Bitcoin is regularly mentioned in the media, but unfortunately they often choose to highlight negative aspects. For example, it is said that Bitcoin would facilitate criminals, making it easy for them to launder money. Or that terrorists could use bitcoin to send anonymous transactions to one another without governments being able to track it. But can we call Bitcoin anonymous? Not entirely, and in this article we’ll explain why.
Bitcoin addresses aren’t anonymous
A lot of people believe Bitcoin is completely anonymous, which may seem true at first glance. When you have a look at the Blockchain, you don’t see a single name there, or other personal information. Still, the network isn’t completely anonymous.
A receiving address is a pseudonym
A bitcoin receiving address is quite similar to your personal bank account. A bitcoin receiving address always starts with a 1 or a 3, followed by a random series of digits and letters.
Bitcoin transactions are kept on the blockchain, Bitcoin’s public ledger. It shows which bitcoin addresses are used to send coins to and from. The ledger is accessible to everyone. Let’s say someone uses the same address again and again to send and receive coins. In that case it is relatively easy for anyone to trace back that all these transactions are done by one person. That’s why bitcoin addresses aren’t exactly anonymous, but rather they’re a pseudonym, which is an important nuance.
Regulation and identification
In 2017, Bitcoin became mainstream. The currency reached its all-time high mid-December, when one bitcoin was worth almost 20,000 dollars (USD). Other coins like litecoin, ether, ripple, and bitcoin cash gained popularity as well. This increase in interest led to governments all around the world discussing the anonymity of cryptocurrencies, and expressing their worries about the risks it implies.
That’s why several governments have been looking into crypto regulation for a while now. One of the regulation focal points is identification. They want brokers and exchanges to ask their users for identification before they are able to use the platform, or before they can trade a certain amount of money. This measure has already been taken by multiple companies, like BTC Direct. This way you can keep using our platform without any problems, even if new regulation is implemented.
Of course this regulation doesn't cause the anonymity of bitcoin to disappear completely. Transactions can be done without using the network of a broker or an exchange. In that case, it becomes a lot harder to trace back transactions to one person, but it isn’t impossible. Security services have ways to investigate who carried out a certain transaction.
Is a lack of anonymity negative?
We don’t think so. We strive to make cryptocurrencies accessible and understandable for everyone, but anonymous trading doesn’t have to be a part of this. It allows for fraudulent transactions or illegal activities, which we wish to prevent at all times.
We believe other things are more important than anonymity. You need to be free to store and manage your own funds, be able to send and receive them without the need of a third party, and everyone can join. That’s what cryptocurrencies allow you to do.