Bitcoin Anonymity

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Bitcoin Anonymity

Bitcoin is a virtual currency that by many is considered an anonymous currency, but the reality of Bitcoin is that it is a pseudo-coin. When using digital currency, you have more anonymity and security than when working with conventional transactions. Bitcoin gives the impression that it is a completely anonymous currency and this ends up attracting more the public, because in the virtual world, data capture and user monitoring only increase, and Bitcoin would be an alternative for those who want to have more privacy and security

There is a public registry called Blockchain, where all transactions made with Bictcoins are registered in it and available to be viewed by anyone at any time. This can not be classified as anonymous, since, still in this way, there is the transmission of data and in this way, there is no way to completely guarantee the anonymity of Bitcoin, even the users can not be identified.

Remaining anonymous

There are some reasons that explain Bitcoin's anonymity. Bitcoin's addresses have no connection to users' identities, unlike various payment systems and bank accounts. Anyone has the possibility to create a new address of Bitcoin and totally random at any time without having to send any kind of personal information or something that can identify the person.

Another reason is the fact that the identity of the users also have no connection with the transactions. Consequently, anyone is able to perform bitcoins efficiently from any address in which they control the private key to any other address, not having to show or expose any kind of personal data. In this way, just as in bank accounts, the recipient also does not need to know the identity of the sender. (image 1)

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Bitcoin transaction data is routed and transmitted through points to a random set of points in the peer-to-peer (P2P) network. It is through the use of IP addresses that the Bitcoin points connect to each other and it is not necessarily clear to the points if the transaction data they received was created by the point with which they connect or if that point merely forwarded that information.

Breaking the anonymity

Many believe that Bitcoin is impenetrable, but it is not. Although Bitcoin transactions are randomly transmitted through the peer-to-peer network, the system is not impenetrable. For example, if a hacker can find ways to connect to various points on the Bitcoin network, that may be enough to determine where a transaction originated from. This all happens by combining the data collected from these different points.

It may occur that Bitcoin addresses are linked to real identities if these identities are used in any way with Bitcoin's addresses. This includes some cases like:

• Addresses used for deposit or withdrawal of money to a brokerage or portfolio service (regulated) or from it
• Publicly exposed donation addresses
• Use of an actual identity linked to an address that is only used to send bitcoins to someone

The way it is possibly the most important is that all the transactions of the Bitcoin network are completely transparent and traceable by anyone. This complete transparency for the public is what makes it possible for several Bitcoin addresses to be linked and grouped to the same user. Therefore, it is only necessary that one of these grouped addresses be linked to an identity in the real world through one or several other methods of deanonimation, so all the grouped addresses may also be.

Privacy

As for Bitcoin's privacy, it can be said that it is unknown in the next few years. While the anonymity of Bitcoin is trying to be improved and making progress, on the other hand possible methods to deanonymize users are often created by another. As we do not know all possible future possibilities of anonymity improvements, some available basic methods exist and have been discovered in order to increase privacy on the Bitcoin network at the moment. A widely used and solid solution is the use of a VPN to purchase and manage bitcoins. Using a VPN disassociates your IP address from your online actions, thereby removing the money trail. It is worth remembering that a VPN not only helps in the transactions and movements of Bitcoin but also in the navigation of a general way, avoiding that the data of the users are used of erroneous form on the part of interested services.

Only a VPN by itself does not hide the user's identity while buying and managing their bitcoins, but without the presence of one it is impossible to achieve anonymity at the end of the day. The best way to achieve maximum privacy would be to combine an impenetrable VPN solution (a VPN that allows you a quick setup is the Steganos Online Shield) along with some simple tactics. That way you can get the movement and purchase of bitcoins without anyone being able to monitor your financial life.

Another solution would be to use TOR (anonymous browser) or other methods to hide IP addresses. But the ideal would be to use a VPN together with the TOR, in this way, allowing both a safe navigation and the use of bitcoin 100% anonymous, because if the transactions of Bitcoin are transmitted by TOR, there is no way to determine where they originated.

To increase privacy there is the possibility of creating a new address for each transaction. The creation of a new address for each transaction ends up making it difficult to link addresses to real identities, since this would require at least more grouping to be performed. An increasing number of Bitcoin portfolios do this automatically with the use of hierarchical deterministic portfolio software.

A slightly more advanced method for achieving privacy is the use of mixers. Mixers basically allow anyone who uses this method to receive bitcoins from each other. If done well, the mix prevents analysis of transaction networks as well as association analysis. And for best results, the blend can be repeated.

An example of this mixing strategy is CoinJoin, which merges inputs and outputs of multiple users into one transaction, breaking the hypothesis that all entries belong to the same user. CoinJoin, however, does not remove all associations from a Bitcoin address, since the inputs and outputs are still connected to a certain extent.

In addition, to prevent quantity analysis, mixers may require that all users send the same quantity to the mix. On the other hand, blending services may charge a random fee, making it difficult to establish a relationship, by a stranger, between the quantity of bitcoins sent and the quantity returned. In addition, it is possible to fragment the blended quantity and overshadow the coins, while smaller quantities are more easily amidst the "crowd" of transactions.

