How Anonymous Is Cryptocurrency?
A decade after cryptocurrency came to be, it is still decentralized, meaning it is not government regulated, making it anonymous.
But how anonymous is cryptocurrency?
When digital currency and particularly bitcoin, was invented in 2008 by an unknown group that goes by the pseudonym Satoshi Nakamoto.
They launched the unique blockchain technology that allows anonymous cryptocurrency exchange that does not require identification. Instead, it uses wallet addresses generated by cryptographic hashes that look similar to the human eye but different in computers. It is a string of hashes containing uppercase and lowercase numbers.
Cryptocurrency is anonymous in that the various transactions involved in digital currency, such as buying, selling, or exchanging currency, use encrypted addresses. Every user possesses a personal address and a public one to their crypto wallet-where they store their digital currency.
The secret code is useful as the user’s signature when sending digital currency, while the public key helps receive currency. That makes the transactions untraceable to any identity.
However, blockchain technology is like a ledger that is useful in verifying transactions, which means that the information is publicly available to the users. Moreover, on many currency exchanges, the traders must disclose their identity to the exchange third parties as KYC (know your customer), meaning that the transaction can be traceable to the user.
As much as the exchange platforms maintain the user’s identity’s discreteness, their identities could be exposed in cases of a cyber breach.
The possibility to make anonymous transactions using cryptocurrency has led to an increase in illegal activities. A common example is Wannacry Ransomware that affected many computers globally, and the cyber attackers demanded the ransom in the form of bitcoins to avoid being identified.
The anonymity of cryptocurrency has also been associated with black market trades, tax evasion, money laundering, etc., which could see it face stringent government regulations in the future.
Is It Possible to Buy Bitcoins Anonymously?
Yes, it is possible to buy bitcoins anonymously since you may want to invest or accommodate some bitcoins for future use without telling the world. One way in which you can buy bitcoins with anonymity is by finding a bitcoin seller near you and meeting them up for a physical exchange of the bitcoins with your fiat currency or any other asset.
But, it would be best if you found a reputable and legitimate seller. Another way is by buying bitcoins for cash from a bitcoin ATM near your physical location. Although it is a digital way of making a transaction, you can specify you don’t have identification or use a pseudo-identity.
You can also buy bitcoins anonymously through a cryptocurrency exchange such as godex.io, which allows a user to make an anonymous exchange. You can use a different identity if you want to keep your identity from the seller, which guarantees the total discreteness of your transaction.
Another sensible way of anonymously buying bitcoins is by using different wallet addresses every time you transact. With multiple bitcoin wallet addresses, the transactions will be untraceable to you, but with technology advances, that will be impossible in the future.
What Is the Most Anonymous Cryptocurrency?
Currently, the most anonymous cryptocurrencies are monero and Zcash. Zcash provides unique security features for hiding transactions; however, they have to be updated by the user and are limited to some transactions.
That reduces privacy since cryptocurrency anonymity requires all transactions to be discreet. Monero, on the other hand, provides unique features to make all transactions anonymous.
Now that you know the most anonymous cryptocurrency globally, you can use these platforms to perform secure cryptocurrency.
That’s all for now. If you still have any doubts about Cryptocurrency and its anonymity, shoot down your questions in the comments section given below.