Anonymity on the Internet applies to any association a client has on the Internet that shields their character from being imparted to another client or with a third party. The anonymity on any online platform is a challenge and risk at the same time. Many people think that besides many anonymity services available to ensure the anonymity of a user online but complete anonymity is still a myth.
Bitcoin is often described as an anonymous currency because it is possible to send and receive bitcoins without giving any personally identifying information. However, bitcoin by itself is, in most cases, not 100% anonymous. Bitcoin is pseudonymous: sending and receiving bitcoins is like writing under a pseudonym. If an author’s pseudonym is ever linked to their identity, everything they ever wrote under that pseudonym will now be associated with them. In bitcoin, your pseudonym is the wallet to which you receive bitcoin. Every transaction involving that address is stored forever in the blockchain. If your address is ever linked to your identity, every transaction will be linked to you. But achieving reasonable anonymity is quite easy.
Mix Your Bitcoins
If you already own your bitcoins, especially important is that you mix your bitcoins with other bitcoin owners. A bitcoin mixer, also known as a bitcoin laundry or bitcoin tumbler, is a service that breaks the link between you and your bitcoins, mixing your funds with others, so the trail back to you is unclear. While bitcoin mixing may not guarantee 100% anonymity, it does provide a very high level of anonymity, and it would be a difficult task for anybody to link you with properly mixed coins.
We recommend using a quality online mixing service such as BitMix or Cryptomixer to periodically exchange your bitcoins for different ones which cannot be associated with the original owner. In order to further enhance the security of your transactions they provide the opportunity to use two or more forward addresses as well as convenient time delays. They immediately delete all archival logs related to your transactions. You can also use Coin Join for that purpose as it is free but a bit more complicated. Also, if you use anonymous Tor browser, you may want to try BitMix’s Tor Adress.
When purchasing from online exchanges, it is a sort of “tumbling” the bitcoin. Tumbling entails pooling your cash with other people as part of a service offered by a third party, which effectively jumble the bitcoins up and ask for a fee after sending your funds back to you in anonymous bitcoin. One more option is to change your funds to Monero, which happens to be another cryptocurrency geared towards anonymity, and then change them back to bitcoin. So after purchasing bitcoin on a website like Coinbase, you can then buy Monero on an altcoin exchange like Bittrex or Binance, then transfer the Monero to an unknown Monero wallet on your device. Following that, you can transfer the bitcoin to a fresh, new address you have set up.
Careful with Bitcoin Mixing Services!
Chainalysis notes that scammers are taking advantage of the cryptocurrency space’s unique position with the wider public: while most have heard about cryptocurrencies, many still believe it has get rich quick potential and are prone to pull out their wallets because of it.
In the last year, apart from the Ponzi schemes, cryptocurrency scammers invented fake cryptocurrency mixers, phishing schemes, darknet markets, ransomware, exchange attacks, and fake token sales to get to the precious cryptocurrencies illegally. To cash out their gains, scammers mostly used cryptocurrency exchanges, as majority of the funds associated with scams were liquidated on trading platforms.
Please note that there are many scams out there that claim to offer bitcoin mixing services. The problem is that you will send them bitcoins and will never get anything back, so please stay with our recommended services to avoid the hassle and check your provider on forums!
Anonymous Bitcoin Wallet
As bitcoins are stored in a software program known as a bitcoin wallet, and all of the above does not help, if your wallet is identifiable with your personal information. If you wish to remain somewhat anonymous when using bitcoins, such as paying for an adult website, then you should at least use a wallet registered to an anonymous and disposable email address.
By far, the best and most anonymous bitcoin wallets are hardware wallets.
Also, use a different wallet for each transaction to avoid multiple transactions being traced back to you, as this is like maintaining multiple separate identities. A simple way to keep numerous wallets is to use Electrum, a straightforward and lightweight software wallet that allows you to manage multiple wallets from one program. As for anonymous bitcoin desktop wallets, we are still searching for the best choice. Currently, the best advice is to use the Tor browser to connect to an online wallet.
If you want even more anonymity, we suggest to make a paper bitcoin wallet. Maybe the easiest way is to use the code at bitaddress.org (beside anonymity you will increase security too, more info here).
The Open Bitcoin Privacy Project has released their first full report on the levels of privacy found in various bitcoin wallets. Darkwallet is good, another two good wallets in terms of anonymity are also Armory and Mycelium.
Anonymous Bitcoin Debit Card
Wirex, a UK-based company, has launched a virtual and physical bitcoin debit card that works where VISA is accepted. Their bitcoin debit card is available right now for a very small fee.
You can order plastic or virtual debit cards that can be nominated in USD, EUR or GBP. All it takes is a valid email address and basic personal information to sign up, and once you requested your debit card, it will be sent to your home address. Unfortunately, this debit card is not available to residents of the United States.
Bitcoin transaction records
While using bitcoins is an excellent way to make your purchases, donations and p2p payments, transactions are never truly anonymous. Bitcoin activities are recorded and visible publicly via the blockchain. This is a comprehensive database that keeps records of bitcoin transactions.
