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Author Topic: Can I be anonymous to my bank when buying Bitcoins?  (Read 5185 times)
ManBearPig-X
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December 12, 2012, 02:45:25 AM
 #1

If I buy Bitcoins off my bank card, will it be completely anonymous to the bank to where my money has gone? For instance if I buy them off my card on TOR, will I be traceable? As in my IP, where the money has gone or my address? I don't want them to see my account, wallet or know anything about me.

I'm new here as you can see, so I have very little understanding of how things work or alot of the technical terms I have read which have made no sense to me. I'd appreciate help.

Also, I've heard that Bitcoins aren't secure and can be stolen, am I suppose to put them on a USB stick? Thanks Cheesy

I'm just trying to learn the inns and outs at the moment of how things work.
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Bitmanic
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December 12, 2012, 02:56:57 AM
 #2

Your question as to how the transaction appears to my bank is a good one, an one that im interested myself but just not thought of!

with regards to securing your wallet have a read of this https://bitcointalk.org/index.php?topic=17240.0
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December 12, 2012, 03:07:56 AM
 #3

It will really depend on how you go about acquiring your bitcoins.  If you withdraw cash from the bank and use the cash to purchase your bitcoins from somewhere like BitInstant, then the bank can't/won't know that you acquired bitcoins with the money.

If on the other hand you use mtGox to acquire your bitcoins and use their "Bank Transfer" method of funding the account then the bank will almost certainly be able to tell that the money went to mtGox and could reasonably assume that they were used for the purpose of purchasing bitcoins.

Depending on what bitcoin wallet system you choose, your access to your bitcoins will likely be controlled by your wallet file.  If you don't protect this file and someone else gains access to it, they will be able to spend your bitcoins.  You can encrypt the file, but if you lose or can't remember your password you will no longer be able to spend your bitcoins.  They will be lost forever.  Nobody will be able to "reset" or "recover" your password for you.  If you choose a password that isn't complicated enough, and someone gets access to the file and guesses your password, they can spend your bitcoins.  Access can mean they hack in to your computer, or that you acquire a computer virus or trojan program that steals wallet files.  Storing the wallet file on a USB drive can reduce the opportunity for others to gain access to the file, but it is still possible for them to gain access when you plug the USB into a computer if the computer is already compromised.

If you loose access to the wallet file (such as in a hard drive crash, or losing your USB drive) you will no longer be able to spend your bitcoins and they will be lost forever (nobody will be able to recover them for you).

Fortunately, since it is just a computer file, you can create regular backups.  This way if the file is damaged/lost, you can recover the backup and regain access to your bitcoins.  However you must be careful to not store your backups somewhere that someone else can access them, and be careful that you are reliably able to recover the backup.

There are some wallet solutions that reduce some of these risks for you.  If you set up an account with mtGox, they will provide you with a bitcoin address where you can have coins sent, and you can send coins directly to others from your mtGox account.  This works even if you don't send any non-bitcoin money to them at all.  They take care of storing the wallet file and securing it from theft.  Unfortunately you then have to trust that mtGox won't suddenly decide to run off with all the bitcoins that are deposited with them, and you have to trust that they will do a good job of securing the bitcoins from theft.

Until you understand the risks involved and have a decent understanding of what a few of the wallet providers have to offer in the way of risks and features, I'd suggest not maintaining more bitcoins at any one time than you are willing to accidentally lose.  Then as you gain a better understanding of what you need to do and what is available to help you, you could increase your bitcoin holdings as you see fit.

Stephen Gornick
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December 12, 2012, 04:29:58 AM
Last edit: December 12, 2012, 07:59:38 AM by Stephen Gornick
 #4

For instance if I buy them off my card

I think that's probably where you are misunderstanding what options are available to you.

There are nearly no sellers who accept a payment card for the purchase of bitcoins.

The few that do will definitely have their merchant account name appear on your bank statement.  For instance, VirWoX:
 - http://www.VirWoX.com    <---   Buy Second Life Lindens (SLLs) then trade SLLs for BTCs.

LiqPay is another, used by BTC-e.com for instance.

Here's another ... but they have a delay of delivery from five to eight days:
 - http://www.bitcoinroad.com/bitcoin-store.html

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ManBearPig-X
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December 12, 2012, 12:16:42 PM
 #5

Thanks guys, hmm I thought Tor was very anonymous? If I buy off Tor and my bank decided to try and track what I've bought or where it is going, can they?
Or will they just see money leave my account... Out into the internet... And BAM! The moneys gone? Cheesy So the buyer can't be traced, the sender can't be traced and my delivery address cant be traced.

Going off that I got the impression I could buy Bitcoins and nobody will know I ever did.

