Bitcoin is NOT anonymous--and is a dangerous privacy issue for its users

[retreat]

The issue regarding privacy related to Bitcoin transactions is that when you use a centralized exchange for your transactions, because your Bitcoin address is associated with your account, this means that the exchange platform knows who owns the wallet address. However, if you make transactions via a decentralized exchange, no one will know your identity, because you are completely transacting via a decentralized platform that is KYC free. So basically, people will only see how many Bitcoins are in your wallet, but they can't guess who has them - and that's why Bitcoin is said to be pseudonymous, not anonymous.

[el kaka22]

The issue is that you are looking at the address like it's yours and you will always be known, but that's not the case in most times, just because we might give KYC to exchanges, doesn't mean that every address we have is connected. So, if I buy bitcoin p2p and put it on some address, as long as I do not move it, that means I am going to be fine.

Plus if I can find p2p buyer again, nobody knew who I was during all of that period both buying and selling. I think that's important and we should be considering that part as very important. I believe that we could make it work somehow, will take a while but we could make that work and we just prefer not to right now, that's the most important part.

We are willingly giving our KYC to anywhere that asks it, hell people started to give their KYC even for airdrops which makes no sense to me a tall, willing to give your information fully to some dev just in return of their fake made up token is not a smart move. So in this crypto world, we live in right now, we are definitely looking at something that's a lot less privacy oriented, people are not interested in privacy, we are interesting in just reaching whatever we can reach in profit that's it.

[Mate2237]

Such information has also been trending in social media platforms these days but I have not really paying attention on them. Someone was saying that Bitcoin is not anonymous because of the end use of the coin. Like if you transfer the coin to electrum, you will send it to an exchange and the exchange has a KYC which can be tranced from the electrum transaction to the exchange and the owner of the exchange will be known at the end.

And Bitcoin can be anonymous when the two parties use electrum to electrum for the transaction or the trading but one person will still use exchange.

[stompix]

When I first saw this thread title I baffles a little until i read through the entire discussion and I discover that ops have made alot of controversial statement about bitcoin and it privacy provision because in all his statement he failed to define what decentralised network means to him and how best to interact with centralised service without losing our identities.

You know that thing about killing the messenger?
What does a decentralized and centralized netwrok have to do with this?

You order a pizza from a restaurant next to you, you pay via BTC, and the guy receiving the order now knows your name, your address, and your BTC address, have you thought of this? Besides, now be honest and swear to god, on how many platforms have you done KYC to date?

This is the first time I am hearing of the statement that IP contains and transfer our identities, although I know of the traceability of IP but I haven't read where IP contains users identity that he has shared online and on the Internet before.

Each IP is assigned to to a customer by the ISP, the ISP will always know what customers(s) have used that IP and for what connection, it has been like this since the first internet provider. You visit a website you expose your IP, if enough websites share their databases and logs along your browsing pattern yeah, your history can be traced, just as how leaked email addresses would work in tracking you.

So, if I buy bitcoin p2p and put it on some address, as long as I do not move it, that means I am going to be fine.
Plus if I can find p2p buyer again, nobody knew who I was during all of that period both buying and selling.

Remember what happened to BurtW? Or others like him:
https://www.coindesk.com/markets/2017/05/03/localbitcoins-user-pleads-guilty-after-undercover-sting/

[legiteum]

Bitcoin has the same problem IP addresses always had: if you used your personal information anywhere along the chain, the entire chain can now be attached to you.

This is where you got it all wrong. IP address isn't enough validation to detail a person on the internet, anyone can used fake IP address that gives a person different address and locations. Even this forum don't judge people by IP address because people protect their privacy alot with different IP addresses. I hope this clear your first intuition.

You've missed the point of my OP entirely. It has nothing to do with IP addresses. Please try reading it again?

I will be waiting for you to build one so we can have the first person ttat personalized ads from people. Where will you get addresses from? Centralized exchanges? You want to pay Binance, Kucoin, Bybit, Coinbase to give you all their customers data, email, documents, photographs and all their corresponding wallet addresses? Please wake up from your dream.

Yes, centralized exchanges. Are these companies somehow different than all of the other companies in the world that collect personal information and resell it? Companies buy and sell customer data all of the time, and it's a business worth tens of billions of dollar per year.