Almost all exchanges require you to verify your identity by sending scanned personal documents. Also, they are required to report large transactions to the proper governmental authority. When you use bitcoin to pay for goods and services, you will also many time need to provide your name and address to the seller for delivery purposes. This means that someone with an interest in tracking your activities can use your ID information as a basis from which to track your future transactions or to study your previous activity. In short, you have compromised your security and privacy.
That is why, if you want to stay anonymous, you must do both – get and spend bitcoins anonymously as described above.
Get Anonymous VPN
Over the last few years, VPN services have grown in popularity – and for a good reason. Using a VPN helps protect your privacy and secure your data from being easily stolen — a critically important task for the increasing number of people around the world facing the threat of surveillance.
VPN, where you can be 100% anonymous, is SatoshiVPN. Pay anonymously with Bitcoin. No user registration required. The other one, where you can pay with bitcoin, is Namecheap’s VPN.
We also use Pure VPN from time to time (use DISCOUNT10 code for a discount), but you can’t pay with BTC here.
Buying Bitcoins Anonymously
- The best option is to buy bitcoin with cash to avoid on-line exchanges totally. Most online exchanges require verification where you need to upload your ID and similar. You can buy bitcoins with cash on an atm or meet the seller personally. There is more information on how to do that on our buy bitcoins with cash section.
- P2P cryptocurrency exchanges allow users to trade directly with each other. Because they do not hold any money, they are not a subject to complex compliance procedures, meaning that they do not require KYC/AML verifications.
- One of the options is also to buy BTC at VirWox. Using this account you can buy another currency – Second Life Lindens (SLL) – with PayPal, Skrill and Paysafecard that you can buy in any shop. Then you just easily convert your SLL to bitcoins and no verification is needed for doing that.
- To buy bitcoin with credit card without verification is almost impossible. Here are a few (not the best) ideas to buy bitcoin with credit card anonymously.
Find out more details in our guide to buy bitcoin anonymously.
Spending Bitcoins Anonymously
This part depends on what you want to get for your coins. The main idea to stay anonymous is that at the purchase process, you do not reveal any personal information. There are many services (mostly online) that accept bitcoins as a payment method, and they do not require any personal information.
Staying anonymous is easy if you need an online service. Subscription to xxx website, anonymous online casino, gambling and dice, anonymous sport bets, advertising, donating to wikileaks just to name a few.
An excellent way to spend BTC anonymously is to simply buy a gift card with cryptocurrency. When you have a gift card in your hand, you can use it as money. Some of the most popular options: buy Steam games card with Bitcoin, buy things on Amazon, buy video games, book hotels and flights with BTC, buy stuff on eBay, buy apps and book an Uber.
It gets more complicated when you need some stuff to be delivered to you physically.
- Currently the hottest topic in this industry are Decentralized Exchanges — also known as DEX’s — are a new technology that facilitate cryptocurrency trading on a distributed ledger. These exchanges shift back control of funds and trades to the user and they eliminate the single point of failure. A secondary effect is that government taxation or fund confiscation can become nearly impossible.
- Bitcoin debit cards review.
- Bitcoin wallet reviews.
- Guide for Buying Bitcoins With Gift Card.
- Coincheck to Delist Privacy Coins Monero, Zcash, and Dash: Cryptocurrency exchange Coincheck will delist trading pairs for Monero (XMR), Zcash (ZEC), and Dash (DASH). The reason behind this decision is related to the less traceable transactions of these privacy-centric cryptocurrencies, which don’t comply with the Anti-money laundering regulations [may 30, 2018, more].
- Bitmixer.io, the largest BTC mixing service online has decided to shut down operations, citing the future of Bitcoin as a catalyst. While no links have been made official, users question possible pressure and dark market shops as a possible cause [2017-08-01].
- MIT Technology Review: Bitcoin Transactions Aren’t as Anonymous as Everyone Hoped. Web merchants routinely leak data about purchases. And that can make it straightforward to link individuals with their Bitcoin purchases, say cyber security researchers [2017-08-23].
- Exmo exchange: Comparison of TOP cryptos by anonymity of its use [2017-10-22].
4 thoughts on “Using Bitcoin Anonymously is Difficult”
Monero’s xmr.to service is another great option for mixing bitcoins.
Monero will, just like Zcash, hide amounts (or value of all transactions on the blockchain) as well. See the paper “Ring Confidential Transactions for Monero”:
Currently it hides sender and recipient already with a combination of stealth addresses to achieve unlinkability and ring signatures to achieve untraceability. Furthermore, in the foreseeable future it will integrate I2P to hide IP/metadata as well.
Fastest bitcoin mixer I’ve found is bitcoinmixer.net usually doesn’t take long and it ensures your coins are clean
I change Bitcoin to Monero – then back to Bitcoins and withdraw to wallet https://bitcoinofficial.org – then withdraw to my card.