Bitcoin Transactions Might Not Be That Anonymous After All

One of the main features of Bitcoin and other similar digital currencies has been the anonymity of the transactions. Because of that, more and more merchants have been using Bitcoin to make transactions online and one of the main reasons why Bitcoin became so popular in the world is the fact that it provided that anonymity for the users. Those who have been making Bitcoin transactions know that transactions with digital currencies are recorded but they can only be linked to the electronic address and not to the real individual.

However, some experts have been indicating that anonymity of Bitcoin transactions is not that safe as many believe it to be. They have compared that situation with the situation of writing a book or an article under pseudonymous. In that case, you will be able to maintain your privacy all the way until someone comes up and connects your pseudonym with your real name. Experts have warned that once your electronic address gets a link to your personal details, all your Bitcoin transactions will be made public. Besides that, the history of what you have bought will also be made public.

You Are Sharing More Info Than You Know

Researchers from Princeton University have been researching the security of Bitcoin transaction and they have found out that the main reason for information leaks are Web trackers as well as cookies. Web trackers and cookies are small pieces of code that have been implanted in the website and they sent information about the users to third parties. Because of that, pages such as Google and Facebook are able to receive information about the users even when those users are not aware that they are sharing their personal information.

When it comes to digital currency transactions, the information about your Bitcoin transactions gets leaked onto the Internet which enables some law enforcement agencies or some other people with bad intentions collecting those pieces of information and use them for their benefits. In order for someone to link the Bitcoin address and the personal information of the user that someone would need to have the name and the e-mail of the user.

The information that these researchers found out were mostly used for the purpose of advertising and analysis. However, they have also discovered that several other types of information have been leaking from platforms for digital currency transactions. This is especially problematic news for those people who want to keep their transactions private.

Researchers have also stated that it does not take a lot to make a connection between an electronic address and the personal information. In their opinion, all that is required is an amount of the transactions and the time when the transaction was made. Combining those pieces of information with the exchange rate at the moment of the transaction, a third party might be able to find out the electronic address of the people who made the transaction.

For those who trade with digital currencies, you need to be aware that there is several ways in which you can additionally protect your identity and your Bitcoin transactions. According to the researchers and other users, one of the most efficient ways of doing that is CoinJoin which is a service that connects two or more users who are about to make similar payments and provides them the opportunity to pay together. The result of that is the fact that Bitcoins get mixed which makes it almost impossible for an individual to identify the electronic address that sent those Bitcoins.

Written by Vedran Ostojic

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