more than $20k on 2015 in coinbase? Because that money has made more than x12 since then, and it is more than $440,000 at the moment.

Bitcoin was never anonymous.  Anybody who said it is, was stupid or lying.  Anybody who thought it is, may be in for a rude shock with unknown timing.  The notion that “Bitcoin is anonymous” is a persistent, pernicious myth.  It’s a global ledger, wherein each copy of the blockchain shows in full all transactions ever made.  What is so hard to understand about this?


They have been, for awhile.  But things develop slowly in Bitcoin.  They can’t just smack on a new feature, at risk of accidentally dropping a billion dollars worth of coins on the floor.

No, your public key is always the same, plus each person can look at any transaction in the blockchain. It is possible to refill all money transfers, but in fact the public key number is not a name and passport data, so only partially if you use the VPS and the proxy then it will be extremely difficult to find you) if you are not engaged in crime in the industrial mast

STOP MISLEADING PEOPLE.  Bitcoin was never anonymous, not designed to be, and never imagined to be by anybody who understands the simple concept of a global public ledger.

People who read this, before you shoot yourself in the foot, do some research.  Also read carefully, and observe the blatant self-contradictions of people who claim that Bitcoin be anonymous:


(How can it be “getting compromised” if it’s really anonymous?  How could the IRS be “following the tracks” of anybody who uses something “created to be anonymous”?  Duh-huh.)

I think bitcoin is anonymous to a certain extent, but when you have to cash out and bring the money back on the grid, then you are suddenly not anonymous anymore. If there was a way to cash out without using banks or other institutions that are part of the financial system, then bitcoin would have been completely anonymous.

Bitcoin is anonymous only for the books but the reality is different. Everything can be tracked through the blockchain public ledger. So we can't call bitcoin truly anonymous.


The banks are expected to make negative comments on bitcoin and its usage and that's exactly what they are doing. Some banks are even blocking the account for transacting with a known bitcoin exchange or a dealer. It's a threat to their business because billions of dollars are filtered out of banking channel already and more to go out in future.


That's true! IRS will not employ much manpower to chase the peanuts. They want big players who can generate a sizable amount of tax. $100-$200 earning doesn't make much sense for them to chase.

Stop thinking.  It is dangerous to your health.

There is a rich vein of academic research on tracing and correlating information in the blockchain, as well as cross-correlating it with real-world identifying information from other sources.  Professors who know, like, mathematics ’n’ stuff have been working on this for years.  Go read some papers before you opine.

Bitcoin is pseudoanonymous. Anyone can track how coins are being transferred between addresses, but it's extremely hard to figure out what exactly happened, as wallets tend to generate new address on every transaction. But if the government can get exit addresses at the exchanges, they can establish connections with these addresses much more easily.

Bitcoin itself is anonymous. But government is always finding a way to monitor transactions like forcing exchanges to comply with their regulations which is Anti-Money Laudering and Know Your Customer(AML/KYC) policy. That exchanges will also implemented to their system. So people will have to comply in able to use their services. People will forced to give their identification that will be trun over to government and the government will monitor users. Coinbase just turn over their collected IDs of traders to IRS. That is why IRS can monitor every users. That's all i know.

As far as my knowledge is, I knew that bitcoin was totally anonymous but governments always tried a way to track in the about all the transactions in bitcoin. I guess bitcoin can be traceable because I have seen many people out on the forum boosting the speed of transactions after taking the hash value doesn't that mean Bitcoin can be traceable?

The primary way the IRS "tracks" Bitcoin traders is through exchanges. If you give your passport and proof of residence to an exchange, your deposit/withdrawal and trading histories can be provided to regulators like IRS.

It became known a few months ago that the IRS is also working with Chainanalysis, which extensively works to link Bitcoin transactions/addresses to identities by scraping the internet and more specifically, darknet markets and forums. It's hard to know how much they know about us from watching our blockchain activity.


Bitcoin privacy is terrible, but users can take steps to mitigate that. For instance, most people just use default sending rather than selecting UTXOs. Each output is tainted by its history. Keep that in mind before you send it anywhere, and certainly before you link a bunch of addresses together in a single transaction. Signing transactions from multiple addresses makes it easier to track your wallet because those addresses are forever linked together after that.

It is not anonymous, i dont know why you all are saying that is, in fact, it is not. Maybe it was created to develop a new idea for organizing the money, but it does not means that it was just created to be anonymous.

If you are looking for an anonymous coin, then monero/zcash,/zencash are the ones who you should be using instead of bitcoin. Deeponion is crap, so dont use if you dont want to lose your money.

