"Bitcoin is anonymous" --- According to every avg. Joe, but is it really?

[Dafar]

Every time I have a conversation about bitcoin with my friends, every one of them say the same thing: "it's anonymous internet money". Why is this usually the first or only thing that the average newbie know about bitcoins? Hell, I'm still having a hard time understanding why the concept of bitcoins being "anonymous" is one of the main traits that the media portrays about bitcoins. Is it really that anonymous? From my understand of bitcoins and how the blockchain works, it seems like bitcoins are the opposite of anonymous... and potentially a nightmare for privacy.

From what I understand, the blockchain is a global ledger, it hold information for every single transaction ever done by bitcoin by linking the bitcoin to the private address that the individual holds. This is open to the public. Yes, you can't tell who owns a bitcoin address but once you link that address to your identity or your bank account, and if someone finds your bitcoin address, they can see every single transactions you have ever made through bitcoins. If you use coinbase and coinbase has a record of your bank account and your initial bitcoin address, and if the government or some other identity gets a hold of that initial address... they can see every single transaction and transfers you have ever made.

Please tell me if my understand is wrong, but I just don't see how this is anonymous.



On another note, now that I think about it.. I can relate to people who think bitcoins are "shady" and the only use for it is for anonymous internet transactions. Of course we all know that assumption is completely missing the big picture. But when I first heard about bitcoin it was over a year ago... my friend showed me Silkroad and we browsed through the website for fun, shocked and amazed at all the crazy illegal stuff that were being sold using bitcoins. I automatically assumed bitcoins only played a role in the illegal market because it was completely anonymous, and being that anonymous it made me feel like it was sketchy and lacked in privacy. I completely forgot about bitcoin until the US Senate hearings, when I actually did some research and realized it was much more than just some anonymous internet currency and has the potential to change the world. I wish I would have invested when I first heard about Silkroad/bitcoins.. but everyone's hindshigt is 20/20

[hilariousandco]

It's only truly anonymous if you want it to be and know what you're doing. I also heard about Bitcoin through its ties to Silk Road and was fascinated by both. As a libertarian and anti-prohibitionist I immediately loved both concepts.

[Reece523]

Some companies let you mail them cash or put an envelope full of cash under their door which they give you Bitcoin for so there would be no way to figure out from your bank's end that the money went into Bitcoin. Or you could just use Local Bitcoins and meet someone in person and pay them in cash -- either way, there will be no record at your bank. You can keep your Bitcoins in a bunch of different wallets, recycle the Bitcoins through websites which allow you to do such, etc. It can be pretty anonymous imo if you put in the effort to make it so. Of course Bitcoin can't protect you from spyware nor can it in all likelihood protect you from the NSA (nor can Tor apparently). But if you aren't setting out to start your own Silk Road or Assassination Marketplace, you'll probably be fine I would imagine. It's not like the government doesn't have better things to do than track down someone who bought $40 worth of pot online

[DoubleMyCoins!]

Bitcoin is what you call "pseudo" anonymous. When you buy things normally with a credit card or check your ID is right there for the world to see, you're also asked for a second ID usually. Bitcoin is different. No business needs your identity because if you send them the bitcoins it's like handing over cash, no worry about the bank reversing the sale.

So since you can send anyone bitcoin from a jibberish looking wallet address without your name etc. Bitcoin is sort of anonymous like cash. The drawback is since Bitcoin uses the Internet and IP addresses, and a public blockchain, if someone wanted to trace transactions to possible identities that's doable. However if you know what your doing, by using tools like Tor and coin mixing services that makes erasing the transaction trail easy too, so Bitcoin can be basically completely anonymous. Hope that helps  

[Dafar]

Ohh that definitely helps! Thanks guys, that makes sense 

[LiteCoinGuy]

as you said, Bitcoin isnt fully anonymous and it wont be in the future.

Zerocoin will be truly anonymous. coming in 2014.

https://bitcointalk.org/index.php?topic=362468.msg3878992#msg3878992

[ak84]

The blockchain is public info. Analysis of the blockchain transactions can potentially identify users. Therefore, bitcoin is not anonymous.
It may have been marketed as such or misinterpreted as such because it's a good story: "new internet currency lets users anonymously purchase assassinations and drugs".

http://www.telegraph.co.uk/technology/news/10488201/Software-activist-calls-for-truly-anonymous-Bitcoins-to-protect-democracy.html

[AnonyMint]

Bitcoin is not and can not be anonymous.

