Is Bitcoin private enough for freedom financially??

[Majestic-milf]

Seeing as BTC is fully decentralized and free of censorship, why do bitcoiners need to pay a little attention to it? Here's why.

Since BTC is not private by default and as such every transaction conducted is recorded on the Blockchain and as such one has to provide personal information to exchanges like Binance, FTX and Coinbase when purchasing Bitcoin, it invariably means your real identity is revealed and leaves you open to issues like this;

= Personal information on the exchange's centralized database is prone to data leakages and hack. Info can be shared with the government on request and this leaves you a vulnerable target for an EO 6102 attack

= These exchanges become a choke hold for enforcing regulatory actions like OFAC sanctions and they are left with no choice but to oblige. To cite an instance, is the Tornado Cash mixer issue on Aug 8th. 2022.

= There's a loss of financial privacy as your transactions can be tracked without limit by the exchange even when the owner of the coins wants to make a withdrawal.

    How then can one be free from these setbacks?

- To stay anonymous, you run your own node, you conduct your transaction yourself and also verify it. How is this done?
 You first download a Bitcoin Core software and allow it copy the entire Blockchain from other nodes. Nodes validate and
 broadcast transaction to network, and once the transaction is validated the nodes add the new block to the previous series of blocks.

- You employ the coin join method
 A coin join helps for privacy as it achieved when two or more parties batch their transaction into one single transaction. This obscures who owns which coin and a coin join forward severs the historical links and data watchers can't be able to trace the origin.

- To be safe from these regulatory bodies, buying coins from centralized exchanges should be discontinued. https://bitcoinmagazine.com/technical/is-bitcoin-private-enough-for-freedom

[Charles-Tim]

Downloading the blockchain and running your own node helps privacy if using it with Tor.

But you can be anonymous if you use Tor to connect with your SPV wallet. This way, you depend on central server which can link your wallet addresses together and also with the IP address that you are using with the wallet. But if you use Tor with it, the addresses can still be linked together, but no linked to the real owner of the addresses.

Other privacy means like making use of coin control appropriately can help.


You are right, but people have more followed centralized exchangee. There are decentralized ones like Bisq which is better, but people prefer going the other side. This makes me not to be surprised anymore when people are falling victims of scammers that want to pay 10x or more profit within just a month and they fall for it.

[348Judah]

If you think the consideration if running a full node will be challenging due to the space required and the technical skills as well after considering the cost also, you can go for a hardware wallet https://bitcointalk.org/index.php?topic=5229081.0 there are some which are affordable and using them could provide you with much safety as wanted, you can also make use of electrum wallet https://bitcointalk.org/index.php?topic=5178675.0 which are all cold storage wallet, gone are the days of using centralized exchanges.

[Welsh]

The fact that people think fiat is private, and just automatically assume that when we're living in a world where data sharing is a gold mine, quite frankly confuses me. I don't trust the banks that everyone uses, to not be forwarding our finances to other companies. Since, today everything is about marketing, and who knows your finances better than anyone else? It's your bank.

I'll give an example, if the bank knows you're running low on money, they might offer you a loan via the post, or they might forward that to other companies which can offer you similar services, depending whether that bank actually offers loans or not. Although, even if they don't forward you to another company, and offer it themselves it proves that they either have a automatic system or have looked into it personally, and have identified you need a little help. Some people might think that's a benefit, but it also proves they can, and do look at your balances, and they try to push things onto you because of that.

Bitcoin doesn't have that at least. Plus, you have the option of not associating your Bitcoin balance with you. Obviously, you're subject to websites that use tracking to link you with addresses, and that's probably something you should be aware of, and try avoiding.

So, while Bitcoin might not be anonymous by default, I don't believe fiat is either. Unless, you're dealing with cash.

[cryptoaddictchie]

If you have bitcoin and planning to convert it to fiat then we have plenty of choices but the burden is KYC like Binance. But there are known exchange for bitcoin which you dont need to give up the KYC and you have an option to do a peer to peer transaction limiting the censorship and tracking of activity you are conducting and planning to do. Satoshi meant to be it like that, but the introduction of centralization such as exchanges make it convenient for everyone to convert it into fiat well a lot of people uses that more than the p2p and bitcoin market without KYC. But its always up to us to make a choice for this.

[elevates]

It is not compulsory to use a centralised exchange. You do have option of a DEX. For example Bisw is a Bitcoin DEX where you can buy and sell Bitcoin using fiat currency. It also allows users to trade XMR in the same manner. You do not have to pass KYC but it is slow and sometimes there are connection issues because it uses TOR network. If you have patience then Bisw is good.