It does not means that it is not anonymous because of that, because you can still use a multi signature wallet and no one will be able to track your addreses or your money.

The above fact does indicate that bitkoyn is not as anonymous as it was thought. Therefore, the last coins that detached from bitcoin, namely bitcoin brilliant, have a greater degree of confidentiality than the original bitcoin. So, in it in an open for general review magazine blockchein the data about coins in a purse and their balance are closed. This greatly reduces the likelihood of hacker attacks on wallets with large amounts in the crypto currency. If bitkoyn does not solve the issue with increasing confidentiality in the near future, people will simply switch to other coins, in particular, coins that have separated from him in recent months.

It is nice to see a Newbie's fight! Lmao


Anyway, bitcoin has been created to be ANONYMOUS, it is not working as it was before because a lot of people started to use it.

Because it has the records of all the transactions on all over the blockchain, it does not means that it is not anonymous, because it is the public record that makes the blockchain be legit, that has been created to prevent the double spend and all the scammers, and of course, the issue of the coin.

If you want a 100% anonymous coin, go and buy monero, everytime that you need to buy something with bitcoin, you must put your details and ID's almost everytime, so yes, now it is not anonymous, but it was created for it.

Bitcoin is not anonymous, not anymore. Transactions are transparent so anyone can check when and from who certain address has received bitcoins. As far as I know, the introduction of "confidential transaction" will help us to solve this problem partially. What are confidential transactions? The information about sent amount of money will be encrypted so only sender and recipient will know the exact amount which was sent.

In the Twitter/TL;DR world, so few people actually read nowadays.  Who needs it?  Let’s see a picture of how pretty a Bitcoin transaction graph is!


That’s from 2014, from a blog post (https://archive.is/1aTij) by bitcointalk user organofcorti, as discussed on this forum (https://bitcointalk.org/index.php?topic=66026.msg5742102#msg5742102).  Anybody who hasn’t seen it is a n00b.

Now, to correct a few bits of misinformation:



Yes, “AML”/“KYC” is poison for privacy and freedom.  But that’s not even relevant here:  Governments and exchanges are not the only ones who can trace Bitcoin transactions.

Instead of shooting off your mouth on an Internet forum, you could try your own blockchain tracing with BlockSci (https://freedom-to-tinker.com/2017/09/11/blocksci-a-platform-for-blockchain-science-and-exploration/), available as an open-source project (https://github.com/citp/BlockSci).  First, read the paper (https://arxiv.org/abs/1709.02489).

Also have a look at this paper on how merchants and third-party web trackers can correlate web cookies, names, physical addresses, etc. with blockchain data (https://arxiv.org/abs/1708.04748).

There are also some neat papers on attacking the privacy of Bitcoin mixers; but if you want me to assemble a bibliography for you, you’ll need to start paying me.

Correlating “KYC” identity data in an exchange is the easiest way to identify Bitcoin users.  Obviously.  But it’s not the only way; and if you think it is, then you are in for trouble at some point.  As is anybody who takes your forum advice.  Don’t mislead others with careless, foolish, and factually incorrect talk of Bitcoin being “anonymous”.

P.S.:


I may perhaps consider your opinion and explain to you why you’re wrong, if you could explain to me how many “newbies” have longstanding familiarity with the academic literature on Bitcoin transaction tracing.

Also, I could argue Zcash vs. Monero; but that’s offtopic in a Bitcoin forum.

Also, I think my “first fight” was over here (https://bitcointalk.org/index.php?topic=2469397.msg25696091#msg25696091).  Though it’s tough to say; I’ve (https://bitcointalk.org/index.php?topic=1184641.msg25697278#msg25697278) been (https://bitcointalk.org/index.php?topic=2518088.msg25749798#msg25749798) busy (https://bitcointalk.org/index.php?topic=2527193.msg25809454#msg25809454).  There are just so many “ill-informed nincompoops who overestimate their own competence [and] enjoy voicing opinions to which they are not entitled”, to quote myself from that first link.

Now, stop claiming that Bitcoin be “anonymous”, or I will taunt you again.

Every one already know that bitcoin is only pseudo anonymous.So,every transaction is registered in a public ledger.So,if the government officials want to track your transactions,they could easily do it.

And if you want to be safe from the radar of the government,you could better use mixer services where you would be given new bitcoins so that no one would be able to trace your transactions and identify you.I think that's the only possible option left to use bitcoins safely being untraced.