There was upthread discussion about anonymity, well my oh my look what facebook is up to.  

And pleaassse don't give me that BS about the public ledger increasing transparency fairness.

Also China's currency just passed the Euro in international transaction use.

Appears someone wrote an article that copies my theme from my OP.

Follow the links in the above post.

Right now probably 40% are against Putin and can't do much about it.

They are not so desperate yet to risk their lives. Don't forget about the perks Putin gives to some part of population (military, police, useless bureaucracy) to buy their loyalty.

Don't forget that the 10% with BTC will be the ones with enough money to give anonymous perks to the politicians that run this place.

With true anonymity (Bitcoin doesn't and can't have it, see below), then the politicians can hide their ill-gotten wealth too. So then they will not be afraid to rob the government blind, and government will collapse rapidly.

That is the perfect outcome, because I've shown mathematically that all prosperity is due to technological innovation (i.e. productivity increases) and small government getting out of the way.

And they make it clear that anyone that receives your coins in payment is going to receive the same treatment, thus your coins become unspendable.

Or whoever receives it sends it through a bitcoin mixer or CoinJoin, and the coins they end up with are no longer linked to be, and are spread among a dozen or more other random unknown people.

Without anonymity, you have nothing.

It's a good thing bitcoin has it then. You just have to work a little to get it.

I am going to school you again.

I have explained numerous times that mixers are basically useless if 99% of the users are not doing what is necessary to be anonymous, because then your new coins can be discovered with probabilities and a process of elimination.

Bitcoin does NOT have mandatory anonymity and thus it doesn't have anonymity at all.

Anonymity is an significant-minority-or-nothing proposition.

And if all of the significant-minority are tainted coins, then the authorities can just blacklist all the 1% or 10% that come out the other side of the mixer by the process of elimination.

For anonymity to work, the users in large part have to all be anonymous.

P.S. I've introduced ideas for physical Bitcoins in order to obtain more widespread anonymity.

[wumpus]

It is not anonymous but pseudonymous. Creating new "identities" is free and frictionless, but they act on a public ledger.

It has a different set of compromises from the bank-based financial system, but is by no means an anonymous mecca. If you want to be (more, not completely) anonymous that takes a lot of precautions. It is neither a "privacy nightmare" because the global financial system already stores all transactions and makes them available to many actors.

This has been an heavy topic of discussion since 2010 and in many wiki pages, stack exchange questions. Do a bit of research yourself please.

There are also many proposed privacy features see https://medium.com/p/7f95a386692f .

[AnonyMint]

It is not anonymous but pseudonymous. Creating new "identities" is free and frictionless, but they act on a public ledger.

It has a different set of compromises from the bank-based financial system, but is by no means an anonymous mecca. If you want to be anonymous that takes a lot of precautions. It is neither a "privacy nightmare" because the global financial system already stores all transactions and makes them available to many actors.

This has been an heavy topic of discussion since 2010 and in many wiki pages, stack exchange questions. Do a bit of research yourself please.

There are also many proposed privacy features see https://medium.com/p/7f95a386692f .

I have studied all the past discussions. I am telling you Bitcoin is not anonymous. Period.

If you could get most of the users of Bitcoin to use a mixer, and if they would also all use Tor and a VPN, and if Tor and VPNs were not compromised by the NSA, then we could talk about Bitcoin being anonymous.

You making yourself private does not give you anonymity if the rest of the users are revealing their identity.

I have repeated this so many times and apparently readers want to ignore me (at their own peril).

[wumpus]

It is not anonymous but pseudonymous. Creating new "identities" is free and frictionless, but they act on a public ledger.

I have studied all the past discussions. I am telling you Bitcoin is not anonymous. Period.

Why are you arguing, that's exactly what I said.

There is no completely anonymous financial system at this point.