I haven't opened a wallet yet, I guess I will try and do that somehow soon, don't wanna put anything in it. Just understand it, I want my wallet anonymous too though with none of my personal details. Just like a blank wallet with just cash in it if that makes sense.


Thanks.
davout
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December 12, 2012, 12:30:46 PM
 #6

If you go through a bank your anonymity is lost. No exceptions.

Grecoin
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December 12, 2012, 01:22:25 PM
 #7

If you go through a bank your anonymity is lost. No exceptions.

Sad but true
creativex
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December 12, 2012, 01:25:29 PM
 #8

If you go through a bank your anonymity is lost. No exceptions.

That's the conclusion I arrived at as well, so I switched to using coinbase. The fees are silly low.

DannyHamilton
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December 12, 2012, 02:36:10 PM
 #9

TOR only hides internet traffic coming from and going to your computer.  It makes it so that people can't track where the internet traffic arriving at your computer is coming from, and people can't see where the internet traffic leaving your computer is going to.  If you aren't careful, you can easily give up your anonymity while you are on TOR.  Example.  When you browse your bank's public website through TOR without logging in to the bank website, they (and anyone else trying to figure it out) can't tell that it is you browsing the site.  As soon as you use your userID to log into the site, the bank (obviously) immediately knows it is you even though they can't trace the traffic back to your IP address.

When transferring non-bitcoin money electronically, the bank doesn't just "put it out on the internet".  It has to communicate with the specific entity that will be receiving the money.  That entity communicates back.  So if you log in to mtGox, and enter your bank account information to do a "bank transfer", your communication between you and mtGox is over TOR, but mtGox knows who you are since you've provided your login credentials and bank account information.  Then mtGox has to communicate with the bank telling the bank that it is supposed to send them some money.  This communication between mtGox and the bank is NOT over TOR.  mtGox has to identify themselves to the bank by identifying where your bank should transfer the money to. They have to provide proof that you have given permission for your money to be removed from your account and sent to them.

The only way to keep the bank from communicating with the whoever you are sending the money to, is to use some trusted third party to receive the money from the bank and then send it on to wherever you will be purchasing the bitcoin.  This third party has to be trusted, because they will have access to your bank account information AND will know you are purchasing bitcoins.  The BEST trusted third person is yourself.  You can accomplish this by withdrawing CASH from the bank.  At that time, all the bank knows is that you have cash, they don't know what you are going to do with it.  Then when you spend the cash to purchase bitcoins, only you and the entity your are purchasing from know that your are purchasing bitcoins (and they don't know where you got the money).

If you use TOR and set up a web hosted bitcoin wallet at blockchain.info, then you should be anonymous.  blockchain.info (and anybody else) won't know that you are the person with access to that wallet.  Of course, the first time you forget and connect to your blockchain.info wallet without TOR, you create a link between you and the wallet that can be forever remembered even if you go back to using TOR, so you'll have to be careful to ALWAYS make sure that any connections to your blockchain.info wallet are through TOR.  It will be an empty wallet until you find a way to get your bitcoins.  And if you purchase your bitcoins in a way that reveals your identity, then blockchain.info and others will be able to trace the movement of bitcoin revealing that you are the one who owns that wallet.  Therefore, you'll want to be careful about how you acquire and spend your bitcoins so that they can't be traced back to you.

Damian
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December 12, 2012, 06:30:48 PM
Last edit: December 19, 2012, 06:05:40 PM by Damian
 #10

As you know Bitcoin is a decentralized, digital currency that can be used like cash. What many people may not already know however is that there is no need to hand over all of your information to an exchange to buy bitcoins. It is already extremely easy to buy bitcoins anonymously, in less than 10 minutes.

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ManBearPig-X
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December 12, 2012, 09:52:42 PM
 #11

Hmm interesting, what if I buy off someone else's bank card, with or without there permission, it doesn't matter. Can I be traced at all if that was the case?
Or will my wallet which is floating about on the net be a target to trace back to me? Thanks.
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December 12, 2012, 10:01:38 PM
 #12

Take a look at this on my blog: bitcoinsbs.wordpress.com/2012/11/25/anonymous-transactions/

I am also currently working a tool that leverages Maltego for visualization so that transactions can be easily visualized.  I have it mostly working.  now i just need to fine tune it.  I know there are tools like it out there, I see the visualization graphs all over the place.

The key is that if any address ever touches an address that can be associated with an identifiable person or entity, then the anonymity is broken.   The assumption that anonymity exists is a false one.  It might provide some level of obscurity, but if you are doing something illegal the authorities have the tools to find you if they desire.  its worth mentioning, they are in no rush, after all the block change is a historical record of sorts.