I'm sure that making bitcoin more private is probably on the Core dev team agenda, but I doubt that is something that has a high priority level. Bitcoin is somewhat anonymous, since your identity is not tied to your wallet or address, but of course we all know that everything is public in the blockchain, so by the time someone knows you are the owner of an address, they can track down every transaction you make. They won't know what they are, unless they also manage "to ID" the other addresses, but they can see how much you have there, and how much you have been spending.

You can of course keep changing addresses, and do your best not to get identified by a particular address, so I'm not really worried with this. As far as the IRS goes, don't forget that regulation is important for bitcoin, in order for it to become legit and get more adoption. I have no plans in evading taxes, and I don't think anyone should do that.

Anonymity is important, but I hope the Core team is focused on the scalability issues, and in developing off-chain solutions like the lightning network. That is the very important update that we are all waiting. Anyway since segwit provides many off-chain solutions, I'm sure that it will be easy to increase the privacy of bitcoin transactions.

Bitcoin has never being anonymous, especially now if you buy your coins from an exchange or you use a payment method that reveals your identity, also if you try to cashout your bitcoin you are going to need to reveal your identity so there is nothing to do.

Bitcoin is not really anonymous because it has a ledger recording all of our transactions and everyone could look up to our own bitcoin addresses but not our real information. Once they know who that person is using that address, you are doomed i guess.  :D

bitcoin being decentralized crypto currency  using internet connection I know reagarding to my knowledge bitcoin is anonymous currency, so becareful your bitcoin investment if you are careless have possible to lost your bitcoin especiall in your wallet if forget the private keys or password.

Did you flunk the Turing test?

How did you get past the CAPTCHA to log in?

My guess always was that Bitcoin is anonymous as long as there wont be a link of your address to your person. As a distributed (open) ledger, all transactions are visible for everyone, so whatever one spends or receives can be seen by everyone. But if you for example always do your business from an internet cafe or other public places, nobody can link your entry in the ledger to your person. What I was always wondering about was how those mixing services work? Do they just send the transaction that you want to send to eg 10000 different addresses before sending it to the destination address? So it would be a huge amount of work to check all the addresses? I cant imagine how else they could make a transaction non trackable on Bitcoins blockchain. But this would also not be doable because of the transaction cost and speed. Maybe someone can explain it to me?

I guess they could identify you only once you cashed out. Other than that, your identity is safe (unless you have verified your identify in an online wallet, of course); Honestly, man there are lots of ways to stay away from the eyes of the FEDies. You just have to be creative.  ;D

WRONG.  For but one of a hundred other ways your identities could be linked, even if you mix with CoinJoin, check out this pretty picture from a research paper (https://arxiv.org/abs/1708.04748) I referenced in my earlier post on this thread (https://bitcointalk.org/index.php?topic=2527738.msg25814830#msg25814830):


Stop giving dangerously bad advice!


You ask some reasonable questions.  More reasonable still would be the question of how to actually protect your privacy.  That last is a difficult question.  Strong anonymity (or more properly, the transaction unlinkability required for strong privacy) requires considerable expertise; there does not currently exist any point-and-click solution which will make that happen for you.

I’ve been trying to write up a little post on the basics; but it takes time, since unlike some people here, I don’t simply toss out substance-free gab to hear myself talk.  It is a complicated topic; and I know that if I give the wrong advice, people could get hurt.  I may or may not finish what I was writing.  Meanwhile, here are some notes:

I observe in brief that I have never used a Bitcoin mixer site.  I am a privacy activist.  I have exclusively connected to the Internet through Tor for some years now—just on principle.  I’ve been intrigued by the potential of private digital currency since Chaumian Digicash was still a thing; that was a few decades ago.  And I have never used a Bitcoin mixer site.  That might suggest to you something about those Bitcoin mixers.

Some people here need to read this paragraph thrice, from the newbie-level introduction at https://bitcoin.org/en/you-need-to-know#anonymous (https://bitcoin.org/en/you-need-to-know#anonymous) (italics added):


The same people should also read that “read more” link very carefully.

Observe some discussion by smart people who know what they are talking about (https://bitcointalk.org/index.php?topic=279249.0).  (N.b. that I can’t recommend CoinJoin or Joinmarket (https://github.com/JoinMarket-Org/joinmarket) at this time unless you know its limitations, and you really know what you are doing.  Look back to the above graphic.  The little crossover icons in the left half represent CoinJoins.)

