Every financial transaction you make leaves behind clues that link to your identity. The time and location of the transaction. Your IP address. Your spending habits. Your financial status and how much money you have. These are all things that are left exposed on the blockchain when you use crypto. And even if they aren’t initially linked to your name, the wrong people will have an easy time figuring it out with all that data.
The good news is, you can minimize the risk in several ways.
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Reasons for keeping your transactions anonymous
Even though surreptitious transactions are often associated with criminal activities, such as drug dealing or tax evasion, privacy is a human right. Even aside from your personal safety, there are several completely legitimate reasons you should seek anonymity for your transactions. On a personal level, you don’t want your financial information, for example your net worth or transaction history, to be obtainable and exploitable by advertisers or hackers. In order to avoid this situation, you may prefer to make private transactions.
From a business perspective, the effects are much broader, as transaction data and patterns can relate to trade secrets, intellectual property, or client privacy. Therefore, it’s important to know which payment method will meet your particular needs.
Transactions that involve third-parties such as banks, payment gateways like PayPal, or digital platforms are easy to track, as those middlemen store your sending and receiving history, as well as your account details. There is no way to make a completely untraceable bank transfer.
As a result, many people prefer to pay face-to-face, using cash as a “clean” way of transacting. The anonymity of such transactions is founded entirely on the trust and consensus between the two parties involved. That can also be a disadvantage, however, as privacy is only maintained as long as both parties stay committed to the deal.
- No transaction fee.
- Transaction history is not recorded.
- Geography can be an issue, with long-distance and cross-border transactions being problematic.
- Carrying large sums of money is always a risk.
- As there are no records or verification checks, a lot of trust is required from both parties to keep their side of the deal. This leaves you open to fraud, assault, and worse.
Setting up an anonymous PayPal account
This may sound impossible, but this practice for untraceable money transfers is actually widespread on the Internet. The methods vary, but they all include some basic steps; setting up a clean IP with a VPN, creating an untraceable PayPal account with an address that is linked to the paid VPN, and adding an anonymous debit card to verify the account. Even though this approach enables users to send, receive and withdraw money with more privacy, it could pose serious legal risks if any suspicious activity is detected, and you give up any legal recourse if you are defrauded.
- You can send and receive money internationally.
- You can make private payments with fiat currency.
- The process is cumbersome and time-consuming.
- Does not guarantee surveillance-free transactions, potentially poses legal risks.
- Accompanied by various fees.
- Middle-men hold your money (banks, payment gateways), while it’s not in your name.
There is a misconception that using cryptocurrency is a way to solve these issues by default. However, cryptocurrency is far from private. In fact, with Bitcoin and other cryptocurrencies, the majority of your transaction data and history are permanently and publicly stored on the blockchain. As extensions of Blockchain technology, they were invented to provide transparency and security for asset transfers. No transactions made on the Bitcoin or other blockchains are governed by any third-party, instead, they’re verified by an entire network of users.
Although these transactions do not directly contain users’ information such as their name, physical address or email, identitiy checks are required for KYC authentication and can be revealed to the public if the site is hacked. KYC is mandatory when trading Bitcoin for fiat currency, meaning that your personal information is stored on these sites
However, there are still ways to make an untraceable money transfer with cryptocurrency.
1. Bitcoin mixing
When it comes to making an untraceable money transfer using Bitcoin, Bitcoin mixing, also referred to as coin tumbling or laundering, is a process that tries to break the connections between the Bitcoin sender and recipient’s address. The procedure involves a few steps:
Firstly, you submit the amount of Bitcoin you want to be tumbled, then the mixer service shuffles your Bitcoins with someone else’s cryptocurrency to release a fresh batch of Bitcoins under a random address. If done properly, transactions can be made almost impossible to trace and you aren’t required to leave any personal details. There are several services offering bitcoin mixing, with Smart Mixer, Wasabi Wallet, and Samourai Whirlpool being solid options.
Nonetheless, for an extra layer of anonymity, you should only access these services with an encrypted VPN and web browsers that don’t track your browsing history or IP, such as Tor or Brave.
- Services are accessible and guarantee high anonymity for making an untraceable money transfer.
- Coin mixing services are often quite costly.
- The process is complicated and inconvenient for regular use.
- Service providers can be dishonest about their privacy and reveal your address when processing the transactions, you’re still required to trust a third party.
2. Privacy altcoins
Due to the downsides of Bitcoin, several altcoins have stepped up and attempted to solve the pseudo-anonymity problem. Some of the most well-known privacy altcoins are Monero, Dash, Zcash, and Zcoin.
Each of them follows a different protocol to provide their users with privacy when sending or receiving crypto assets. However, most privacy altcoins are still new to the market and need further improvements to effectively serve as a private method for money transfers. Additionally, they force you to rely on a single privacy coin for transfers, which means you’re unable to use your favorite coins.
- Altcoins are fungible, which helps avoid subsequent loss of value or rejected transactions.
- Most altcoins are difficult to purchase in the mainstream market.
- The adoption of privacy coins is low and not user-friendly for beginners.
3. Private crypto wallets
While other methods for anonymous crypto transactions still have visible drawbacks, private crypto wallets may be a superior solution to those who seek to make untraceable money transfers. These wallets have the same functions as standard crypto wallets, allowing users to send, receive, trade, and store your crypto assets. However, they also provide users with complete ownership of their private keys and allow them to send Bitcoin (and other crypto assets) with total anonymity.
Even though this concept is not currently well-known by mainstream users, there are a couple of options available on the market at the moment. While hardware wallets keep your funds offline and private, software wallets help to send, receive, and store crypto assets anonymously when connected to the Internet.
If you need an effortless method to send bitcoin anonymously on a daily basis, the Incognito Wallet is what you are looking for.
Incognito Wallet – The anonymous bitcoin wallet of choice
The Incognito Wallet is an untraceable money transfer app that turns the cryptocurrency of your choice into a privacy version of the same coin with a single tap.
The app gives you full control of your personal data and assets; you can send, receive, buy, sell, invest, and store Bitcoin, Ethereum, and over 80 other cryptocurrencies in total anonymity.
As a sidechain for privacy coin, the Incognito chain builds a trustless portal to connect to Bitcoin and other blockchains. Holders of Bitcoin can obtain a privacy version of Bitcoin (pBTC) issued at a rate of 1:1 on the Incognito Chain, and can switch it back into regular BTC at any time. The two processes are all executed automatically and independently from any third party, through the utilization of smart contracts and trustless custodians. This means that you can take your privacy back into your hands, and that you don’t have to rely on anyone else.
When you anonymize your crypto by depositing it into your Incogntio wallet, you can use your crypto with peace of mind. No one can see your history, balances, location, spending habits, or any other data that might put you at risk.
Best of all, the Incognito Wallet app is totally free and available for Android, iOS, and PC with a Chrome extension.
There is a lot of time and energy being put into creating systems that allow people to make an untraceable money transfer. You have every reason to seek privacy when conducting transactions, and thankfully there are various methods at your disposal. It’s worth researching the different methods mentioned in more detail, so you can find the one that works best for you. In any case, always look to keep your transactions anonymous.