Bitcoin is not Anonymous!

The dark net has been around for decades but didn’t really come into the public eye until 2011 with the introduction of a few eye-opening websites but most notably the website SilkRoad. The SilkRoad was an online black market where people were able to purchase illegal drugs, illicit services and purchase other people’s information with a simple user account. People suddenly realized that they could purchase many illegal items from their computer. But how were they going to purchase these things anonymously when their credit cards and bank accounts are all connected to their personal id? The answer was Bitcoin.

The Problem Now

Here is the problem with Bitcoin: It is built on a technology called blockchain which is extremely traceable. Your user id within the blockchain is anonymous but if someone is able to figure out what your user id is, they will ultimately know everything you purchased.

Don’t believe me? Check out the trial of Ross Ulbricht, the founder of SilkRoad where authorities were able to trace millions of dollars to the wallet on his computer or how in 2018 the US government tracked a few illegal Russian groups using Bitcoin. Tim Cotton, a blockchain developer, was interviewed by Vice Media in 2018, and stated “It is not a good idea to commit a crime with Bitcoin because the moment you have one single weak link in your operational security all of your history is now exposed.”

The fundamental element of blockchain is that the entire chain is shared with multiple people so it is very hard to manipulate illegally but it is also public, so if you wanted to write some simple scripts to see where money is being sent to and from, it is a trivial task. This is how many indictments have occurred in which people believed it was anonymous, but ultimately discovered it was not unless serious precautions are taken to hide one’s identity.
Most people who use technology are aware you are tracked significantly in your daily life. Instances where an activity log is created is when your cellular phone connects to a tower, logging into social or email accounts, purchase history, connecting from known Wi-Fi accounts, etc.

So how can you still use Bitcoin and remain anonymous?
  • Use pre-paid cards and disposable phones to access your bitcoin wallet
  • Don’t have your wallet on your personal computer
  • Don’t use your personal Wi-Fi or a known private Wi-Fi connection
  • Don’t use reoccurring purchases (i.e. monthly subscription to VPN) as it can be seen as an identifiable amount
  • Don’t use a single account as it is easier to trace

Regardless of the above, authorities could subpoena the exchange and get the information you gave them when originally setting up the account and purchasing your first coins. There are some sites that try to launder these coins but that makes it easier for law enforcement to charge you with laundering money or false identification. It also doesn’t help that many of these services have large fees for converting your money.

You can still use Bitcoin to purchase goods, but as Jim Carrey said in the movie ‘Liar Liar’ on how not to get in trouble: “Stop Breaking the Law!”

Andrew Riley
Senior Software Engineer
ENGAGE