Finally, I must quote this for the right spirit.  Privacy is not for criminals; it is to protect you from criminals:


There exist corrupt and oppressive governments.  There also exist robbers, stalkers, identity thieves, and kidnappers who are increasingly sophisticated in their exploitation of digital information sources.  I think it is only a matter of time before organized crime catches on in a big way to the goldmine of useful information which can be linked through blockchain tracing; perhaps they have already, and I just don’t yet know it.  All these threats can work retroactively, too.  Every transaction you commit to the blockchain is there forever.

Don’t be paranoid, but take precautions.  I use Bitcoin for whatever I want to, nobody knows how much I have, and I sleep quietly at night.  Of course, I don’t engage in criminal activity—that’s outside my threat model.  I just want—no, I demand privacy; and I have it, at the expense of some large effort.  It’s worthwhile!

Thanks, I appreciate all the information and links. I've got a lot of reading ahead of me. I've always been scared of what kind of files the blockchain analysis companies already have on us. I can't for the life of me remember many of the transactions I've made with bitcoins over the years, and it's scary to think that Chainalysis knows more about them than I do! :-[

When bitcoins were trading in the $200s in a seemingly neverending bear market, none of this seemed to matter. Now that we're trading above $10k: life comes at you fast....

Happy to help.  I wish I had a better and easier answer at the ready.

What you say reminds me of thoughts I’ve had over who has recordings of my telephone calls, or copies of long-past (unencrypted) e-mails.  My own communications, as of which I myself have no record outside scattered memories—with those, it’s impossible to be certain of who has or doesn’t have what.  My calls to my fondly remembered old ex-girlfriend in $YEAR; who may have archival recordings of those?  I think it’s probable that some database has it all.  The situation with the blockchain is worse, since it is public and permanent; although other data which could be cross-correlated with it may be another “who recorded what when?” situation, depending on what you did and how in terms of buying, spending, etc.  At least, you also have a copy of the blockchain.

Looking a few steps further:

Do you surf the Web without Tor or similar measures?  Do you remember every website you’ve ever visited?  Do you remember every search term you have ever typed into Google?  (People tell Google secrets which they would never tell their spouses, best friends, clergy, or psychiatrists.  When they have trouble sleeping, people openly tell Google their midnight fears and fantasies.  The Google search is the closest thing to mind-reading technology yet invented.  “I’m feeling lucky.”)

Somewhere, there is definitely a record of these things; or somewheres plural, not only in government agencies.  Inasmuch as this data may oft be in the hands of private companies such as Google or your ISP, it is used for “marketing” purposes.  You are eyeballs and a piece of meat.

In a similar vein, do you carry a mobile phone?  (I ask this rhetorically; I would not suggest that you answer such questions on a public forum!)  If you do, then somewhere, there is a database which knows precisely where you were physically located on, say, the date of 2010-03-09 at 10:04 in the morning.  Do you know exactly where you were on 2010-03-09 at 10:04 in the morning?  Somebody does—well, a computer somewhere does.  If you were to ever become interesting (in the sense of a “person of interest”), then a wetware analyst could look back at that years or decades later, and correlate it with other available information.  That includes, but is not limited to, the calls and texts you made with that phone (metadata and/or content).  It also includes the locations and communications of persons carrying phones around you.  Do you remember who was near you and whom you associated with on 2010-03-09 at 10:04 in the morning?  Somewhere, there is a database which remembers that.

Such is the meaning of dragnet mass surveillance.  It is the total destruction of even the most basic dignity.  It respects nothing sacred, leaves no part of you untouched and inviolate, admits no freedom.  It fears no gods, but deifies itself with omniscience and omnipotence.  It is an invisible collar around your neck, from your cradle to your grave.  “If you’re not doing anything wrong, you have nothing to hide.”  No!  Because I do nothing wrong, I have nothing to show.  I am a man, not a worm; therefore, my life is none of your business.

My location on 2010-03-09 at 10:04 in the morning, and my activities, communications, relationships, “social graph”, finances, reading habits, and innermost thoughts, are all none of your business.

Let these thoughts sink into your gut, and you will begin to understand why I care about privacy.  Most people don’t get it.  Encrypted e-mail, anonymized Internet, cash at the store, and antipathy for GoogFaceTwit?  People will look at you funny, at best (and thus the first rule of privacy: be discreet about privacy).  But once you start to think the full history of your blockchain transactions, your credit cards, your bank accounts, your phone calls, your locational information, your e-mails, your web surfing, your web searches, etc., etc.—well, then privacy begins to make sense.  It even makes sense to expend effort and endure inconvenience, to obtain privacy.  Actually, when you begin to understand these matters, you realize that the lack of privacy is outright insane.