If you think these companies will pass up billions of dollars in basically free money, you are the one living in a dream.

[ChiBitCTy]

What's crazy is I often still read articles on bitcoin, and often times on decently well "received" outlets, and they still try and push the old narrative that bitcoin is anonymous.  I mean if anyone who does any sort of basic research on bitcoin will quickly come to realize that just not the case.  Not to mention making bitcoin anonymous would ruin it's future potential.  A lot of people try to argue against this, but it's a fact as far as I'm concerned (just look at Monero for reference).

[legiteum]

What's crazy is I often still read articles on bitcoin, and often times on decently well "received" outlets, and they still try and push the old narrative that bitcoin is anonymous.  I mean if anyone who does any sort of basic research on bitcoin will quickly come to realize that just not the case.  Not to mention making bitcoin anonymous would ruin it's future potential.  A lot of people try to argue against this, but it's a fact as far as I'm concerned (just look at Monero for reference).

People's intuition is that something only involving numbers will be anonymous. I am old enough to remember when people though IP addresses were anonymous, and unless they gave a website their personal information (or they used fake info), they would be totally safe. It took years of consumer education to dispel this myth--and a third of people probably still don't get it.

[Abu-Naim]

Millions of consumers seem to believe, falsely, that using Bitcoin makes their transactions private. And that false information can be very dangerous since it will give people a false sense of security.

Bitcoin being a private means of transacting is a dangerous falsehood that needs to be corrected.

Am I wrong about any of this?

I will assumed you know a little about Bitcoin but you are wrong about many things, start with Mastering Bitcoin and Bitcoin for beginners, it will help you reshape your thinking about some go the misconceptions aboyr Bitcoin.

Instead of the OP to learn through asking questions on the relationship between these IP address and bitcoin transactions, he concluded blindly by misleading the audience that will follow him/her blindly without doing extra research.
On IP address, people do use fake IP address through VPNs, can these people be traced?

OP needs to learn more about Bitcoin transactions and how they are been broadcasted in Bitcoin nodes and stop to conclude fast without learning. Learn and learn before you make conclusions.

[legiteum]

Instead of the OP to learn through asking questions on the relationship between these IP address and bitcoin transactions,

You simply haven't even read my post. I wasn't talking about IP addresses as they relate to Bitcoin.

Maybe actually read the posts before commenting on them--especially when you respond with... personal attacks.

[d5000]

I see the word "private" on the descriptions written by thousands of Bitcoin users ever day. They are obviously wrong, but that is clearly the perception of Bitcoin.

Give me some high-profile example (i.e. not a random spammer or shill on a forum or so, but a major influencer ...) where the warnings about address reusage is omitted.
"pseudonymous" is of course correct.
Seriously, I think that doesn't happen too often.

Using Bitcoin alone, without sophisticated techniques to obscure your transaction is a security risk--just like surfing the web without a VPN is.

Not reusing Bitcoin addresses is not a sophisticated technique, but the normal functioning of Bitcoin clients.

This is different in the case of Ethereum for example, where address reuse is completely normal and even required for some smart contracts.

CoinJoins are sophisticated, but they're normally only necessary if you reused or published addresses somewhen.

My problem however is that you write in your title that "Bitcoin is a dangerous issue". This is FUD and wrong.

If you had written something in the vein of: "Bitcoiners, please care about your privacy and follow these basic rules ...", I'd not complain

Perhaps what you might be missing here is that most people actually do not know about chain analysis and thus it's not "obvious" that Bitcoin has this issue--and their ignorance of this presents a danger...

Here I somewhat agree, but again: that's not Bitcoin's fault. The Bitcoin Core client already works in a fashion which is privacy-preserving.

There are clients who have some privacy risks, like SPV clients connecting to servers which may be run by chain analysis companies. But in this case your title should also be different, something like "Be careful with SPV clients."

It is absolutely not better than a bank transaction.

I partly agree here, again.

Bank and Bitcoin transactions have different kinds of risks. In the case of banks/credit cards, the risk is that the entity is hacked, but then you will know not only the transactions but also the IBAN or even worse, personal data.
In the case of the Bitcoin transaction, the risk is that you publish an address somewhere and this can be associated to you, either via IP address or via other data yourself.

