Most people still think that blockchain and all cryptocurrencies offer full privacy. With the exception of private coins, the rest cannot guarantee anonymity.
The truth is that your crypto transactions can be visible to who cares hard enough to look. The prying eyes of the government tax auditors and criminals could be auditing your ledger.
That should worry you, but thankfully, we are here for you. The information in this piece will help you make the necessary steps towards anonymity, especially on the onset of another crypto boom, when you are bound to make more profits from crypto transactions.
Who Is Snooping?
First of all, if you are a casual user, it’s highly unlikely that ‘big brother’ is tracing your transactions. If you only use bitcoin for buying online items, chances are, you haven’t attracted enough attention to warrant interest.
But that doesn’t mean you neglect your online privacy. If somebody were interested in looking at your transactions, he would do it, effortlessly. In some cases, nefarious individuals piece together small personal details before finally stealing your entire funds.
The Anonymity Misunderstanding
Crypto’s anonymity has been misunderstood. Cryptocurrencies aren’t entirely anonymous but essentially pseudonymous. In fact, cryptocurrencies weren’t made to be anonymous but transparent. Bitcoin was designed to make entire transactions visible to the public eye. The difference is with the public keys which are pseudonymous to each transacting party.
Anyone, therefore, can discern user identity from any transaction. By tracking the postal address of delivery goods bought with crypto is a straightforward way hackers discover your identity. An extreme form of revealing the same is finding the bank account you used to purchase crypto.
It’s all about connecting the dots to find your personal information. After that, finding your exchange passwords is a matter of when. Here are some privacy steps that you could use to protect yourself.
Transacting Using A VPN
A virtual private network does a great deal of a job protecting your IP address, geographical location and blockchain transactions. You see, VPNs protect user identities by encrypting connections to the internet through an external network.
VPNs, therefore, prevent actions of eavesdropping from potential thieves and government regimes when they mask your exact location. As a result, users from prohibited crypto locations can access crypto services.
If you are considering using crypto, a VPN could be the best choice to protect your identity.
By Use Of Mixing Services
Mixing services were created to prevent bad actors and snoopers from tracking your crypto address and personal details. Mixers allow users to pool a set of transactions in varied combinations which are made as unpredictable as possible. Mixers also ensure that timing does not sell out the clues about the flows.
A shortcoming with mixing is that you could be tied to wallets belonging to bad actors and thereby incriminating yourself.
Using Private Coins
The use of private coins is one of the most effective ways to preserve your privacy as a user. Coins such as Monero and Zcash come in handy when dealing with anonymity.
Different coins implement different methods to ensure their user’s of total anonymity — Monero for instance users Ring CT and stealth addresses. Zcash, on the other hand, uses zk-SNARKS technology.
Privacy coins have however attracted scrutiny from regulatory bodies who believe that the coins are facilitating criminal activities and terrorist funding.