Also if you are new and want a step by step guide check out my book, see signature :-)

Kindle : Bitcoin Step by Step (2nd Ed) : http://www.amazon.com/Bitcoin-Step-by-ebook/dp/B00A1CUQQU
Kindle : Bitcoin Mining Step by Step : http://www.amazon.com/Bitcoin-Step-by-ebook/dp/B00A1CUQQU
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December 12, 2012, 10:19:50 PM
 #13

You shouldnt just assume because you use bitcoins you are anonymous.

But bitcoin + TOR + tunneling your Bitcoins through a few web wallets before you buy something with them or cash them out if you are a seller and you are untraceable in practice.

ManBearPig-X
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December 12, 2012, 10:25:54 PM
 #14

I think I see what you mean, so if I buy so many coins, off a card which isn't mine, and the owners bank wanted to find me, they will just trace the wallet to which the coins were sent too? But if the wallet has been opened purely through TOR anyway, then when I spend the coins they could track where the coins have been spent on, and then get my address from the delivery address from what ever I have bought? That right?

I'm using examples here to help myself understand the system. Thanks.
davout
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December 12, 2012, 10:40:09 PM
 #15

I think I see what you mean, so if I buy so many coins, off a card which isn't mine, and the owners bank wanted to find me, they will just trace the wallet to which the coins were sent too? But if the wallet has been opened purely through TOR anyway, then when I spend the coins they could track where the coins have been spent on, and then get my address from the delivery address from what ever I have bought? That right?

I'm using examples here to help myself understand the system. Thanks.
Bottom line : if you really want to be that anonymous you wanna know exactly what you're doing, so you got to understand exactly how it all works. Read up Smiley

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December 12, 2012, 10:59:34 PM
 #16

You shouldnt just assume because you use bitcoins you are anonymous.

But bitcoin + TOR + tunneling your Bitcoins through a few web wallets before you buy something with them or cash them out if you are a seller and you are untraceable in practice.

Unless you use them and that person is not concerned with being anonymous.  The trail might start there and a little investigative work and your found.

Kindle : Bitcoin Step by Step (2nd Ed) : http://www.amazon.com/Bitcoin-Step-by-ebook/dp/B00A1CUQQU
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beru
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December 13, 2012, 05:12:14 PM
 #17

You shouldnt just assume because you use bitcoins you are anonymous.

But bitcoin + TOR + tunneling your Bitcoins through a few web wallets before you buy something with them or cash them out if you are a seller and you are untraceable in practice.

Quick question if I may :

Does this mean that if I dont Bitcoin+TOR+tunneling some1 can link up my BC address with, like, an IP adress  Huh

Regards
DannyHamilton
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December 13, 2012, 05:30:54 PM
 #18

You shouldnt just assume because you use bitcoins you are anonymous.

But bitcoin + TOR + tunneling your Bitcoins through a few web wallets before you buy something with them or cash them out if you are a seller and you are untraceable in practice.

Quick question if I may :

Does this mean that if I dont Bitcoin+TOR+tunneling some1 can link up my BC address with, like, an IP adress  Huh

Regards

That depends on who you mean when you say "someone" and what you do with the bitcoin.

Example:

You visit a web-based shopping site that accepts Bitcoin as payment.  As you visit, the website logs your IP address.  Then when you checkout the website generates a unique payment address for this purchase (and logs the payment address association with the IP address).

Now when you make the payment, those with access to the website logs can tell which addresses the outputs you spent came from.  If you are using the reference client (Bitcoin-Qt), then they now have a list of some of your bitcoin addresses.  They can then scan the blockchain for any other addresses that were previously used for inputs alongside any of these addresses giving them a larger list of your bitcoin addresses.

So yes "someone" can possibly link up your IP address and several (many?) of your Bitcoin Addresses.

ManBearPig-X
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December 13, 2012, 06:40:02 PM
 #19

So basically what you guys are saying, if I use a bank card to buy Bitcoins via TOR, have say 3 wallets for example all created and only ever used on TOR and say send the coins between each one, then that way you'll be un-traceable/harder to trace?

Which wallet services do you recommend I open? I've never tried opening one. Hardcore newbie.

Very helpful forum Grin
Stephen Gornick
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December 13, 2012, 08:22:03 PM
 #20

Which wallet services do you recommend I open?

Mixing for newbies:
 - https://blockchain.info/wallet/send-anonymously

Of course, there are varying degrees of privacy.  Just like how Tor activity can be detected (seeing data go in on one side and seeing the same data go out on the other), this mixing doesn't magically protect from that same type of analysis.    But it does sever the direct link.

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