I would instead rephrase: A Bitcoin transaction can be more privacy-preserving than a bank transaction if you follow the "no address reusage" principle and mix/CoinJoin/AtomicSwap all coins where you didn't follow that rule, and use either a full client or a privacy-preserving light client.

If not, then it can be (potentially much) worse privacy-wise. It is however a gradual affair: it can be even almost exactly as privacy-preserving as a bank transaction, if you transact only between centralized, but regulated wallets/exchanges. Bitcoin simply gives more options to you.

Why do I partially agree? Because many, probably most users do it wrong. Yes, that's a problem. But again, it's not Bitcoin's fault. Bitcoin is continuously improving in this matter (e.g. with Taproot and silent payments).

[legiteum]

I see the word "private" on the descriptions written by thousands of Bitcoin users ever day. They are obviously wrong, but that is clearly the perception of Bitcoin.

Give me some high-profile example (i.e. not a random spammer or shill on a forum or so, but a major influencer ...) where the warnings about address reusage is omitted. "pseudonymous" is of course correct. Seriously, I think that doesn't happen too often.

All I can say is that you live in a bubble. I have never heard a person (who doesn't live in these forums) even use the word "address reusage". Most average consumers wouldn't even know what that means.

Using Bitcoin alone, without sophisticated techniques to obscure your transaction is a security risk--just like surfing the web without a VPN is.

If you had written something in the vein of: "Bitcoiners, please care about your privacy and follow these basic rules ...", I'd not complain

Noted. I certainly could have conveyed the same thing with a different word choice...

I would instead rephrase: A Bitcoin transaction can be more privacy-preserving than a bank transaction if you follow the "no address reusage" principle and mix/CoinJoin/AtomicSwap all coins where you didn't follow that rule, and use either a full client or a privacy-preserving light client.

Totally agree. I just looked at the popular perception. Again, I remember a time when everybody thought nobody could track IPs--the public eventually learned, and started using tools like VPNs.

(And they learned to do this by... becoming aware from... things like my OP ).

[AmoreJaz]

What's crazy is I often still read articles on bitcoin, and often times on decently well "received" outlets, and they still try and push the old narrative that bitcoin is anonymous.  I mean if anyone who does any sort of basic research on bitcoin will quickly come to realize that just not the case.  Not to mention making bitcoin anonymous would ruin it's future potential.  A lot of people try to argue against this, but it's a fact as far as I'm concerned (just look at Monero for reference).

People's intuition is that something only involving numbers will be anonymous. I am old enough to remember when people though IP addresses were anonymous, and unless they gave a website their personal information (or they used fake info), they would be totally safe. It took years of consumer education to dispel this myth--and a third of people probably still don't get it.

It is how an individual will secure his privacy over the net. Even if the transaction is visible in the blockchain, but if people don't know your address, you can still save your privacy. As much as possible, don't disclose to anyone about your crypto transactions as well as your addresses.

[franky1]

bitcoin was always described as pseudonymous not anonymous/private
bitcoin was always described as a public ledger not a private payment system

it was only those promoting privacy services that claimed bitcoin was private

in public there is no expectation of privacy and its up to individuals to create their own privacy via self controlling the information they emit/admit to the public

bitcoin is also not fungible which is why those who scream that bitcoin is fungible and private then promote mixers and stuff because deep down they know they are lying and want to trade off their tainted/dark service linked coin to innocent people and take innocent peoples coin. to try to de-link their involvement in stuff that can be publicly linked

if you want to create privacy YOU need to do it and not rely on central/commercial services which can be used against you. yep even commercialised mixers still need to create logs to ensure the depositor gets the right amount of coin after the mixing when the service later gives coin out, so expect that even commercialised mixers know who put funds in and where they go to, to balance the books and ensure the recipient after mixing is made whole for what they put in..
.. and to ensure they keep logs to ensure hackers are not shifting coins out of a mixers haul without being a genuine user/customer who put funds in(ensure people get what they deserve by logging who uses the service honourably)

