bitcoin pseudonym

Bitcoin is Pseudonymous: 5 Ways to Reveal Your Identity

8th January 2024

Bitcoin, although a digital currency, is not as anonymous as we like to think. In fact, he is pseudonymous by design. This means that we cannot directly reveal your identity with your bitcoin address. However, depending on the method you used to obtain it, then, in certain cases, your identity can be traced.

This article explores the different ways your identity can be revealed when using Bitcoin.

1. Open a wallet on a centralized platform

When you use a bitcoin wallet that asks you to add an email address, you are likely dealing with a non-custodial wallet. This means that you provide personal information to the companies that manage the wallet. Most cryptocurrency exchanges require their users to provide identity verification, such as uploading their proof of residence, a photocopy of their ID card or passport page and even a selfie of themselves holding their identity document. It is even the classic procedure of the famous KYC (Know your customer).

For example, platforms like Binance ask for your email address (mandatory step) before you can create a new wallet. When you reveal your email address, there is a chance that you could reveal your identity. Some sites only require registration by email without providing an identity document. In this case, use a disposable email service like protonmail ou Mailinator if you need to provide one.

2. Carry out operations on non-confidential sites

Your bitcoin spending transactions can also reveal who you are. For example, if you spend your bitcoins on e-commerce sites, or in hotels, using a crypto bank card as Wirex for example, or spending at a cafe accepting bitcoin, these are places and merchants that can reveal who you are.

Think about your credit card information, CCTV footage and personal information stored on online shopping apps. Whether it comes from a merchant or of an exchange platform who has your personal information or from someone who is personally associated with or knows who you are.

3. Link your bank account

When you link your crypto wallet to your own bank account, it is a direct way of revealing your identity. It's even the worst. Most people do this because it's easier to buy bitcoin with a credit card, that's a fact. It's also easier to withdraw fiat currency from the exchange to your bank account.

The act of converting BTC to your local fiat currency, for example Euro, mainly requires linking your bank account to your cryptocurrency exchange account. By doing this, both parties know exactly what you are doing. Converting BTC by linking your bank details reveals your true identity.

To avoid this, you can use peer-to-peer platforms that do not require KYC like LocalCoinSwap or the Peach application for example. This is already a first step in not providing personal information to crypto companies.

localCoinSwap-review
LocalCoinSwap allows you to buy and sell bitcoin without providing an identity document.

4. Give your Bitcoin address publicly

Although your Bitcoin address is intended to be shared with others, that doesn't mean you should post it anywhere, especially on the Internet. Also don't forget that you can create as many addresses as you want.

When giving out your Bitcoin address, be aware if it is in a public domain, such as an online forum or social media platforms like Twitter or Facebook, where anyone can see it. If they can see it, they can search for it on a blockchain explorer, see all your past transactions and know your current balance.

Far too many people – out of laziness – keep the same bitcoin address. Do not hesitate to create several for different services for example.

5. Not protecting your IP address

This is something that we tend to remember often but which is important to follow and apply. Avoid public Wi-Fi networks in airports or train stations for example. Using public Wi-Fi networks can pose security risks. If you transact Bitcoin over an unsecured Wi-Fi network, it may be possible for malicious third parties to monitor your activity and hack you.

The same goes for compromised private networks. If your private network is compromised by malware, attackers could potentially gain access to your information.

In many cases, the use of a VPN, whether you have cryptocurrencies or not can be interesting and useful.

north VPN
NordVpn

Conclusion

We didn't publish this article to make you paranoid. The idea is to understand that the privacy of Bitcoin also depends on your actions. It is important that you know that your personal information can sometimes be revealed without your knowledge.

It is good to note that there are also other privacy-focused cryptocurrencies that you can consider Monero or ZCashEg.

Read also:

Bitcoin Pseudonymity FAQ

What is pseudonymity in the context of Bitcoin?

Pseudonymity in the context of Bitcoin refers to the fact that Bitcoin transactions and addresses are not directly linked to users' real identities. Each user is identified by a cryptographic address rather than personal information.

How does Bitcoin pseudonymity work?

Each Bitcoin user has a pair of keys: a public key (Bitcoin address) and a private key (kept secret). Transactions are recorded on the blockchain, but the identity of users is not directly revealed. Users can create new addresses with each transaction, thus preserving their pseudonymity.

Is Bitcoin completely anonymous?

No, Bitcoin is not completely anonymous, but rather pseudonym. Although transactions are transparently recorded on the blockchain, addresses are not directly linked to real-world identities. However, additional efforts are required to maintain confidentiality, and the use of centralized services may compromise pseudonymity. This is precisely what we have just seen in this article.

Can Bitcoin addresses be traced back to a real identity?

In general, Bitcoin addresses cannot be directly traced to a real identity. However, practices such as using centralized services, transacting on regulated platforms, and other factors can potentially compromise privacy. It is important to adopt security practices to preserve pseudonymity.

How can I optimize the confidentiality of my Bitcoin transactions?

To maximize privacy, avoid using reusable addresses, use hardware wallets, avoid public Wi-Fi networks, use VPNs and minimize the use of centralized credential-related services. The use of mechanisms such as coinJoin can also improve transaction confidentiality. You can also use privacy-focused Bitcoin wallets like Samourai Wallet for example.

Do Bitcoin wallets offer an anonymity option?

Some Bitcoin wallets offer privacy-enhancing features, such as using the Tor network, generating new addresses for each transaction, and integrating anonymization protocols like CoinJoin. It is recommended to choose privacy-friendly wallets to maximize pseudonymity. Again, you can also use privacy-focused wallets like Samourai Wallet for example.

Total
0
Shares

ZoneBitcoin Editorial

Passionate about Bitcoin, our editors try to democratize their knowledge through varied articles touching on different subjects.

Leave comments

Your email address Will not be published.

This site uses Akismet to reduce unwanted. Learn more about how your comments data is used.

Total
0
Share

Learn more about ZoneBitcoin

Subscribe to continue reading and have access to the entire archive.

Continue reading

Trade crypto on Changelly

changelly

Crypto tracker

coinstats app

On Google

googlenews

Do not miss :

rainbow chart bitcoin

The Bitcoin RainBow chart: Know when to invest?

Financial markets have always been imbued with a certain complexity,
increase in bitcoin value

Why will bitcoin continue to increase in value?

Since its creation in 2009, bitcoin has seen its