[NeuroticFish]

Financial freedom is usually seen as having enough money for a good life / for the lifestyle you aim for, hence it's not about KYC.
I wanted to start with since your topic is about something else and may confuse some.

What you want is your money not getting linked to your identity. And for this there are plenty of solutions, all getting discussed here now and then.

* use, where possible, non KYC exchanges and other P2P options when buying bitcoin (and of course, the fiat you pay with should also not be tied to your name)
* you can go some steps forward by using Tor, and/or mixers, and even use (atomic swap?) of Monero, if you know what you're doing and also acknowledge the possible risks

* make proper use of change addresses and the multiple addresses in your wallet (when you buy and when you spend too)
* use your own node
* use your own block explorer

* don't brag about how much coins you have

One arguably extra step could also be to pay your taxes and then you don't need that strict protection of your privacy.

[Upgrade00]

Since BTC is not private by default and as such every transaction conducted is recorded on the Blockchain

Bitcoin by default is pseudo anonymous. Information are public, but there is no real identity linked to them, so they effectively are private. Practices that one does to reveal their identity are not directly linked to Bitcoin, neither is it a product of the protocol, and there are some extra steps one can take, if they are very strict on maintaining 100% privacy.

If you think the consideration if running a full node will be challenging due to the space required and the technical skills as well after considering the cost also, you can go for a hardware wallet

A hardware wallet is not an alternative for running a full node. For full privacy you can adopt both, but do not rely on any one to maintain privacy, security or pseudo anonymity.

[dkbit98]

Since BTC is not private by default and as such every transaction conducted is recorded on the Blockchain and as such one has to provide personal information to exchanges like Binance, FTX and Coinbase when purchasing Bitcoin, it invariably means your real identity is revealed and leaves you open to issues like this

You don't have to use centralized exchanges, and some exchanges still work without sending any personal information.
There is always option of using p2p trading and decentralized exchanges like Bisq, and other than coinjoin you can also use mixers to hide history of your transactions.
Running full Bitcoin node is great but I doubt most people will do that because they don't care enough about privacy.

[348Judah]

Personal information on the exchange's centralized database is prone to data leakages and hack. Info can be shared with the government on request and this leaves you a vulnerable target

It worries seing some people running for security and privacy by adopting the use of bitcoin for assets and investment but yet they don't know the difference between CEX and Dex or how to remain private and secured with their assets without involving the centralized and modernized banks in the form of exchanges, some may find it a reason that they need CEX to buy bitcoin all because they don't know mryans they can use to acquire it than centralized exchange, there's much to continuous enlightenment on staying privately secured with bitcoin because we keep having new people adopting the use of bitcoin each day.

If you think the consideration if running a full node will be challenging due to the space required and the technical skills as well after considering the cost also, you can go for a hardware wallet

A hardware wallet is not an alternative for running a full node. For full privacy you can adopt both, but do not rely on any one to maintain privacy, security or pseudo anonymity.

Thanks for more insight, i got your point to always try both by every means because where one's treasure is, there his mind will always be and security and privacy should not be a thing to be taken with low priority.

[BitcoinBarrel]

You can always network with other Crypto users and do a P2P trade without a third party.

[Odusko]

Bitcoin offers total financial freedom but that is only possible if you can set your node nd make use of Peer to peer only, it is easy to stay Anonymous but that also come with a lot of responsibility and knowing what to do at all times. If you want to avoid your Bitcoin transaction getting traced to you, you can use bitcoin mixing services to always mix your coins to avoid traces but that also come with fees. Freedom through Bitcoin can be categorizeded into several categories but the obvious to is the freedom to remain private with your financial dealing through Bitcoin, and also Bitcoin gives its holders the ability to make profits on their bitcoin holdings which is one of the most celebrated characteristics of Bitcoin ability to transform the life of it holders are given them total financial freedom.

[Welsh]

Even if you do peer to peer trades, you technically should be declaring all your earnings to the tax man. If you're driving around a new car every couple of years, which will be signed for, and have all the documentation registered to you, and you haven't declared your taxes then you're going to get into trouble regardless. I get the impression some here are suggesting peer to peer trades for that reason.

Financial freedom doesn't mean breaking the law. It means you have the freedom to do whatever you want within reason, and you don't have to rely on a third party to confirm or reject your transaction. I might differ from a lot of people, due to how the UK is run (free healthcare), but I personally don't have any issues with paying my dues in tax.