To prevent time analysis, in addition, mixers can wait for some random time interval before sending back the coins: the longer this interval, the more difficult it becomes to link transactions. In addition, increasing the mixing time increases the probability that transactions are overshadowed by normal transactions. In the end, Bitcoin's privacy is still a variable scale, not a binary problem. Rather than being completely or anonymous, Bitcoin users rely on a certain level of privacy, depending on how much of their identity they reveal, what anonymization techniques they use, how often they use it or how often.

Bitfury

Bitfury Group is a leading full-service Blockchain technology company and one of the largest private infrastructure providers in the Blockchain ecosystem. Bitfury is a global team of experts in technology, business, communications, security and civil society. The Bitfury Group develops and delivers both the software and the hardware solutions necessary for companies, governments, organizations and individuals to safely move an asset through Blockchain. The Bitfury Group believes that Blockchain can and will open new doors to global economic opportunity and prosperity, and its mission is to create and promote Blockchain applications that further promote innovation and the advancement of the peer-to-peer economy. Bitfury recently launched Exonum, a customized framework that helps individuals, businesses and governments bring their ideas and solutions to life safely and easily.

Bitfury Group's development team has uncovered and detailed a new solution to help reveal relationships between bitcoin addresses, minimizing data errors, and ensuring greater accuracy in linking bitcoin addresses to criminal investigations, and shows users of bitcoin ways to protect your privacy.

As mentioned earlier in this article, bitcoin users can have multiple addresses, making it easy to anonymize and hide identities and thereby enable users to commit crimes at Blockchain. The ability to link related addresses, called clustering, is a new and important tool that helps public safety agencies conduct criminal investigations. Bitfury's award-winning engineers have created an incredibly innovative approach to analyzing transactions at Blockchain Bitcoin. Bitcoin Blockchain has the potential to be a strong force for good, and this new method will help ensure that it reaches that potential, aiding in investigations and reducing criminal activity.

Criminals are increasingly aware that Bitcoin Blockchain is not the place for them. Having a public traceable registry of all the transactions already done bitcoin allows the legal authorities 'follow the money' in a way that would never be possible with money. Criminals must stay well away from bitcoin. And thanks to Bitfury, they should be fleeing from this criptomoeda even faster.

Bitcoin Address Pooling is a process that exposes bitcoin users by determining which addresses belong to a single user through a blockchain data analysis. Clustering ends by grouping these addresses together, allowing researchers to link them to a single entity.

Bitfury reveals a comprehensive approach to clustering that reduces errors in results. While previous algorithms have built clustering models using Blockchain information and validating them with off-chain data such as public information on the Internet, Bitfury's new method uses both types of data during the model building step. The proposed approach allows researchers to reduce errors in unreliable input data sources and achieve a higher level of accuracy.

Tests carried out by Bitfury's technical development team confirm that the new approach produces more accurate results than methods that only analyze Blockchain's data. Approaches based exclusively on blockchain data tend to produce wrong connections, but combining this data with information from out-of-chain sources eliminates these errors.

Legality

In the virtual world, bitcoin was the main choice of criminals because of the anonymity, but Bitcoin is losing its fame with these criminals and is paving the way for new types of private virtual coins like monero created to avoid tracking. This transaction from Bitcoin to the monero was due to advances in the last months of programs to monitor the use of bitcoin. Some companies like Chainalysis are enhancing the tracking of digital businesses with criminal or money laundering, alerting them to trade and avoiding the transformation into cash.

It was precisely through this anonymity that the use of bitcoin on the black market was used as a method of collecting redemptions in machine hijackings, such as illegal sales and as an instrument of money laundering, fomenting illicit activities and terrorism.

The first case we actually heard of the use of crypto-coins in money-laundering crimes happened in 2014 in the United States, where businessman Charlie Shrem, owner of the exchange house Bitinstant, was accused of conspiracy in which he converted traditional money into bitcoins to use them on a black market website called Silk Road. On this site there were anonymously drug purchases, even within US borders.

Clearly, using techniques to achieve anonymity and using this Bitcoin anonymity for money laundering purposes is illegal, but participation or enforcement schemes others use for money laundering can also be illegal or at least leave the participant vulnerable accusations of helping criminals and terrorists. Bitcoin anonymity techniques involving bitcoins that are worth large sums of money are illegal in most jurisdictions, violating anti-structuring laws.

See also

• Bitcoin
• Cryptocurrency
• Transações de bitcoin
• Anonymity

External links

• Site coindesk
• Site Blockchain
• Tecmundo
• Techradar
• Site Bitfury
• Site Chainalysis

Bitcoin Anonymity

This article "Bitcoin Anonymity" is from Wikipedia. The list of its authors can be seen in its historical and/or the page Edithistory:Bitcoin Anonymity. Articles copied from Draft Namespace on Wikipedia could be seen on the Draft Namespace of Wikipedia and not main one.

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