I wonder if it is even possible theoretically, as you have to at least know someones reputation before you can do business with them. And you get to know someone from doing business (ie, by knowing what they order). So even if extremely private, a system would still have the nodes know each other (with a pseudonym to identify the endpoint no matter how temporarily), so it is not truly anonymous.

[kik1977]

I am scared because of the contrary! If I give you some btc, I can now see what you do with them and where you spend them!

From an old post : Thanks J, that's what I meant, you can now link that person to a specific address (not his entire fortune, just that specific address), and now see what he does with that money. Even if he's going to use different wallets to do different things, at some point he will use that money..

Let's imagine I give to a friend 1BTC because he sold to me his old laptop.. now there are two possibilities:
1. he will never mix the money in that wallet with the other BTC he has, but he will spend it someway and I will be able to see where the money goes..
2. he will mix that coin with other he already has (maybe to buy something more expensive than 1BTC) in a transaction.. now I am able not only to see where those bitcoins went, but also to link other address(es) to him and see where he got that money from, how much money he had in that address, other expenditures he had, etc.

Sure you can use a different address for each payment (ok, not so sure, read below) but at least I will be able to see where the money I sent goes. On a larger scale, this will be an issue also when/if a company pays the salary to an employee in bitcoins.. they will be able to monitor his transactions. Maybe he will use a different address each month, but the point is the same!

Last point, we can expect a person with an average/good computer knowledge to take precautions like changing address for every transaction, not from everyone. And my point is exactly that I see this as a possible obstacle to a larger adoption of Bitcoin.
What I want to understand is if this is a known issue which has been already addressed by the guys working on the protocol or by some kind of software..

[AnonyMint]

It is not anonymous but pseudonymous. Creating new "identities" is free and frictionless, but they act on a public ledger.

I have studied all the past discussions. I am telling you Bitcoin is not anonymous. Period.

Why are you arguing, that's exactly what I said.

There is no completely anonymous financial system at this point.

I wonder if it is even possible theoretically, as you have to at least know someones reputation before you can do business with them. And you get to know someone from doing business (ie, by knowing what they order). So even if extremely private, a system would still have the nodes know each other (with a pseudonym to identify the endpoint no matter how temporarily), so it is not truly anonymous.

I explained what I think can be anonymous in a debate with porc a couple days ago. You can find in the archive of my posts.

Rather than argue this further, I am preparing a whitepaper because these forum debates don't really nail down the taxonomy of anonymity thoroughly and precisely.

[polarhei]

The statement? Well it is wrong at start as public id must be shown. It is just about data collecting issue.

[AnonyMint]

If anonymity is not assured for most users, then the anonymity is useless for ANY user.

It isn't FUD.  

It's real, alipay and the other payment providers and financial institutions are not allowed to deal with the bitcoin exchanges anymore.

I told you guys the legal document was open for interpretation.

https://bitcointalk.org/index.php?topic=358368.0;all

Financial institutions deal with currency, and the Chinese government wants to keep it that way.

Bitcoin Exchanges and related companies deal with Bitcoin, and the Chinese government wants to proceed this way.


It's only clarification of separation between THESE businesses, not Bitcoin in general.

Agreed. A big part of the motivation is probably to stem potential capital flight out of China via bitcoin. Not there was likely much of that going on, but the gov probably wants to get out ahead of matters. Which means eliminating layers of financial intermediaries that could obscure identity (hence why "payment processors" might not be allowed to interact with bitcoin exchanges, but banks are ok).

All in all, it will probably indeed dampen the mania to some degree, but it's by no means as hostile as many are making it out to be.

Bingo!

Good to see you all are starting to understand finally.

For the record, we can fully expect governments everywhere to demand the equivalent of AML/KYC, which is more or less what this China action likely amounts to (though more rigidly). That AML/KYC status-quo permeates the global financial system; not just the US.

Yes and they will collect capital gains and/or VAT taxes on Bitcoin appreciation as an investment even if you are trying to use it as a currency (medium-of-exchange), thus it can not be a currency.

But developers of altcoins will rise to the opportunity and create truly anonymous coins. Anoncoin isn't it. Bitcoin isn't it. I will soon publish a whitepaper to explain why.