alot of people who fall for the myth of privacy then get lazy as they think they were promised privacy so dont need to self control their data
for instance:
people who used silk road think that because they used bitcoin they could not be traced, so were lazy and happily then gave their home delivery address to receive silk road promoted goods. not thinking they should have used a fake ID to get a PO box and only attended with a mask and ensure the PO Box was not surveilled/monitored

also people who think just using bitcoin keeps them private so then happily and lazily then publicly discuss their home life on forums and link bitcoin addresses to their profiles, thinking that there was some magic system that automatically then scrambles their public omissions after publicly releasing personal data

heck people even think things like lightning and tor are private, not realising that the 'gossip'/bridging protocols can be used against them to form links
(and yes when tor has its own list of bridge nodes pre-programmed, you are at their mercy of the path the software takes you)

[ABCbits]

It's not perfect in privacy and anonymity but it is better than if you use banks for bank transfers and other services that under control and management of governments.

It is absolutely not better than a bank transaction. This is the sort of dangerous misinformation I have been talking about here.

A typical credit card transaction is known to you, the bank involved, and the counterparty. The latter two present a risk of exposure of your privacy, but only  two entities that can expose your data--and they are known entities that are also heavily regulated. If a bank exposes your personal information, you can sue them for damages, etc.

On the other hand, a Bitcoin transaction is known to potentially five billion entities because it's open to the whole world. And none of those entities are accountable to any law or regulation, and they can't be sued no matter how criminal their intentions are since they cannot be known.

You are much better off using a credit card transaction, from the standpoint of privacy, than you are a standard Bitcoin transaction.

In practice, credit card isn't as good as you describe though. On some country, bank legally can share some of your personal data with other financial company.

To know more about certain Bitcoin transaction, you'll need one of involved party (such as sender, receiver or 3rd party used by either sender/buyer) to leak such data.

I see the word "private" on the descriptions written by thousands of Bitcoin users ever day. They are obviously wrong, but that is clearly the perception of Bitcoin.

Give me some high-profile example (i.e. not a random spammer or shill on a forum or so, but a major influencer ...) where the warnings about address reusage is omitted. "pseudonymous" is of course correct. Seriously, I think that doesn't happen too often.

All I can say is that you live in a bubble. I have never heard a person (who doesn't live in these forums) even use the word "address reusage". Most average consumers wouldn't even know what that means.

But on the other hand, some Bitcoin wallet already help preventing address reuse. The wallet would show different address when previous ones already receive Bitcoin or user manually click "Generate receiving address" again.

[vjudeu]

Besides, now be honest and swear to god, on how many platforms have you done KYC to date?

Zero. Because I don't need it. And if you want to just buy a pizza, then such amounts can be transferred without KYC, under many jurisdictions.

For example: if you have Bitcoin ATMs, then you have this famous "1000 EUR limit". Should be enough for many pizzas.

if enough websites share their databases and logs along your browsing pattern yeah, your history can be traced

We have CGNAT. Which means, that if you use IPv4, then your IP is shared with thousands of other people. Which means, that if you try to edit some Wiki page, there is a huge chance, that you will see someone else's history. And after restarting your router, it is very likely, that you will get a different IP, just like in Tor, when in every session, you have a different IP.

So, if people would have end-to-end connections, then yes, knowing someone's IP might be enough to track someone. But now, in the era of IPv4 and CGNAT, you are mixed with a lot of different individuals, unless you specifically request a static IP from your ISP (and pay a bunch of dollars more per month, for the ability to run your own home-hosted servers).

[NotATether]

if enough websites share their databases and logs along your browsing pattern yeah, your history can be traced

We have CGNAT. Which means, that if you use IPv4, then your IP is shared with thousands of other people. Which means, that if you try to edit some Wiki page, there is a huge chance, that you will see someone else's history. And after restarting your router, it is very likely, that you will get a different IP, just like in Tor, when in every session, you have a different IP.

So, if people would have end-to-end connections, then yes, knowing someone's IP might be enough to track someone. But now, in the era of IPv4 and CGNAT, you are mixed with a lot of different individuals, unless you specifically request a static IP from your ISP (and pay a bunch of dollars more per month, for the ability to run your own home-hosted servers).