Thanks for thinking about these issues.  Everybody who cares about privacy can make the world a tiny bit of a better place.  And good luck with securing your Bitcoin privacy.  Bitcoin has great promise as a force for freedom, which necessarily encompasses privacy; but thus far, its tools are as yet imperfect, and the privacy part is very difficult to get right.  At least, you certainly have more control of your own destiny with Bitcoin than you do with banks and credit cards.  Consider how your ownership of your private keys means nobody can help you if you lose them.  Here likewise, Bitcoin gives you the power over yourself, and thus the responsibility for yourself—two sides of the same coin!

Those are some pretty detailed posts about bitcoin privacy and privacy in general
It is clear that we have become accustomed to the fact that when we browse something an analytics program would record that, when we visit a place, google maps would record it, when we wish someone dear, an e-mail messenger will record it.

We have failed to realize that we could as easily have access to all these things without it being recorded and turned into data to be mined. We have accepted it as a fact of life and frankly, its ramifications are absurd and long lasting.

Will privacy ever become a standard

BTC has never been anonymous. Anyone thinking they can hide from the IRS is in for a rude awakening.  Unless you live off the grid and do not have any tangible property you cannot hide for long. It's not worth the hassle.

It is not hard but most people do not want to take the time to read about the myths of bitcoin, of all the myths that is probably one of most long lasting and in my opinion is one of the most damaging since people think they can get away with anything because they think they are anonymous.

 Well, it does not have to be if we join in the Playcoal or Forum we do not need to hide the identity too much, but if we want it it does not matter, because Bitcoin is a currency intended for long-distance people with their families so if Bitcoin is too anonymous we find it difficult to trace the shipment that we or our friends are doing or if we have made a withdrawal and through the Bank, it is certain we use the original identity we have

Bitcoin is of course anonymous, but the IRS thinks bitcoin has a lot of profit, so they must be trying to levy a tax. It's as if your neighbor suddenly became rich. Then you will have an idea. What way does my neighbor make so much money? I have no way to make money.

With the methods of analysing big data - no matter how you mix bitcoin, once it touches the ground, you'll be found out.

But bitcoin transaction is recorded, it will help the law enforcement to track the illegal activity which using bitcoin as medium of exchange. Bitcoin just protect the identity of the users but very transparent in transaction.

Bitcoin is transparent. the record on blockchain can be seen and checked by anyone.

IRS can cracked down tax evaders using the exchanges information like coinbase for example, creating an account at coinbase you need to verify yourself before you can do any transaction this is one way for IRS to track you down, as long as you give your personal information to a 3rd party law enforcers can find you.

I think bitcoin is very anonymous, but the government is always looking for ways to track transactions of bitcoin users, but to this day there is still no effective way to track these transactions. it is possible that in the future the government can solve the anonymous bitcoin problem

Bitcoin not so anonymous but most anonymous payment tool. you can send it without Id.

when use strong vpn and VPS will be anonymous and No one can track you

Not anonymous but much more plausibly deniable than most modern forms of payment.   Bitcoin plus a good attorney or two is all you need.   

The blockchain is opened, everyone sees everything. Bitcoin has "pseudonymity". For example, if an attacker demands a ransom for a wallet, then everyone understands that the wallet belongs to a bad guy. And since anyone can follow the transactions from this wallet, it will not be possible to simply take advantage of Bitcoin, because revealing the identity somewhere means the government immediately catch him. Almost at all stock exchanges for an exchange for ordinary money it is necessary to pass through identification.

I think it is anonymous. does not belong to anyone. It exists and grows not the management of any organization. Investors involved in bitcoin do not need to provide too much personal information.

Bitcoin is known in different countries in our world case that I just do not even know who owns and who owns a bitcoin but for sure I do not worry about it because I like it because for bitcoin you earn just how big it is and how to use it and how to make it here because there are so many problems when you think about the owner here.

Bitcoin is not really anonymous because it has a ledger recording all of our transactions and everyone could look up to our own bitcoin addresses but not our real information. Once they know who that person is using that address, you are doomed i guess.

No need to worry about this, the trading being done in btc are technically not yet under the jurisdiction of the taxation system. Not unless you country has regulated it already.

Thank you for your posts. Despite, you're bitcoin fanatic, you're telling right things about civilization and relationships in it :)

So who says that Bitcoin is anonymous. It is built as a transparent system.

Yes, bitcoin is not anonymous in fact most people around the world knows about the way points of bitcoin. The only anonymous thing in bitcoin is the transaction from the blockchain.