Bitcoin Forum

Is Bitcoin practically Anonymous (or Decentralized) ? I know, please read the complete post.

Assumptions (Correct if wrong)
1. Once an entity gets a Bitcoin address it's permanent to that entity
2. I have data (amt of transaction) in public ledgers and I have address of the both entities involved in that transaction.
3*. Having more than one bitcoin address for entity isn't allowed ?
4. We are using bitcoin for WHITE transactions.

Theory :

Now, as the entity's bitcoin address doesn't change over time and I know all the transactions happened in the public ledger. So I get the history of all the transactions that a particular entity has done. Also I have record of all the actual physical transaction that took (buy and sell of a product).[Assuming we are only considering WHITE transactions).

So if I use today's sophisticated Pattern Detection and ML, AI algos (I am not well versed), can't I actually map the physical entity to the Bitcoin address and know who that person is ? [As it is 1:1 mapping]

So I guess even if we are ready to adapt bitcoin for currency we can't guarantee no one can know who send money to whom, right ??

Also people are bound to die and then transactions with the bitcoin address with will stop that's also a very strong evidence that it was that person then (well we can't hang you :p). But even if one person's identity is disclosed then it will be very easy to determine the other party involved (who may be alive) as this person did transactions with certain people in certain order right ? So by elimination, we can actually know which person is which, atleast for Billionaires ??

Those assumptions is somehow acceptable and I did really get the point.



1. Once an entity gets a Bitcoin address it's permanent to that entity
If a certain generate a certain address then it belong to him together with its private keys.
2. I have data (amt of transaction) in public ledgers and I have address of the both entities involved in that transaction.
Not all the times since there are transactions which is indirectly happening on both parties.You wont know on what address he was using either his personal or on exchange.
3*. Having more than one bitcoin address for entity isn't allowed ?
As much as we like since we can able to generate tons of it.
4. We are using bitcoin for WHITE transactions.
Not only on white but there are people who would really make use on dark purposes and really cant be avoided.

Not necessarily, in theory you can also sell / buy the private keys themselves, without a public transaction on the blockchain. Of course you'll have to trust your counterparty and forgo the security of the blockchain in that case though.



Yes! A well known issue that is already practically exploited -- or utilized, depending on your point of view:

http://fortune.com/2017/08/22/irs-tax-cheats-bitcoin-chainalysis/



In theory yes, in practice coins are also lost, burned or used for transactions that are never actually bound to real world identities or physical goods.


Note that there are alternative cryptocurrencies that focus on the anonymity aspect, more or less viably, with varying up and downsides. If that topic interests you, I suggest looking into Monero, Zcash and Byteball Blackbytes for different approaches on achieving anonymity.

Yes. Bitcoin has never been fully anonymous, and neither was it ever a selling point. Criminals were able to use it freely in the past because few people had any idea how the Blockchain worked, and there were no Blockchain analysis services. Recently, it seems like they use mixers or buy Monero to throw off the scent. They can otherwise be pinpointed, as you described.

The IRS has recently prohibited the concealment of exchange accounts, so they will almost certainly be able to link out all your addresses to you. It's about to happen in a massive scale.

I thought so too, but tell me please why it is impossible to track the hackers who hacked last week nicehash? They stole 4700 bitcoins. It's not a small amount and it seems to me that many who wish to trace those who did it. Probably not so simple as we think. Probably if desired bitcoin can provide anonymity. Or do you think that search of the hackers robbed nicehash do the Amateurs?

Because Bitcoin still has some anonymity. There's usually a trail, but there are specific cases where there simply isn't. This is one of those cases, as the hackers could simply create new addresses to send the hacked coins to. At that point, you know which addresses hold the coins, but not the owner. No part of the hackers' identity is public. That could change once the hackers start liquidating the coins though, as the trail will finally have endpoints to follow.

If you're a regular person that cashes out through an exchange or other people though, that essentially means part of your identity is public (your exchange address or the address you used to deal with the third party), and it could be used to trace your other addresses. There are still solutions to this, of course, like using a mixing service like Chipmixer before sending out your coins.