In short, you need to understand that Chaum mix-nets (e.g. Tor) are vulnerable to timing attacks, and even honeypotting given only 3 hops. They NSA and spy agencies in each country are likely still able to track your identity much of the time. And VPNs are likely all controlled/backdoored/hacked/rooted by the NSA. And exchanging through mixers and altcoins does not obscure your IP address no matter how many times you do it. Also even across these proxies, your identity is tracked in other ways such as browser plugins trojans, cookies, patterns of internet uses such as favored search terms, facbook et al tracking the way you type, etc..

Even if you are one of the lucky few who manages to keep your anonymity assured by careful mix of the above methods, the point is the majority will not. And thus it is very simple for the government to make your anonymous coins practically unspendable and useless. The government simply sends a tax bill and put criminal liability for all activity on a coin since mining until present, until those non-anonymous coins holders (or former holders) can provide the identity of whom they bought from and sold to.

Thus all users will become afraid and only accept coins and sell coins from those who provide their complete identity. Thus only a coin with widespread assured anonymity would be able to become a currency and remain immune to government control.

So clearly you can see that you never will have anonymity with Bitcoin nor any current altcoins. Thus Bitcoin and the current altcoins can never be currencies (unless the governments take them over somehow and make them legal tender), and the government will essentially control them.

Note one means anonymity I proposed thus far are a new way to do physical crypto-coins.

[Desensitizer]

If you understand the steps required to keep it anonymous then it can be perfectly anonymous. It requires the creation of new wallets, and the tumbling of coins to insure they cannot be traced. Look up guides on the forums if you are worried about having your transactions traceable, and purchase coins locally using services that do not track your IP address (TOR, internet cafe, etc)

[jones31]

The term you're looking for is pseudo anonymous.
If you want true anonymity grab your bitcoins with cash or mine them , use mixers all the time. This is the only way to ensure you are truly hidden.

Again , if you buy some bitcoins from Gox  , with verified papers and then spend them directly on SR let's say , nobody looking at the chain will know a thing.
But once the FBI starts asking Gox for info , you're toast.

[AnonyMint]

If you understand the steps required to keep it anonymous then it can be perfectly anonymous. It requires the creation of new wallets, and the tumbling of coins to insure they cannot be traced. Look up guides on the forums if you are worried about having your transactions traceable, and purchase coins locally using services that do not track your IP address (TOR, internet cafe, etc)

No it can't be anonymous. Perhaps you did not understand my prior post. Mixers (tumblers, zerocoin, etc) do not obscure your IP address. Tor is vulnerable to timing analysis. Internet cafes have cameras. Etc..

And the main point you missed is that if most are not anonymous, then anonymity becomes useless for everyone. Go re-read my post and try to wrap your slow brain around it.

[hilariousandco]

If you understand the steps required to keep it anonymous then it can be perfectly anonymous. It requires the creation of new wallets, and the tumbling of coins to insure they cannot be traced. Look up guides on the forums if you are worried about having your transactions traceable, and purchase coins locally using services that do not track your IP address (TOR, internet cafe, etc)

No it can't be anonymous. Perhaps you did not understand my prior post. Mixers (tumblers, zerocoin, etc) do not obscure your IP address. Tor is vulnerable to timing analysis. Internet cafes have cameras. Etc..

And the main point you missed is that if most are not anonymous, then anonymity becomes useless for everyone. Go re-read my post and try to wrap your slow brain around it.

What would be an example of something that is truly anonymous to you, if it even exists?

[hayek]

If you understand the steps required to keep it anonymous then it can be perfectly anonymous. It requires the creation of new wallets, and the tumbling of coins to insure they cannot be traced. Look up guides on the forums if you are worried about having your transactions traceable, and purchase coins locally using services that do not track your IP address (TOR, internet cafe, etc)

No it can't be anonymous. Perhaps you did not understand my prior post. Mixers (tumblers, zerocoin, etc) do not obscure your IP address. Tor is vulnerable to timing analysis. Internet cafes have cameras. Etc..

And the main point you missed is that if most are not anonymous, then anonymity becomes useless for everyone. Go re-read my post and try to wrap your slow brain around it.

I expect a full report from you on my complete bitcoin history complete with my gps coordinates at the time of my spends/receives (if I have any) by tomorrow morning.