It's not just that, but if you are unfortunate enough to be assigned an IP address that has been abused in the past, then all online services are going to treat you the same and start enforcing blocks and captchas, since all they get is an IP address and an (easily changeable) user agent in the HTTP headers which is all they have available for identifying you.

But at the very least, it's just a nuisance and I similarly don't think that Bitcoin doesn't have any serious privacy problems.

[Alpha Marine]

I disagree and agree with some of your points, but I'll only focus on the topic for the sake of not talking too much.
Let's take this forum for example, you do agree it is an anonymous forum, right? No KYC required, no personal details, just an email a username and a password. Now if a user registers on this forum and goes ahead to use his real name and posts his passport or other ID cards for us to see, you agree that the user is compromised right? But does that stop the forum from being an anonymous forum?

I believe it's the same with Bitcoin. If a Bitcoin holder doesn't use any centralized exchange, he strictly transacts P2P with other users that don't use any centralised exchange, can you still say he's not anonymous? I agree you cannot use a new address to receive transactions every time, but you can use different address for different purposes. Bitcoin on its own is anonymous, its the way the holder uses it that decides if it will keep being anonymous or not.

[nullama]

I would like to introduce a topic that I have been thinking about for a while.

Most people assume that because Bitcoin transactions involve anonymous numbers, and not a real name and other private information, then Bitcoin is perfectly safe from anybody knowing of your transactions.

However, Bitcoin is a public ledger, and every transaction is available to anybody on the Internet.

For me, this akin to web server logs containing your IP address: it's just a number, right? That's what everybody thought when the internet was new, but we all quickly learned that your IP could be "triangulated" to your real identity: once you used that IP to connect to something with your real identity, then the IP and the identity could be linked, and thus your IP was essentially the same as using your name and address for every single server access.

The advent of Monera and Bitcoin mixers would seem to verify my thesis here: why would these things have been invented and have become popular among those who are serious about their privacy (for whatever reason) if Bitcoin was not a privacy issue?

Bitcoin has the same problem IP addresses always had: if you used your personal information anywhere along the chain, the entire chain can now be attached to you.

How long will it be before somebody builds an app that allows you to put in a Bitcoin address and pop out a name and address? (Pardon my ignorance if this is actually already an available product).

How long before marketers start using this data to target ads at people? For criminal networks to start using this to target people?

Millions of consumers seem to believe, falsely, that using Bitcoin makes their transactions private. And that false information can be very dangerous since it will give people a false sense of security.

Bitcoin being a private means of transacting is a dangerous falsehood that needs to be corrected.

Am I wrong about any of this?

Pretty much anyone that reads about Bitcoin for one day will know that Bitcoin transactions are pseudonymous, not anonymous. It's been like that since genesis.

This means that you have a specific ID when dealing with Bitcoin, that can be traced. If at any point there is a link between that ID and your real name, then your real name can be traced to those transactions.

I'm surprised that this is new information to anyone in this forum though.

[SquirrelJulietGarden]

It is absolutely not better than a bank transaction. This is the sort of dangerous misinformation I have been talking about here.

If you are trolling, I am done. Nothing to say more with you.

If you say Bitcoin does not provide any better thing for you and your life, why are you here?

Are you here to prove that Bitcoin is not as good as people say and want to debunk it?

Go ahead and you will receive many helpful answers from community to enlighten your wrong knowledge on Bitcoin. The day people recognize that you are trolling, the community will be done with all threads you create.

A typical credit card transaction is known to you, the bank involved, and the counterparty. The latter two present a risk of exposure of your privacy, but only  two entities that can expose your data--and they are known entities that are also heavily regulated. If a bank exposes your personal information, you can sue them for damages, etc.

There are more methods to exchange your bitcoin to fiat currency or cash, and credit card is not the only method for doing this.

There are methods for cashing out directly without connections with banks, credit cards and there are no KYC exchanges for you to sell your bitcoin too.

[deepskydiver]

OP, I think you've been influenced by people who aren't familiar enough with bitcoin and taken that information as being commonly understood.

It's not. That's just your understanding from poorly informed people.

It's well known by people who are well informed that bitcoin is not private, in that you cannot easily or typically use your coin without giving complete or partial evidence of your holdings.

Secondly, your ignorance of address usage is just that - your not having come across it is your doing and no one else's.

We're all learning.