Maybe not that anonymous as we think .
We can certainly examine  by the address that it came form which wallet and it becomes very easy to trace the transactions . If someone goes back to the root it becomes very easy to keep an eye of every transaction.  Sending the coins to the exchanges is the part where one can atleast evaluate the source belongs to which country . That becomes pretty revealed at that point.

But most hackers wont really tend to do such stuff on not mixing on the coins that have been stolen into someone. They are not dumb enough to disclose their identity easily. They would normally make use methods which would really cover up the trail and would make the tracing would be more difficult or even impossible for you do search on and would end up tired and wont bother to investigate. Even on using directly a mixing service from the very start would really solve the problem on making that dirty money into a new one.

Actually most of the world don't care about the IRS and their abilities. Remember that it's authority doesn't reach out beyond the US borders.
Also, buying monero through an exchange won't help you. If it becomes worth the trouble they can force the exchange to give out your details including the name you've used to register, email address, IP and the phone number (usually a phone is the smallest requirement). It's still difficult to track down a smart user, but in most cases it's possible because even your VPN provider has to comply when presented with a court order.

I disagree. The federal government has always taken the position that the US has jurisdiction over companies that do business with US customers. It was stated in the BTC-e indictment that this was partially the justification for the July enforcement actions. It didn't matter where BTC-e was organized. Similarly, Bitfinex has been fined by the CFTC despite its registration in Hong Kong or the British Virgin Islands.

That's why some exchanges prohibit US customers. Others continue to serve them because it's a massive market, and the profit motive outweighs the regulatory risks.


Link? I haven't heard of anything like this. There is a Senate Bill (not passed yet) which would prohibit concealing your identity to financial institutions, with that term being expanded to include exchanges. So if an exchange requires KYC, it would be unlawful to lie to them (fake names, etc).

It's not that simple, though. You can trace back through a transaction tree and establish a relationship among various addresses. But you can't definitively prove that various addresses have the same owner unless these addresses are used together to sign a transaction. This is why it's important not to reuse addresses. If you reuse addresses, it becomes more likely that some piece of the transaction tree history will at some point become linked to a transaction/address which can be linked to your identity.

Mixers and non-KYC services can help break the chain, but you also need to be careful because centralized services also store information about you: cookies, IP addresses, browser settings, etc.

Yeah, the IRS only has jurisdiction over US residents but the point I was making is that there's already an entity out there that potentially knows you. They also set a dangerous precedent which may be followed by other governments.

Yeah it would be pointless to buy a fully anonymous cryptocurrency with your identity exposed. You can buy them from third parties while maintaining a good amount of anonymity though. If you want to make full use of Monero's anonymity features, exchanges are obviously the wrong way to go.

Normally, bitcoin isn't anonymous but pseudonymous as every transaction linked to a specific address and listed on blockchain permanently.
But, bitcoin can be completely anonymous and can't be linked to a person if never been going through an exchange, especially if you bought the private key as mentioned above, or in this case, bitcoin mixer can break the link as they give you a new private key which not linked to you.

I always thought that a foreign country can't fine you, despite the reason, if you aren't their resident and your company isn't registered in their country. That's why all the phone and Internet scammers from India, Pakistan and Nigeria have been targeting US residents. They know nobody will send a team of Seals to track them down and move to US to await trial. They can fine you, but you can ignore it and show them the finger. If whole countries can act like that so can you :D

You might be anonymous using Bitcoin but there are a lot of ledgers who also keep track of your footprints in the digital platform. That is why, it is best to keep clear from illegal acts.

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In the past, many of us have been assuming that we can continue on being anonymous while transacting business with Bitcoin but this is not the case anymore. In the first place, the transactions are open in the ledger available to anyone and once you convert your Bitcoin into cash there will be the paper trail and then the connection can be made. This is very true in the light of many governments who wanted to have a pie in the action (for taxation purposes and to counteract laundering possibilities). In my viewpoint, if am not doing anything illegal then there is no need to hide. Now, if we are under a freak government, there are now also many ways to play a hide-and-seek with the government.