[kawetsriyanto]

Since BTC is not private by default and as such every transaction conducted is recorded on the Blockchain and as such one has to provide personal information to exchanges like Binance, FTX and Coinbase when purchasing Bitcoin, it invariably means your real identity is revealed and leaves you open to issues like this;

Of course, every transaction is recorded on the blockchain but I don't think it is a problem. People don't know who did the transaction, the blockchain only shows the wallet address. Regarding CEX who ask for KYC procedure with our private data, we can avoid using them if we want. It isn't a must to buy or sell Bitcoin on CEX, we can do it on DEX as well. DEX never asks for KYC, our private data isn't needed for them. So, you can't claim Bitcoin isn't private only on CEX side, it is only an alternative. We have DEX which keeps the privacy of the users' data.

[SatoPrincess]

Every government in the world care about their taxes, I read the US government banned an etheruem smart contract, tornado cash because it has privacy features that offers people who do not want their money to be tracked on the blockchain the liberty to easily mix and clean their crypto.

[SquirrelJulietGarden]

If you don't use illegal money to buy Bitcoin and use it for money laundering, you don't have to obsess too much about privacy.

It is good, not harmful if you care about privacy of your transactions. Please do it with your full node and Tor connection. In order to do it, you must use non custodial wallet, have enough space in your disk to download the entire blockchain and don't forget to use Tor.

If you don't care much about privacy, you can simply use non custodial wallets like Electrum. That wallet allows you to run with Tor connection too but you don't have a full node with it.

If you want a full node, use Bitcoin Core.

[Poker Player]

-snip

Here you focus on how to maintain the privacy of your bitcoin, but I go to the second part: I do not quite see how you think financially free thanks to Bitcoin and at the same time have privacy. It's one thing if the Bitcoin is a part of what you have, and for example you have a paid house and a job that gives you a good fiat salary, and apart from that a large amount of Bitcoin privately.

But if we are talking about Bitcoin alone, to be financially free in a rich country you will need at least $2M. This depends on age and other factors but I think it's a good benchmark.

If the Bitcoin you have is "private", meaning the authorities don't know you have it, how do you expect to pay all your expenses?

You can't buy a house. To pay rent you would have to find someone who will accept your Bitcoin and won't declare it, with the risks that this entails. To buy a car the same. Or get a lease.

Buying at the supermarket or clothes you might find solutions, but spending 100% of your expenses in Bitcoin today I see it difficult.

If you don't use illegal money to buy Bitcoin and use it for money laundering, you don't have to obsess too much about privacy.

I agree. In my case I am somewhat careful about privacy. Not just with Bitcoin, but in general, but not to the point of obsession.

[mk4]

If you don't use illegal money to buy Bitcoin and use it for money laundering, you don't have to obsess too much about privacy.

It is good, not harmful if you care about privacy of your transactions. Please do it with your full node and Tor connection. In order to do it, you must use non custodial wallet, have enough space in your disk to download the entire blockchain and don't forget to use Tor.

If you don't care much about privacy, you can simply use non custodial wallets like Electrum. That wallet allows you to run with Tor connection too but you don't have a full node with it.

If you want a full node, use Bitcoin Core.

I think you should at least slightly "obsess" about your privacy. Completely up to you if you're going to go far as to use mixers or CoinJoins, but at the very least learn proper coin control as to not expose your entire holdings if it's the case that you need to send BTC to someone.

[Poker Player]

I think you should at least slightly "obsess" about your privacy.

It depends and there is no universal answer for everyone.

For someone who has $1M in Real Estate and another $1M in index funds, I don't see what problem they are going to have buying a couple of Bitcoin on Coinbase fully KYC.

All of you who are obsessed with privacy, I imagine that you have a very important part of your net worth in non-kyc Bitcoin, passed through CM.

[pooya87]

and as such one has to provide personal information to exchanges like Binance, FTX and Coinbase when purchasing Bitcoin,

You don't have to use centralized exchanges with KYC to buy bitcoin. In fact you don't even have to buy bitcoin to own bitcoin (you can earn it as you earn any other currency).
This reason is like saying "Tor doesn't provide privacy because logging in your google account that has your real IP and phone number while using Tor reveals your identity"!

- You employ the coin join method

Same arguments as above. CoinJoin helps improve privacy but as long as it is done right. If you use a shady software that is working with blockchain analysis companies to deanonymize your transactions (like what Wasabi wallet has been doing) then using CoinJoin is waste of money.